Full Press Release Details
Schr dinger Reports First Quarter 2024 Financial Results
First Quarter Total Revenue of $36.6 Million, Software Revenue of $33.4 Million
Announces FDA Clearance of Investigational New Drug Application for SGR-3515, a Novel Wee1 Myt1 Inhibitor
SGR-1505 and SGR-2921 on Track for Initial Phase 1 Data Readouts in Late 2024 or 2025
New York, May 1, 2024 - Schr dinger, Inc. (Nasdaq SDGR), whose physics-based computational platform is transforming the way therapeutics and materials are discovered, today announced financial results for the first quarter of 2024.
"Over the past year, we have witnessed unprecedented interest in computational drug discovery, and we are excited by the growing appreciation for using computation to drive pharmaceutical innovation. We are excited about the opportunities we have to increase customer adoption of our platform this year and drive revenue growth going forward," said Ramy Farid, Ph.D., chief executive officer of Schr dinger. "We are also pleased with the continued progress of our proprietary pipeline. Today we reported FDA clearance of our IND application for SGR-3515, our novel Wee1 Myt1 inhibitor, and expect to initiate a Phase 1 clinical study in patients with solid tumors this year. Our Phase 1 clinical studies of SGR-1505 and SGR-2921 remain on track, and we look forward to reporting data from these two trials in late 2024 or 2025."
First Quarter 2024 Financial Results
Total revenue for the first quarter was $36.6 million, compared to $64.8 million in the first quarter of 2023. The decrease was primarily due to a large collaboration milestone payment that favorably impacted revenue in the first quarter of 2023.
Software revenue for the first quarter increased 3.7% to $33.4 million, compared to $32.2 million in the first quarter of 2023. The increase reflects a growing contribution from hosted licenses, partially offset by multi-year agreements signed in the first quarter of 2023.
Drug discovery revenue was $3.2 million for the first quarter, compared to $32.6 million in the first quarter of 2023. The first quarter of 2023 included a large collaboration milestone payment associated with the progression of a collaboration project.
Software gross margin decreased to 76% for the first quarter, compared to 78% in the first quarter of 2023, largely due to higher technology expenses.
Operating expenses were $86.3 million for the first quarter, compared to $76.2 million for the first quarter of 2023. The increase was primarily due to higher R D expenses.
Other income, which includes changes in fair value of equity investments and interest income expense, was $13.2 million for the first quarter, compared to other income of $186.0 million for the first quarter of 2023. Other income for the first quarter of 2023 included a $147.3 million gain relating to the cash distributions from Nimbus in connection with the sale of Nimbus's TYK2 inhibitor to Takeda.
Net loss for the first quarter was $54.7 million, compared to net income of $129.1 million in the first quarter of 2023. For the three months ended March 31, 2024, Schr dinger reported a non-GAAP net loss of $62.4 million compared to a non-GAAP net loss of $27.6 million for the three months ended March 31, 2023. A reconciliation of non-GAAP net loss to GAAP net (loss) income can be found in "Non-GAAP Information" and financial tables below.
At March 31, 2024, Schr dinger had cash, cash equivalents, restricted cash and marketable securities of approximately $435.7 million, compared to approximately $468.8 million at December 31, 2023.
| Three Months Ended | |||||||||
| March 31, | |||||||||
| 2024 | 2023 | % Change | |||||||
| (in millions) | |||||||||
| Total revenue | $ | 36.6 | $ | 64.8 | (44)% | ||||
| Software revenue | 33.4 | 32.2 | 3.7% | ||||||
| Drug discovery revenue | 3.2 | 32.6 | (90)% | ||||||
| Software gross margin | 76 | % | 78 | % | |||||
| Operating expenses | $ | 86.3 | $ | 76.2 | 13% | ||||
| Other income | $ | 13.2 | $ | 186.0 | - | ||||
| Net (loss) income | $ | (54.7) | $ | 129.1 | - |
2024 Financial Outlook
As of May 1, 2024, Schr dinger maintained its financial guidance for the fiscal year ending December 31, 2024
Software revenue growth is expected to range from 6% to 13%.
Drug discovery revenue is expected to range from $30 million to $35 million.
Software gross margin is expected to be similar to software gross margin for the full year 2023.
Operating expense growth in 2024 is expected to range from 8% to 12%.
Cash used for operating activities in 2024 is expected to be above cash used for operating activities in 2023.
For the second quarter of 2024, software revenue is expected to range from $31 million to $33 million.
In March, Schr dinger launched LiveDesign Biologics, an enterprise cloud-based, informatics solution that allows drug discovery teams designing biologics to centralize access to computational modeling tools and data in a single interface. LiveDesign Biologics builds on Schr dinger's existing LiveDesign offering, which is primarily focused on integrating tools and data for the design of small molecules.
In March, Schr dinger presented the discovery of SGR-1505, its MALT1 inhibitor, during the First Time Disclosure Session at the American Chemical Society Spring 2024 Meeting. The presentation provided an overview of how Schr dinger leveraged its computational platform at scale to discover SGR-1505. Schr dinger's platform enabled vast exploration of chemical space, evaluating 8.2 billion compounds, allowing Schr dinger to synthesize only 78 of the most promising molecules in the lead series, and identify SGR-1505 in approximately 10 months.
Schr dinger is accelerating the validation of computational predictive models of off-target drug activity. There is an emerging requirement for such models to predict drug toxicity risks before animal or human studies are initiated. Schr dinger is exploring the deployment of its core technologies and capabilities, at scale, to provide computational solutions to meet these requirements. The company's recent advances characterizing the structure of key proteins such as hERG (recently published in Cell) and cytochrome P450 enzymes are examples of these efforts.
Proprietary Pipeline
Today, Schr dinger also announced that the U.S. Food and Drug Administration (FDA) cleared the investigational new drug (IND) application for SGR-3515, its Wee1 Myt1 inhibitor. Schr dinger expects to initiate a Phase 1 dose-escalation trial of SGR-3515 in patients with solid tumors in the third quarter of 2024.
The company is advancing the Phase 1 dose-escalation study of SGR-1505, its MALT1 inhibitor, in patients with relapsed refractory B-cell malignancies, and enrollment is ongoing in the U.S. and EU. The company expects to report initial data from this study in late 2024 or 2025.
Schr dinger also continues to advance its Phase 1 study of SGR-2921, its CDC7 inhibitor, in patients with acute myeloid leukemia (AML) or myelodysplastic syndrome. Patient enrollment is ongoing in the U.S., and the company expects to report initial data from the study in late 2024 or 2025.
Today Schr dinger announced that the rights to the SOS1 inhibitor discovered and developed as part of the collaboration with Bristol Myers Squibb have reverted to Schr dinger based on portfolio prioritization decisions at BMS. In 2023, Schr dinger completed and delivered a development candidate, and BMS had been conducting IND-enabling studies.
Schr dinger is progressing its discovery pipeline, including programs targeting EGFRC797S, PRMT5-MTA and NLRP3. The company continues to anticipate submitting at least one IND in 2025.
Webcast and Conference Call Information
Schr dinger will host a conference call to discuss its first quarter 2024 financial results on Wednesday, May 1, 2024, at 4 30 p.m. ET. The live 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. To participate in the live call, please register for the call here. It is recommended that participants register at least 15 minutes in advance of the call. Once registered, participants will receive the dial-in information. The archived webcast will be available on Schr dinger's website for approximately 90 days following the event.
Non-GAAP Information
Included in this press release is certain financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). The company presents non-GAAP net income (loss) and non-GAAP net income (loss) per share, which exclude gains and losses on equity investments, changes in fair value of equity investments, and income tax benefits and expenses. Adjusting net income to exclude the impact of these items results in a financial presentation for the company without the impact of our equity investments and tax benefits and expenses. Management believes non-GAAP net income (loss) and non-GAAP net income (loss) per share are useful measures for investors, taken in conjunction with the company's GAAP financial statements because they provide greater period-over-period comparability with respect to the company's operating performance, by excluding non-cash mark-to-market and other valuation adjustments for the company's equity investments, non-recurring cash distributions from the company's equity investments and the tax impact of these distributions that are not reflective of the ongoing operating performance of the business. However, the non-GAAP measures should be considered only in addition to, not as a substitute for or as superior to, net income (loss) and net income (loss) per share or other financial measures prepared in accordance with GAAP.
Other companies in Schr dinger's industry may calculate non-GAAP net income (loss) and non-GAAP net income (loss) per share differently than we do, limiting their usefulness as comparative measures. For a reconciliation of non-GAAP net income (loss) and non-GAAP net income (loss) per share to GAAP net income (loss) and GAAP net income (loss) per share, respectively, please refer to the tables at the end of this press release.
Schr dinger is transforming the way therapeutics and materials are discovered. Schr dinger has pioneered a physics-based computational platform that enables discovery of high-quality, novel molecules for drug development and materials applications more rapidly and at lower cost compared to traditional methods. The software platform is licensed by biopharmaceutical and industrial companies, academic institutions, and government laboratories around the world. Schr dinger's multidisciplinary drug discovery team also leverages
the software platform to advance a portfolio of collaborative and proprietary programs to address unmet medical needs.
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 statements regarding Schr dinger's expectations about the speed and capacity of its computational platform, its financial outlook for the fiscal year ending December 31, 2024 and second quarter ending June 30, 2024, its plans to continue to invest in research and its strategic plans to accelerate the growth of its software licensing business and advance its collaborative and proprietary drug discovery programs, the long-term potential of its business, its ability to improve and advance the science underlying its platform, the initiation, timing, progress, and results of its proprietary drug discovery programs and product candidates and the drug discovery programs and product candidates of its collaborators, the clinical potential and favorable properties of its CDC7, MALT1, and Wee1 inhibitors, including SGR-1505, SGR-2921, and SGR-3515, the clinical potential and favorable properties of its collaborators' product candidates, the expected timeline for submitting investigational new drug applications, as well as expectations related to the use of its cash, cash equivalents and marketable securities. Statements including words such as "aim," "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "goal," "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 Schr dinger's current views about its plans, intentions, expectations, strategies and prospects, which are based on the information currently available to the company and on assumptions the company has 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 important factors that are beyond Schr dinger's control, including the demand for its software platform, its ability to further develop its computational platform, its reliance upon third-party providers of cloud-based infrastructure to host its software solutions, factors adversely affecting the life sciences industry, fluctuations in the value of the U.S. dollar and foreign currencies, its reliance upon its third-party drug discovery collaborators, the uncertainties inherent in drug development and commercialization, such as the conduct of research activities and the timing of and its ability to initiate and complete preclinical studies and clinical trials, whether results from preclinical studies will be predictive of the results of later preclinical studies and clinical trials, uncertainties associated with the regulatory review of IND submissions, clinical trials and applications for marketing approvals, the ability to retain and hire key personnel and other risks detailed under the caption "Risk Factors" and elsewhere in the company's Securities and Exchange Commission filings and reports, including its Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed with the Securities and Exchange Commission on May 1, 2024, as well as future filings and reports by the company. Any forward-looking statements contained in this press release speak only as of the date hereof. Except as required by law, Schr dinger undertakes 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.
Matthew Luchini (Investors)
matthew.luchini schrodinger.com
Allie Nicodermo (Media)
allie.nicodermo schrodinger.com
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except for share and per share amounts)
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Revenues | |||||||||||
| Software products and services | $ | 33,415 | $ | 32,213 | |||||||
| Drug discovery | 3,183 | 32,569 | |||||||||
| Total revenues | 36,598 | 64,782 | |||||||||
| Cost of revenues | |||||||||||
| Software products and services | 7,976 | 7,115 | |||||||||
| Drug discovery | 9,732 | 11,974 | |||||||||
| Total cost of revenues | 17,708 | 19,089 | |||||||||
| Gross profit | 18,890 | 45,693 | |||||||||
| Operating expenses | |||||||||||
| Research and development | 50,611 | 40,741 | |||||||||
| Sales and marketing | 10,171 | 9,145 | |||||||||
| General and administrative | 25,541 | 26,308 | |||||||||
| Total operating expenses | 86,323 | 76,194 | |||||||||
| Loss from operations | (67,433) | (30,501) | |||||||||
| Other income | |||||||||||
| Gain on equity investments | - | 147,322 | |||||||||
| Change in fair value | 8,137 | 35,737 | |||||||||
| Other income | 5,028 | 2,937 | |||||||||
| Total other income | 13,165 | 185,996 | |||||||||
| (Loss) income before income taxes | (54,268) | 155,495 | |||||||||
| Income tax expense | 456 | 26,359 | |||||||||
| Net (loss) income | $ | (54,724) | $ | 129,136 | |||||||
| Net (loss) income per share of common and limited common stockholders, basic | $ | (0.76) | $ | 1.81 | |||||||
| Weighted average shares used to compute net (loss) income per share of common and limited common stockholders, basic | 72,291,134 | 71,467,097 | |||||||||
| Net (loss) income per share of common and limited common stockholders, diluted | $ | (0.76) | $ | 1.75 | |||||||
| Weighted average shares used to compute net (loss) income per share of common and limited common stockholders, diluted | 72,291,134 | 73,818,611 |
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except for share and per share amounts)
| Assets | March 31, 2024 | December 31, 2023 | |||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 130,236 | $ | 155,315 | |||
| Restricted cash | 4,638 | 5,751 | |||||
| Marketable securities | 300,843 | 307,688 | |||||
| Accounts receivable, net of allowance for doubtful accounts of $130 and $220 | 19,839 | 65,992 | |||||
| Unbilled and other receivables, net for allowance for unbilled receivables of $130 and $100 | 25,781 | 23,124 | |||||
| Prepaid expenses | 12,349 | 9,926 | |||||
| Total current assets | 493,686 | 567,796 | |||||
| Property and equipment, net | 26,133 | 23,325 | |||||
| Equity investments | 91,387 | 83,251 | |||||
| Goodwill | 4,791 | 4,791 | |||||
| Right of use assets - operating leases | 118,578 | 117,778 | |||||
| Other assets | 3,187 | 6,014 | |||||
| Total assets | $ | 737,762 | $ | 802,955 | |||
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities | |||||||
| Accounts payable | 9,974 | $ | 16,815 | ||||
| Accrued payroll, taxes, and benefits | 19,549 | 31,763 | |||||
| Deferred revenue | 49,497 | 56,231 | |||||
| Lease liabilities - operating leases | 16,927 | 16,868 | |||||
| Other accrued liabilities | 10,560 | 11,996 | |||||
| Total current liabilities | 106,507 | 133,673 | |||||
| Deferred revenue, long-term | 8,016 | 9,043 | |||||
| Lease liabilities - operating leases, long-term | 108,988 | 111,014 | |||||
| Other liabilities, long-term | 545 | 667 | |||||
| Total liabilities | 224,056 | 254,397 | |||||
| Stockholders' equity | |||||||
| Preferred stock, $0.01 par value. Authorized 10,000,000 shares zero shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | - | - | |||||
| Common stock, $0.01 par value. Authorized 500,000,000 shares 63,472,866 and 62,977,316 shares issued and outstanding at March 31, 2024 and December 31, 2023 , respectively | 635 | 630 | |||||
| Limited common stock, $0.01 par value. Authorized 100,000,000 shares 9,164,193 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 92 | 92 | |||||
| Additional paid-in capital | 906,193 | 885,973 | |||||
| Accumulated deficit | (393,142) | (338,418) | |||||
| Accumulated other comprehensive (loss) income | (72) | 281 | |||||
| Total stockholders' equity | 513,706 | 548,558 | |||||
| Total liabilities and stockholders' equity | $ | 737,762 | $ | 802,955 |
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Three Months Ended March 31, | |||||||||
| 2024 | 2023 | ||||||||
| Cash flows from operating activities | |||||||||
| Net (loss) income | $ | (54,724) | $ | 129,136 | |||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities | |||||||||
| Gain on equity investments | - | (147,322) | |||||||
| Fair value adjustments | (8,137) | (35,737) | |||||||
| Depreciation and amortization | 1,436 | 1,760 | |||||||
| Stock-based compensation | 12,218 | 10,880 | |||||||
| Noncash investment accretion | (2,683) | (964) | |||||||
| Decrease (increase) in assets | |||||||||
| Accounts receivable, net | 46,153 | 9,262 | |||||||
| Unbilled and other receivables | (2,657) | (336) | |||||||
| Reduction in the carrying amount of right of use assets - operating leases | 2,152 | - | |||||||
| Prepaid expenses and other assets | (2,559) | (5,750) | |||||||
| (Decrease) increase in liabilities | |||||||||
| Accounts payable | (7,150) | 2,468 | |||||||
| Income taxes payable | - | 25,963 | |||||||
| Accrued payroll, taxes, and benefits | (12,214) | (11,730) | |||||||
| Deferred revenue | (7,761) | (11,603) | |||||||
| Lease liabilities - operating leases | (1,967) | (623) | |||||||
| Other accrued liabilities | (1,383) | 3,502 | |||||||
| Net cash used in operating activities | (39,276) | (31,094) | |||||||
| Cash flows from investing activities | |||||||||
| Purchases of property and equipment | (4,095) | (3,580) | |||||||
| Purchases of equity investments | - | (4,125) | |||||||
| Distribution from equity investment | - | 111,329 | |||||||
| Purchases of marketable securities | (37,126) | (58,823) | |||||||
| Proceeds from maturity of marketable securities | 46,300 | 127,401 | |||||||
| Net cash provided by investing activities | 5,079 | 172,202 | |||||||
| Cash flows from financing activities | |||||||||
| Issuances of common stock upon stock option exercises | 392 | 867 | |||||||
| Principal payments on finance leases | (14) | - | |||||||
| Issuance of common stock upon ATM offering, net | 7,627 | - | |||||||
| Net cash provided by financing activities | 8,005 | 867 | |||||||
| Net (decrease) increase in cash and cash equivalents and restricted cash | (26,192) | 141,975 | |||||||
| Cash and cash equivalents and restricted cash, beginning of period | 161,066 | 95,717 | |||||||
| Cash and cash equivalents and restricted cash, end of period | $ | 134,874 | $ | 237,692 | |||||
| Supplemental disclosure of cash flow and noncash information | |||||||||
| Cash paid for income taxes | $ | 180 | $ | 86 | |||||
| Supplemental disclosure of non-cash investing and financing activities | |||||||||
| Purchases of property and equipment in accounts payable | 501 | 218 | |||||||
| Purchases of property and equipment in accrued liabilities | 282 | 86 | |||||||
| Acquisition of right of use assets - operating leases, contingency resolution | 2,848 | 1,820 |
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| (in thousands, except per share data) | |||||||||||
| Net (loss) income (GAAP) | $ | (54,724) | $ | 129,136 | |||||||
| Income tax expense | 456 | 26,359 | |||||||||
| Gain on equity investment | - | (147,322) | |||||||||
| Change in fair value | (8,137) | (35,737) | |||||||||
| Non-GAAP net loss | $ | (62,405) | $ | (27,564) | |||||||
| Non-GAAP net loss per share of common and limited common stockholders, basic and diluted | $ | (0.86) | $ | (0.39) | |||||||
| Weighted average shares used to compute net loss per share of common and limited common stockholders, basic and diluted | 72,291,134 | 71,467,097 |