On May 1, 2024 Schrödinger, Inc. (Nasdaq: SDGR), whose physics-based computational platform is transforming the way therapeutics and materials are discovered, reported financial results for the first quarter of 2024 (Press release, Schrodinger, MAY 1, 2024, View Source [SID1234642526]).
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"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 Schrödinger. "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, Schrödinger 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, Schrödinger 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, Schrödinger 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.
Key Highlights
Platform
•In March, Schrödinger 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 Schrödinger’s existing LiveDesign offering, which is primarily focused on integrating tools and data for the design of small molecules.
•In March, Schrödinger 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 Schrödinger leveraged its computational platform at scale to discover SGR-1505. Schrödinger’s platform enabled vast exploration of chemical space, evaluating 8.2 billion compounds, allowing Schrödinger to synthesize only 78 of the most promising molecules in the lead series, and identify SGR-1505 in approximately 10 months.
•Schrödinger 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. Schrödinger 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, Schrödinger 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. Schrödinger 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.
•Schrödinger 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 Schrödinger announced that the rights to the SOS1 inhibitor discovered and developed as part of the collaboration with Bristol Myers Squibb have reverted to Schrödinger based on portfolio prioritization decisions at BMS. In 2023, Schrödinger completed and delivered a development candidate, and BMS had been conducting IND-enabling studies.
•Schrödinger 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
Schrödinger 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 Schrödinger’s website, View Source 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 Schrödinger’s website for approximately 90 days following the event.