On July 31, 2024 Schrödinger, Inc. (Nasdaq: SDGR), whose physics-based computational platform is transforming the way therapeutics and materials are discovered, reported financial results for the second quarter of 2024 (Press release, Schrodinger, JUL 31, 2024, View Source [SID1234645209]).
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"We are very pleased with our results for the second quarter. We delivered 21% software revenue growth, and we see many opportunities for customers to increase their scale of adoption of our technology. Our recently announced predictive toxicology initiative reflects our commitment to investing in the science underlying our platform to drive future growth," said Ramy Farid, Ph.D., chief executive officer of Schrödinger. "Recent clinical and corporate milestones at co-founded companies further validate our platform and underscore the strength of our business model. Our proprietary therapeutics pipeline also continues to progress, and we look forward to sharing the initial Phase 1 data from each of our three lead programs next year, starting with SGR-1505 in the first half of 2025."
Second Quarter 2024 Financial Results
•Total revenue for the second quarter was $47.3 million, compared to $35.2 million in the second quarter of 2023.
•Software revenue for the second quarter increased 21% to $35.4 million, compared to $29.4 million in the second quarter of 2023. The increase reflects increased contribution from new and existing customers purchasing hosted licenses as well as the renewal of several multi-year deals.
•Drug discovery revenue was $11.9 million for the second quarter, compared to $5.8 million in the second quarter of 2023. The increase was primarily due to the recognition of milestone revenue associated with the progression of ongoing collaboration programs.
•Software gross margin increased to 80% for the second quarter, compared to 77% in the second quarter of 2023, primarily due to increased revenue in the period.
•Operating expenses were $84.1 million for the second quarter, compared to $74.9 million for the second quarter of 2023. The increase was primarily due to higher R&D expenses.
•Other expense, which includes changes in fair value of equity investments and interest income, was $1.2 million for the second quarter, compared to other income of $45.0 million for the second quarter of 2023, reflecting the difference in mark to market value of the company’s equity investments.
•Net loss for the second quarter was $54.0 million, compared to net income of $4.3 million in the second quarter of 2023.
•At June 30, 2024, Schrödinger had cash, cash equivalents, restricted cash and marketable securities of approximately $381.5 million, compared to approximately $468.8 million at December 31, 2023.
Three Months Ended
June 30,
2024 2023 % Change
(in millions)
Total revenue $ 47.3 $ 35.2 35%
Software revenue 35.4 29.4 21%
Drug discovery revenue 11.9 5.8 104%
Software gross margin 80 % 77 %
Operating expenses $ 84.1 $ 74.9 12%
Other (expense) income $ (1.2) $ 45.0 —
Net (loss) income $ (54.0) $ 4.3 —
For the three and six months ended June 30, 2024, Schrödinger reported non-GAAP net losses of $48.1 million and $110.5 million, respectively, compared to non-GAAP net losses of $56.8 million and $84.4 million for the three and six months ended June 30, 2023. A reconciliation of non-GAAP net loss to GAAP net (loss) income can be found in "Non-GAAP Information" and financial tables below.
2024 Financial Outlook
Today Schrödinger updated its 2024 full-year guidance for software gross margin and operating expense growth and maintained its other financial guidance. The company’s financial expectations for the fiscal year ending December 31, 2024, are as follows:
•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 now expected to be slightly lower than 2023 and in the range of 2022 based on the effect of the research grant from the Bill & Melinda Gates Foundation.
•Operating expense growth in 2024 is now expected to range from 8% to 10%.
•Cash used for operating activities in 2024 is expected to be above cash used for operating activities in 2023.
For the third quarter of 2024, software revenue is expected to range from $32 million to $34 million.
Recent Highlights
Platform
•In July, Schrödinger launched an initiative to expand its computational platform to predict toxicity associated with binding to off-targets. The goal of this initiative is to develop a computational solution to improve the properties of drug development candidates and reduce the risk of development failure. The project will be funded initially by a $10 million grant from the Bill & Melinda Gates Foundation and will leverage NVIDIA’s AI technology.
•In June, Schrödinger and AstraZeneca scientists published a method yielding more accurate predictions of experimental free energies for optimizing protein-protein interactions, which is central to biologics design. The case studies demonstrate how FEP+ calculations can be applied to real-world protein therapeutic design projects, potentially increasing throughput and lowering discovery costs.
Proprietary Pipeline
•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 Europe. The company expects to report initial clinical data from this study in the first half of 2025.
•Schrödinger announced today that the FDA has granted SGR-2921, the company’s investigational CDC7 inhibitor, FDA Fast Track Designation for the treatment of relapsed/refractory acute myeloid
leukemia. The Phase 1 study of SGR-2921 in patients with acute myeloid leukemia or myelodysplastic syndrome continues to enroll patients in the U.S. and EU. The company expects to report initial clinical data from this study in the second half of 2025.
•Today, Schrödinger announced the initiation of dosing in a Phase 1 clinical study of SGR-3515, an investigational Wee1/Myt1 inhibitor in patients with advanced solid tumors. The dose-escalation study is designed to evaluate the safety, pharmacokinetics, pharmacodynamics, preliminary anti-tumor activity, and a recommended Phase 2 dose of SGR-3515. The company expects to report initial clinical data from this study in the second half of 2025.
Collaborators, Partners, and Co-Founded Companies
•In July, Morphic Holding, Inc., a company that Schrödinger co-founded, announced its planned acquisition by Lilly for $57 per share, or approximately $3.2 billion. Schrödinger currently owns 834,968 shares of Morphic and is entitled to low single-digit royalties on its clinical development programs, including MORF-057.
•Development programs at other companies co-founded by Schrödinger continued to progress. In May, Ajax Therapeutics, Inc. completed a Series C financing and received Investigational New Drug clearance for AJ1-11095, a type II JAK2 inhibitor. In June, Structure Therapeutics presented obesity and diabetes data from its Phase 1b/2a study of GSBR-1290, a GLP-1 receptor agonist, at the Annual Meeting of the American Diabetes Association.
Webcast and Conference Call Information
Schrödinger will host a conference call to discuss its second quarter 2024 financial results on Wednesday, July 31, 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.