Schrödinger (SDGR) 2 Aug 232023 Q2 Earnings call transcript

Thank you for standing by. Welcome to Schrödinger's Conference Call to review Second Quarter 2023 Financial Results. My name is Chris, and I will be your operator for today's call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator that being advised company's at call request. this be recorded is the Please

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

you, results. call which today's on company we Welcome second our update during, and an good review everyone. provide quarter Thank and the to afternoon, will XXXX financial

shordinger.com. across on press we summarizing our at progress issued our and available is a release the today, which Earlier results company, website financial

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

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

our Reform make related our pursuant today's Safe our the quarter for Harbor our management will forward-looking Litigation drug including, our clinical plans XXXX, as to are of our clinical our of use from as outlook XXXX, advance our to of limitation, and software trials, and the without growth statements Act During to cash our of the of the XXXX, readouts future well statements the initiation of properties ending made and full-year provisions XX, programs, the of call, potential Securities discovery September expenses. accelerate that Private and business proprietary compounds, the and resources collaborative timing

as views future, XX-Q result represent otherwise. by elsewhere the quarter made. considerations events based and Factors due have law may factors, the SEC, including information, These the XXXX. are June we of important update information the as that we on the us today, not described or in to current whether strategies we filings we about views the on a in Risk and reflect available our assumptions and of forward-looking as These except ended in new you currently may for caution our of future forward-looking with them statements prospects, our results our required XX, plans, which including the Form differ statements section only make a number and expectations, to Actual intentions, materially

Also measures. in in Accepted a accordance non-GAAP financial to included should considered substitute only non-GAAP and are in Generally refer superior GAAP today's our call for Accounting not financial available are at Principles not the most tables be measures to or reconciliations our addition certain measures. and prepared of press measures. Please with GAAP end to directly these to measures website which of non-GAAP the for on is comparable release, the These

like With that, the turn I'd over to Ramy. to call

you, thank us everyone, joining Thanks, for today. Jaren, and

incredibly The the across intelligence in computationally pivotal an and and this the drug R&D deliver promise by faster. computers drugs and particular continuum for to exciting time driven in patients that more discovery. can increase field artificial is undoubtedly This heightened is interest driven efficiency

with developed have discovery most higher learning powerful we for advanced integrated and Schrödinger, quality At to machine accelerate of methods them the both of methods and physics-based materials. artificial therapeutics molecules intelligence

convincingly publish validated thousands advances leading of now have and have stories success and is institutes extensively numerous we underlying our by used We worldwide. scientific Our platform research that our approach. companies

collaborators are the of clinic, independently two with currently XX includes have the molecules. molecules our which we wholly-owned discovered or in

materials platform advancing heavily challenge solve in computational in We design. to discovery drug continue invest to problems grand and our

We of have during made excellent first half year. progress the the

line contracts. multi-million than total customers software more of reported dollar in active revenue, For with about million, to respect are expectations. of dozen we global we revenue in quarter, second the $XX.X multi-year, With biopharma our which a was software discussions

customers are the at discovery our from programs outlook our of seeing We are their confident software scale. about our to number the given and enthusiasm discussions, the year for stage these platform the revenue deploy of we on them,

the for to confidence increase opportunities growth these year to in XX%. our us led has software to fact, XX% In guidance our revenue

anticipated describe This have revenue. that are adjustment milestones Geoff primarily reflects As previously shifted XXXX will expectations to discovery some reducing our drug for XXXX in we outlook shortly, XXXX.

on pipeline. proprietary As make you will we to from hear continue significant our Karen, progress

brings of X IND and clinical two contributions. of SGR-XXXX Medical look have are announced SGR-XXXX. FDA Phase as inhibitor pipeline today studies advancing, Dugan years development our CDCX forward we our responsible addition and for for our clearance of the will for ongoing, to for team and Chief leadership of pipeline we pharma proprietary XX regulatory Margaret Margaret be wholly-owned Officer. With programs, MALTX more and experience strategy Our our expanded her inhibitor than we our our with

in excited the very the who of year. year We've the appreciate of of the progress made hard are all greatly half employees the about achieving that the lie opportunities second half and I are first our considerable in dedication to and work our mission. we critical ahead

over Geoff. the I'll call to now turn

Good Thank Ramy. you, afternoon, everyone.

Schrödinger that had a our quarter solid in expectations. met QX

breadth and very the We capabilities expenses our active and our pipeline. Our the organization. our carefully and of to we in platform and the building of computational potential the and full proprietary capital pipeline of our managed invest advanced development significantly exploration are well-positioned continued of

with at center the and new a capitalize and partners to and on presented by of is revolution medicines the novel opportunities capabilities we're engaged our in revolution. discover with to largest entrepreneurs technology that company of Our computation the customers companies

reflect was our with markets coupled in other our and relatively trends stable revenue accounts the the line opportunities customer with largest Our results period segments. and our in renewal expectations limited in software among QX

efforts discovery a balance collaborations continue evolve to mainly between from our and drug Our projects collaboration portfolio. to proprietary

or we the to in the deployments to meaningfully year. revenue prospects guidance technology contribute revenue expect the second increased half of increased have We software for new on our scale large based

our year, We reflecting of the development have timing business discovery our activity. guidance the and new drug for expectations the of contribution revenue for new lowered for milestones

contributions We are any that from revenue most our programs in not guidance. of partnering advanced including any

if the industry, innovative and We successful. in new value with those collaborations companies largest continue near significant to advance contribute discussions the and collaborations of could about and long-term some most

results to the for quarter. financial Let me the turn

the revenue including XXXX, revenue was lower million, XXXX. for our were contracts in research below Gates X% $XX.X battery QX had QX which There was XXXX. to contributions quarter that project QX that several services Software contributed

We at QX. expect an Ventures to in renewed increased level Gates the be contract

Hosted contracts software implemented on-prem with hosted than grew quarter, and by quarter. the driven prior licenses continuing faster this new periods, in during providing revenue

deferred expected for result revenue the this million discovery programs. quarter compared revenue drug exceeding the in amount was resulted affected same $X.X achievement timing in The the timelines The we for $X.X by for are in for Drug achievement collaborations. quarter period of QX prior costs a of discovery million development XXXX. revenue in milestones estimates, was the recognized milestones those our which in our the of collaborations and in certain reduction to

million same in to period was $XX.X a lower mainly discovery in revenue due revenue to ago, million year Total $XX.X the drug the compared quarter.

from for and of Cost was the revenue in of quarter XXXX. was to revenue million same the similar cost the period $XX.X

margin to gross our compared prior payments software the driven was for expenses of was the is programs. royalty year partner drug by The activities CRO and quarter, Our consistent and and XX% increased similar with discovery expectations. higher our cost to prior

to for QX and QX decreased profit XXXX, million from XX% discovery XX% quarter. in our XXXX the declined Gross revenue, from on based million drug in $XX.X to margin lower gross $XX.X

ago million XXXX. million a Total were and million in $XX operating in $XX to the $XX expenses compared QX year same quarter

of scale by and QX of discovery increased X% $XX.X the from organization driven in our million in reported higher was by XX% we redeployment The development organization. $XX was and $XX XXXX, of support platform, QX increase the and R&D and increased building our headcount development capabilities million drug proprietary XXXX. programs, to than towards the was our million the

significantly also programs our broadened increased CRO expenses the and as year-over-year Technology spending the driven existing progress and of our increased discovery programs of addition advanced. portfolio. by new to our portfolio

expect into advanced our year stage increase R&D to We into most our and clinical increase earlier and the our progress through programs investment we our development portfolio molecules programs. in expenses as the

to intend pipeline and the of this discuss progress potential programs the at the also earlier We first outline our advanced most year. Schrödinger later and programs

by increase compared industry our and foresee $X offering the growing significant our number During to operating We global QX new expenses marketing mainly levels. compared our support from year leverage The to expense and to flat and was to and was to accounts. prior QX and increased sales support to this geographic of year. XX% the sales year-on-year was due quarter, expansion million our staffing commercialize into increased verticals marketing these

head QX, G&A lower was QX in due Our certain compared lower G&A in with was due lease savings increase to million and QX to X% QX. expenses was distribution in count of which expense offset one-time the is QX $XX services. associated high XXXX. compared to external costs an in increase Nimbus This to by

XXXX. G&A quarterly the stable expect relatively of to be balance through We

quarter, in was were in tax operations in XXXX, $XX.X changes adjustments QX income XXXX. QX from our items value estimated liabilities investments in Other loss $XX.X and our Overall, and interest million the during structure prior income. Morphic, to in from reflecting compared to million therapeutics QX periods, the equity million $XX.X of significant

tax XXXX. in of of $XX $X.X tax an estimate applied million. to investments $X.X full-year benefit million was QX. in we $XX.X including value of adjustment equity fair same million was the loss in compared a that was million and income in total income Change period was Other other the to Overall, interest as $XX.X reported and million

net of for $X.XX earnings As loss $XX.X of loss of QX basic million This the GAAP a net $X.X to diluted share to XXXX. year income period of per compared result same of reported these $X.XX a QX compared items, into translated a we in and ago. net a million in

$XX.X to for $XX.X our in year was activities $XX.X was last loss was net used million during used QX operations in $XX.X non-GAAP in the Our the compared million, million. and used Year-to-date, activities million. quarter cash quarter of cash operating cash in operating

we end March million $XXX of $XXX to XX, As at marketable XXXX, and the million, securities XXXX. reported cash June compared of of

milestone Our as we receivables quarter. significantly declined software receivable collected other and contracts, on payments, the during accounts

earlier, mentioned the year. are our revenue I we As guidance updating for

XX% on in XX% particularly growth the to large the for This are the in of raising QX. year, software second the to half of the and based number revenue increase We we XX% growth. our value to XX% year expect renewals from guidance is

is million. For QX, our million software to revenue guidance $XX $XX

$XX $XX and our guidance million. to lowering the activity, discovery timing from to development on we $XX business are milestones anticipated drug to of Based million $XX million million revenue

revenue scenarios are our with We discovery in now believe change low. of now most being in range, XXXX. While probability that the realized of be those we realized in there will the scenarios achieved than the anticipate is that associated higher new guidance milestones which is higher this

operating last this burn cash year. year than year expense We will continue than to expense growth be expect be our last and to this operating significantly also that year lower operating growth lower anticipate

cash our above We at of continue be position to expect year-end cash position at year. the our start to the

I'll the over call to now Karen. turn

and Thank you, everyone. good afternoon, Geoff,

In development line strategy a this half of progress our build during and with important assets, we to first year. made discovery pipeline of growing the have

nine molecules through In IND and CDCX addition now transitioned designed on using submission our include to collaborations, wholly-owned an inhibitor is platform our clinic and the stage our track clinical WEEX year. the program for that computational MALTX programs to next have

in and provides to The through platform create expect are us immunology concept the Our to also of proof to an investigational and XXXX. medicines molecules first-in-class increasing advance value. we in the additional opportunity therapeutic this of of or our speaks programs to best-in-class select candidate advancing potentially number first with area power development

Officer. medical to Dugan time Medical regulatory With team. clinical welcomed for development experience, this right growing will And the and stage Medical a including our a CMO, oversee Margaret more hire Global Margaret certified research a our and week, than as Margaret strategy Program with Hematologist is Chief clinical for and wholly-owned years development portfolio, to Board XX This was Novartis serving we Oncology. drug the as clinical of Oncologist programs. Head

welcome her to insight and to will look forward bring. We team to she are the very pleased the

Turning now wholly-owned programs. to our

build SGR-XXXX are inhibitor. a global strategy anti-tumor development for our MALTX data We to package pharmacokinetics, safety preliminary our pursuing activity pharmacodynamics, and

to year malignancies, B-cell our clinical in this the to U.S. to sites also study adding expect sites ongoing support to X objectives. in Europe open patients addition with In our we recruitment advanced in Phase

We plan in plan are pharmacology indications. designed malignancies study a conducting additional X our from leverage trials data other to these We ongoing generate the to on Phase data inform the of assessments SGR-XXXX. and B-cell volunteer to and potentially healthy profile

that the optimized healthy and on properties Emerging informs support and the We our pharmaceutical designed activity dosing, properties once from preliminary inhibitors. of of previously of points MALTX described study development. SGR-XXXX to to the of well-behaved data SGR-XXXX pharmacokinetics improve evidence pharmacodynamic further volunteer and daily assessment

progress the are events. with making and sharing we We meetings really results at to and additional are pleased look investor forward medical

clearance our for Today, we program. IND announced SGR-XXXX. to CDCX Moving

year. leukemia the Our multiple exhibits intend already establish The resensitize monotherapy the globally preclinical activity to dose Activities such evaluate is independent AML FLTX or and sites to safety SGR-XXXX Phase Once myeloid to X pharmacodynamics as package evaluate models patient-derived to strong study in recommended dose preclinical determined, of is anti-tumor models of demonstrates combination MDS and agents a combination AML approved study with designed underway this recommended care open acute genetic inhibitors. SGR-XXXX data drivers patients and that syndrome. we with SGR-XXXX of myelodysplastic in treatment. AML in clinical and standard are

Clinical WEEX shown a presented a anti-tumor our year, and in activity which several validate this models in strategy of year cancer forms from durable another including cancers. continues Earlier inhibitors. program earlier WEEX SGR-XXXX, advanced candidate to we uterine inhibition medical selected to therapeutic has preclinical WEEX high meeting ovarian as at used this unmet with WEEX more data need, study development

We Anderson over are including trial and off-target our prior MD in and activity. with identification resulted profile relationships which synthetically inhibitors X interactions types, has SGR-XXXX design. excited the our advantages offer risk drug-drug inform of about potential Furthermore, believe of and lower it the may collaboration tumor sensitive Phase help fatality of

We continuing the an through SGR-XXXX move enabling are FDA IND submission characterize as next we studies year. IND support to to to

oncology, undisclosed programs, at immunology, are a Beyond discovery. stages on programs various these of we number three neurology and working in of

may partner advance to or we that points. value key programs elect new initiate inflection to independently to continuing We're

by complex two is Zai We also goals program reasons collaboration strategic of the collaboration, discovery elected progress the announced that The technical years the advance their us to joint today has not stage next this Lab for development. now towards has Schrödinger. the to the made with for of wholly-owned team substantial target. In

expect In in the very we advancements continued are our summary, with and we across pleased have pipeline made progress this quarter XXXX.

scheduled Our take forward at associated more providing that the is abstract periods with meetings, data detailed time. our update now Pipeline submission of Day on availability, given embargo December to look we in place to medical and a timing pipeline and

to now back will turn Ramy. it I over

Karen. you, Thank

heard, this your take this of happy that you excellent we the progress As business we'd we've on ahead second be forward half made the and the year. opportunities the quarter, you updating lie across At time, to look to in questions.

Thank you. [Operator Instructions].

Yee Michael Jefferies. from is question first Our with

is Your open. line

to Hey some ask you questions. guys, thank the opportunity for

have two. We

that's multiple On are but multiple part? can I what heard change guidance the of I the so reemphasize lot revenue you just discovery of I timing side, software say around part, on and clarify think positive year you or I you would milestones. software not part, talking companies say seeing drug on deals, on heard big comments million $XX is the small. the a the

Phase And is quite on on including the X remind going you've patients Can not So safety were and on feel you progress for what you seeing it dosing much you the progress there? you. about Karen anything, healthiest. been Thank far? like just us sounded quite question making was then, have if how good exactly the there? so good so you're And my MALTX, on you

to This is to answer over add Ramy. Geoff first of anything, Mike. hand the I'll questions; Thanks, then if wants he Karen. couple I'll ask

excuse that increase of and is regard and quality -- large dollar confidence So of again quite number and have to companies. number with real with in we the guidance a multi-year the With software with me, the contracts with correct. regard, multi-million the that's result of the

how that's was to we're required stage of us previous it relative increase guidance. about that's in like going confidence given to are those discussions the the and years, these Given the what

just coming validation platform and even the think is this our the and coming from We Morphic and success overwhelming in the of from structure BMS programs. own

different to that must contributing that's clear and that of by quality the we number quite think use I to discussions companies of a the think -- the be desire platform. the

With Geoff. revenue, it respect I'll drug discovery to to hand over the

number change in guide. There to Mike. factors a contributing drug are Hey, of discovery the Yes. the

out We cautious control. programs those when as taken are the imagine, to have our difficult collaborate it's a We've about estimate to with sometimes get doing try approach to and with this programs progress you are is And milestones to that information update of those focus, will what I can making. occur.

the -- factor is us in here. our milestone the collaborations we revenue quarters a of component are that that's have project timelines where contributing of to second of ongoing the And changing teams subsequent The some adjust in program cases, the we the if cost expect out working. can results those for

the be, business for we're take about close deals. understand, revenue that new then can for that contribution you you there's development particularly a of rules. and of even contribution forecast might revenue When probably And lastly, the deal we activity, closing recognition was to course, uncertainty as course that trying and active from timing those

in prudent change -- we thought it's point. So to at out guidance this put the was that

this And pleased hi progress Mike, with we're the making then program. on we are on SGR-XXXX,

We to volunteer to have that healthy we we have are from an study. open, an suggesting beginning that it's us And data and study, profile. attractive see

We have healthy gathered trial. obviously that some in PK/PD volunteer and

and with so compound, good far is the patients globally so well-behaved the evidence here of the U.S. on have on in PK that that both -- progress we a activity pharmacodynamic and making, the sites well-behaved data we're SGR-XXXX. we're And pleased so suggesting and with far

is Citi. David question with next Lebowitz The from

line open Your is

discovery Or prior to our view on to expectations adjust? more With do appropriate the on incremental the very guidance and there of were my us to and for next it move just you and as year we Thank way a year? what change be next partnership shift to for would top it nuanced question. drug place the you businesses, respect take it much for in taking would

want I only think future, -- model, we now but would the to we a of expect say with to taken that of don't don't year's out this I I component that in [Technical growing Clearly, year. we're the that's anticipate pretty relatively that's that we milestone milestones guidance clear that Difficulty]. that, Dave, but a next Yes. most have small the occur

pace from on of or catch-up away? really enrollment expect year pace European this the MALTX to it And trial. it. Has in to you Phase this objectives need the your on shifted point, Do sites Board for you to the the does kind Got expectations? achieving X where to come earlier

more yes with because help objective. believe interest we enrollment to indeed, actually we opening and that's in trial. and the are seeing Yes. with sites now, spend going We're lot investigators Hi, globally of there's a us our time have

think do help in we with that we will additional so And Europe goals that sites enrollment have.

when see the from on thoughts might data Any DLBCL to the we patients? patients,

guiding not specific right We're anything now.

I any data ready share patient study. the XXXX we're think from to

The next Evan Seigerman question is BMO Markets. with Capital from

is line Your open.

these my Zai picture why taking One of of there collaboration? to Hi yourself? thank there. it hear just on or AI updated Thank in the if data out but Lab as get know to would kind keep to pipeline have of they up, for any questions. development the their not you. so interest And your for color with a is partnership. question just the I working you on Was bigger that guys, pulled priorities? Any all much the refocusing narrative comes a the love something on of me, you to company, but also you you software that ahead drug are how question that's are common thoughts days, focused company

Zai the along first So collaboration.

of the elected was understand well, elect discovery Obviously the team the program. -- Zai making progress, advance the strategic to to reasons. collaboration was to We that's reasons but discontinue So strategic the for next did great Zai going the development. stage not

hear Oh, I'm Well, the I'm other. I sorry sorry. didn't --?

AI? question repeat Evan you the Could about

Yes.

Yes, for sure.

what in when business manage the a on and working AI, folks drug do software that the So taking ahead narrative getting platform? in comes was -- all question of you Schrödinger and interested your themselves of platform, it but kind step development how the of your controlling you're with investors are back how of you hype kind terms to also the not you in how are so

Yes.

a rigorous and we the and own reputation for and always think we gain cannot the which that completely do publish I is hype of we've just have answer accurate there's it about I reviewed really a talking what all it doing to the we what is which just validating the in platform that, journals, the and software doing avoiding make, And can that technology been their we years, way. last and and advances and people using clear with publications. XX think

we We're here, science people of we talk long avoid just of and you I rigorous And number words that see and is that alluding I this as space from a that to which other are the using a differentiate way. about think the as in definition companies think making in hype, don't ourselves; think to able

Vikram from Stanley. Morgan is question Purohit next with The

Your is line open.

Hi, sure good so from this make Two afternoon. to Thanks for our taking just our question, clarification One correctly. we side. questions. understood

million you to So then here also discovery this in towards how of your ED to is $XX sorry revenue numbers towards for drug is moving you partnership is this and lead do set healthy an patients, partnerships? for programs? program on study about there or of move in any for this think or proprietary in seek And or volunteer any be future economics are development through phase opportunities might as contemplated -- moving initial other for from MALTX as you And these thinking purely good secondly million, when you're partnerships? data potential year Thanks. $XX there guidance time and a

we that to question that revenue half small the now the the The if even answer that of the amount in the is me second let small close of reason potential drug very a it DD is year could because on we of report transaction. guidance. guidance. forecast of that There discovery the So part is likely

are and of about is, imminent, you said, do not be suggesting but at to That -- everybody discussions want think in industry, assets. both putting were this we are strategy about with it's course, we where situation. very viewed amount Karen, in are closing huge because deal. We anything a of to on So times engaged It's sort on discussions us we any as collaborations chime just all being in there those prudent don't about at riding active isn't as in the ongoing. proprietary MALTX? should be additional

certainly. Yes,

So more volunteer said point you PK observed are that with strategy a the call, study, data or health forward. about on PD that us package pharmaceutical the we've profile of will the healthy out, the including far tell as approaching we volunteers having of the and moving of so we happy on compound, really the properties and as

believe we As We you're a oncology well directions potentially. well the as up this sets has oncology. opportunities us potential volunteer healthy for with outside take trial are of pursuing to And number mechanism indications of well. different aware, in asset this

programs our to, and about So number with and a programs just Geoff of can see alluded specifically opportunities. SGR-XXXX asked you obviously respect partnering your with early question, of we a number of to about -- the as we second with mature our part partners;

standard think year saw BTK another monotherapy at all that other of and EHA MALTX opportunities this do care all, with or there are earlier We of believe even combinations for think was emerging sets that well, for molecule. that and First inhibitors but we I MALTX. is published ICML we up that

malignancies interesting. think to approved assets continue or very either those And partner for as companies potential And we B-cell emerging is those on have and have market such conversations. who we the the to with

to drugs partner we continue there's So around combinations that opportunities. of combination there's those going pursue pursue order studies be to in I for those types and the and think those to obviously to combinations, access potential have to to

with Matt The Craig-Hallum. next from is question Hewitt

open. is line Your

Good on afternoon. dozen pharmaceutical you remarks, your multi-national global dollar first prepared multi-year, for you taking I contracts. questions. discussions multi-million your them a with clarification in a for mentioned companies possibly Maybe think over a Thank are the software, the Ramy,

existing represent -- those new expansions the customers? clarification, are would Just customers those those with would or new represent

in I'd It's customers question. course, good extent a existing already are scaling increasing through said. the those existing of much with all have very, in discussions in that the and much Geoff even That's very pretty customers usage the cases familiar actually few with working their the as more. impact -- they're we a Yes. very of already to is even seeing steps just industry everybody with an technology This who are actually of technology up of gone already say and

that's encouraging, -- very it's course, So of

And then Absolutely. go ahead -- --

Some up of we for with seeing contemplating benefit and relying on biotech stepping to utilization the not and these are the higher specifically about encouraging up established large what's companies -- are quite with also these and we seeing discovery the scale their in real levels. companies are who that software that is pharma drug efforts, us discussions they're

discovery it's companies the very helpful of So I drug technology biotech just don't want are finding as well. to leave the impression that accelerating it's global pharma who companies very,

point. great Yes. That's Yes.

into it That’s a -- is we've the helpful. guess from which my next really number I And of question, ties already companies -- that heard

else. Geoff, you have anything do

me? you hear Can

sure what's maybe he's no, -- not No, on mute. We're

okay? Can you guys hear me

Don't no, yes, Oh, no, we're no. -- no. --

that again? Could say you Just -- a can second.

hear me guys you Can okay?

we end. have problem might a technical hear, had we on our can Yes,

Sorry, saying you were if --

that is, now larger occurring, companies biotech, was are No, I'm that's not where is already pharma, larger the small okay. a we've follow-up originally small season funding that impacting guess so given I environment, weak that's heard from number the here what And far earning of this you're slow kind what their you rolling just is that only actually of not I guess hearing pharma, seeing but from expanded even expansion. biotech contracting an phases. companies which

do those driving there differentiating? excitement new component that's and Is learning this what the think to guess is you really question is contracts? the the Or else? something AI Thank lot So you. machine I is, of and a leading

the much think see we than it's They've Yes. they're seeing that's starting increased positive we -- of -- what is. machine of combination We because it's we impact. It's doesn't many about actually making they're of success No, times on. They're with impacting impact using -- talked the to now no, probability. technology. compounds. using better that real projects think it working the It the that's they're as don't that. that fewer methods learning seeing They're physics-based what

discovery, they're And in much, improvement phenomena. platform a not of not sort associate efficiency somebody that, so going hype. short-lived is the artificial it's and might seeing that. it AI that's of It's real drug with a be because than course the that real, would just something in be if more much This motivating to driver

from Goparaju The Markets. with Capital Berenberg question Gaurav is next

open. is line Your

thanks for guys, questions. Hey taking my

MALTX hands, the First you one, three assuming advancing stage while to development new bandwidth do discovery internal launching CDCX to addition and your clinic, in in still the programs? you resources have and is clinical proprietary for and WEEX programs think support reached

Thanks Yes. for question. the

have SGR-XXXX So you in an, ongoing yes, now Phase X. we trials know, as

We last IND been for clinic that we have to over bring CDCX our the to months. molecule the to six preparing have and accepted months nine

regard track are for on we So planning to programs. those with

And WEEX going as transition. you know is to

year. transition to plan. going expect We Everything's to it next as according

clinic. So that will last we the transition have years, this molecules fact the few into been over obviously planning for our the

programs, but the manage just these clinical So be as Schrödinger this Margaret existing programs. we've just on heard our capability building will at not you with also of closely stage working execution brought today, who the up on Dugan teams to

a And of last you're we these those. as replace we years, of years, programs motion a and then is concerned, have discovery aware couple three that far as number significant in for

preparing in good future clinic. So the right now and our bandwidth we that programs and in to are is we to the think the bring discovery

well So we feel prepared.

a also just related then And same topic. quick Thanks. on follow-up Awesome. the

tech have as Thanks. do the efforts? looking development of increase will you allocation see activities programs Just expect where both to bandwidth as support do back you to into number stand any you capital internal or platform to pull you clinical your clinic, the internal investment the feel priorities So escalate.

Yes. Good question, Gaurav.

The significant in making proprietary we're medicines. right. of the advanced a And -- the You're We're most in we're a medicines. an investment investment discovery of significant platform proprietary advancing of course, in now. investment those making making

free. all it's So

to investment stage, scale we don't the this our plans technology. certainly At back have any in

to as of is think well-positioned we as we we are customers I with the reason are part continuing are because innovate. our that

methods, physics-based features and quarterly enterprise of software learning, every our the that and adding platform. a our us quarter invest update more think competitors. to continuing I our machine but from in are utility more literally informatics our We We're new differentiates enhances not just with just our

off to backing So certainly new backing our that investment about opportunities in that in discovering We're And the not investment. to ones enhance, we're we're have. not off excited we medicines. the in advance

we're growth's in That to progress likely is investment, future proprietary the but progressing. the the being the I obviously medicines programs think growth described going where in investment, maintain I of of in think our to the to two capital the is said, rather first that our areas area allocation going than be the the proprietary I in be

appreciate for it color, Nice. Got guys. Geoff. it. I Thanks the

Thanks.

with question is Michael Bank Ryskin next America. from The of

Your line is open.

Great. got I've Thanks guys. a question, taking the couple. for

up left pick to the you want going about off you exactly investment I internal forward, First, just of of where talked focus relative areas pipeline. and Geoff on sort

a that the new focusing update there are if Is opportunity today appetite there -- expand around just For or is an collaborations the language there things, given continue drug revenues? to of on more in that you're through just do to longer these slower, interest mean, of the just fruition internal is side your discovery more to priority an offset of an bit because you and as some and taking I come sign moving collaborations for pipeline? appetite ones current to of not to to some terms to sort is collaboration to or the your little of

respect Mike, we to signaled where on quarters, the we're collaborations, transition the lucky Just a sheet that with programs. such couple going And in that between this skill balance and we there capital allocating have are in more the of collaborations good a we've to put opportunity right. the an last programs. proprietary are is And you our we have with the game own

that Zai us collaborations. in upon changes That But might news, are that you a walking little not bit the to we committed from occur partners. see that being the with collaboration leaves and said, making for completely from those decision the We're we internal example as have. away dependent more can

continue is think of think enabling for to targets to technology, a go collaborations. we remain alluded opportunities going are after we We're our at Those that of additional very them. course, to some the think additional small to have about do selective be that that effective that do to to technology very where improve. I've we of And have having. We we be number very going to collaborations. terms. are those take our there and attractive development we're that we're the we economic terms with validation bandwidth So but going of active, course, there for opportunities business on discussions believe of

so comment the just Okay. not I I'm guide customers this negotiations the sounds to you're to be of conversations got revenues on want color software a That's having. the really correctly. you're those like and software that back thinking for I chasing appreciate all sake question it. And to I going your the sure just the is, make then second number and my and go and through chasing helpful. it to

so if they and normally, if them of like guide, just re-up based it customers, contracts, a in step a of revenues the if all your to multi-year are later or lot calls on going quarter be already they a of $XX most, in re-up So looks the XQ huge the are you're it fiscal flat third the mid-point them implies software not all of guide because just and $XX year these lot quarter, and guiding existing year if like this all on of re-up would sort guide. sequential hit something that essentially for to to the fourth roughly then million up it's million

the year, doing renewing this that in it anything a XXXX. it going quarter, up year, may for fourth you're an scale correctly? because scale contract thinking about and -- does the it's pocket in next all be and that there's renewed they that I multi-year air not XXXX, Am if XQ then up in happens customers if next that you're then XQ sense to if have create So year, in

that say in and correctly, retention. quarter from renewed of prior in would be about Mike. are disclosed I high the And we've that past the periods anyway. contracts very our that it we've are going those thinking you fourth software disclosed Look, also degree first, there to are some multi-year

those renew. to expect we contracts So

opportunities indicated, with having that that's than year. our technology we've deployment as so positive customers levels we're quarter to higher contributing we fourth we're contracts about to output Now, for that we that to scale discussions even pre-existing have the of very the of the and have up the the the those in the

we come an is maybe next to certainly not -- not certainly next trying the year. for us next and giving we about. but next it's into that as we're I technology year, that creates I'm pocket guidance that on air of that thinking to more of opportunities see year. And that the whether scale year, year volatility about lost up this Now further to opportunities get from as give our question next the don't year, the we'll want see well that guidance something for to do but comes deployment

have more customers. we Yes, XX than

Yes.

Yes, of I get totally I'm exaggerating yes, course. yes. that but…

exactly but to mean surprised right. no, And be didn't that's No, Yes. I no.

right. absolutely you're No,

Appreciate right. Thanks, it. All Okay. guys.

Thanks.

with Piper The Sandler. next is from question Joseph Catanzaro

line Your is open.

I that of opportunity volunteer with whether side MALTX here. Thanks. first you're there's you if we've in healthy on for should rather give some for candidate you're the I you where the me best-in-class things. avoiding inhibitors. second for say the the of a on concept to a sense other first-in-class? whether of where there's with on things and a for said think know experience, question opportunity immunology enough seen target the we of everybody healthy clinical And MALTX things one Hey of XXXX, to dosing that you think your think proof wondering but volunteers could was as side then clinical or you've safety long liabilities be thanks questions of Maybe long couple for you how my two taking that's

Okay.

we're So all, not course, the good. have dosing, SGR-XXXX, year. very we molecule, to expect trial, of about a more do expansive further say far, with far. sharing to first that dosed on There view we for seen we data profile especially the single need on from sharing But so and far first-in-human dosing the on and and properties today work of of so in obviously looking safety collect. molecule, this pharmaceutical But look, profile information happy more is so to we've there's so point we that and are is the multiple can that that be we've later but on we that

year. know, are always design constitutes strong clinic information strong been I validation are There that we hope immunology human that the sharing in record, have space. genetic present really look believe from this we believe we concerned, one the some will on other is our track to fantastic and to say yet as of this that including alluded programs to the I in there's is and program to program, the immunology an towards that target evidence. has opportunity not and you the as target, this about we'll of end far As that molecules

this year. this So sharing about we'll on later more be

Instructions]. [Operator

next The from question Sachs. is Chris Shibutani Goldman with

Your line is open.

very much. Thanks Yes.

trials, more the development like but primarily about that way question obviously that's second of discovery what side. driving are think feel better that's that there? equipping their smarter think the the drug biopharma the What you sense expect that the maybe pretty spend? machine of I do bit, the side, are then are a able would And trying the be and appetite a an when it as pricing? would with walk of intelligence what side. to of And being large have the software there's software your revenue such Can we decision? cetera, budgetary kind to define this that anything about much are that are development yourself to see, think with do selection", growth, understand you ways better, discovery. smarter we inculcated being penetration there's your the you're have, what process, expertise development financing. you on in you to cheaper, kind of customers clinical that of better, in going guided to and artificial factors in know Just business, kind seem everybody that? little is factors but you're think influence decision the into assess also the your the throughout going I will thinking to factors -- think that But moving us QX development print, intelligence do the side. learning something the going this pipeline, is with come say, In patient to actually and about constraints, the lot we're the variable these so we help dynamic artificial this path drive "somehow constrained particularly with have this companies, we And going in terms the in I what of Or clinical you approach things path of a I'm and to terms in curious discovery when industry, that are always taking to larger period, is whether should of centers of and meaningful walk smaller continue we an you enable kind us sort revenues, about et be industry. maybe Thanks. invoke reflects on managing that variable on is they're the companies, by the clinical to with par else depth to as provocatively to the think

Thanks, question the and I'll over to Karen first for the it to Chris. second hand I'll take one.

variable, So is increases these you of think bit maybe about this the larger really to asking we've talked continued sort what companies. We spend barriers will, what might be a from in little and before. if you're

require needs to shift this fair there you internal have utilize And of expertise drug there's to remember thing whole one that real a in expertise, it to technology. really so discovery type be amount is -- a of And process. the

technology technology. to that's put how how this to how seeing really chemists many nodes a you're happening how courses we program, on to these of online kind in the extraordinary number provide. just seeing very deploy because scale. dedicate and to takes But sophisticated chemists, academic in as computational example, taking but in many in for a medicinal something making, you of And example, those that you playing that companies, things role For one huge the or of learning to many how not computer example, for you'll by we're obviously this people We're that's many of increase companies compounds train about We're in it time. taking encouraged, we're committed at that. can the courses in use in, time hear the And discussions. a But how helping of you're many computers big that chemists, program? this nature institutions, really

well. price mentioned else as about something You

that explain me Let price. quickly about the really increasing

So utilization and limited they're of that our the number running. we mean still extent technology, and the they're are the to what that is calculations customers fully the by now -- or not actually utilizing

the spend that increases calculations of that of the way that more simultaneously. -- the running calculations, licensing more getting instances the up number these and is So more by goes we're they're way simply

our even on Karen, the fully times, higher program. And of you And we've we number per magnitude the way out than so said and comes not we're know required talk still to the licenses to do that increase AI getting a away and to are by far more orders the many from number development just still unnecessary about the as that from, far, we that's utilizing and it's customers. use because licenses it's stuff? software want the software scale largest they're where so license, price of really maxing sense support increase

Yes.

So think run for sort a of has a of a looking company phenotype more as programs to that efficiently. ways I

the the do eyes open efficiency validation to technology I to in the be difference, view that our in clear make opportunities on with a this certainly that highly taking methodologies. same a that's trials clinical is which obviously are to discovery with done. We regulated for we're of want are wide speed required space And really clinic. improve and But

patient we very to typical as we opportunities as et for a are wide eyes but progress, on cetera. clinical open having well selection, types, first approach, want impact keep Our trial programs our following tumor validated do advance, an that understanding are

eye technology very a keeping drug validation, development. that, are important focused but spaces enabled think which really is on all we in we for So and close on discovery

or progress? And still choices well go you'd be now, willing that in work with are a is is the validated that state-of-the-art to there

think will emerging. I to at of progress. that's and years, also that patient going look I'd decades, to believe responses to benefit That's seeing in and using industry nice say, really populations to opportunity that something a actually computation. because I it's broad, not is be segment And tumor still We're obviously but within identify patients some able be work of from. opportunities we'll understanding to imaging the that others more

the insightful comments. you. Thank Appreciate

Thanks, Chris.

further questions no we'll time conclude have We today's and at this call.

may You disconnect. now