Schrödinger (SDGR) 1 May 242024 Q1 Earnings call transcript

Thank you for standing by. Welcome to Schrodinger's conference call to review first quarter and 2024 financial results. My name is Chloe and I'll be your operator for today's call. Please be advised that this call is being recorded at the company's request.

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

company first at you, Welcome today, financial provide and on we the everyone. good we available an which is progress review today's on Thank release afternoon, results which issued to a and summarizing results. XXXX quarter financial call schrodinger.com. press during update across website and Earlier company, our our our will the

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

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

During limitation, the today's will safe statements outlook for related that of quarter Securities statements to of looking provisions Act are Private to full the our forward call, management second year XXXX. harbor Litigation the pursuant without and and including, made Reform make XXXX,

forward-looking generally also the us including on March considerations information of clinical the of considered based we financial of the resources due certain today, the discovery business Our not compounds, result our and These represent measures. described the whether only we information, which quarter our from materially and initiation Please growth intentions, XX, our advance non-GAAP financial XX-Q to of expenses. These law, are non-GAAP tables including for statements measures otherwise. Also Actual included call of them current plans, accepted and website except refer the the potential we that, a caution our and to available are the directly not and of drug press which reflect in prospects, of timing our expectations, plans for in future non-GAAP comparable proprietary I'd release, about accounting our as for results are differ on use filings the measures. With today's not views as in most to factors, SEC, as collaborative forward-looking cash that, be programs, of our ended or update properties in principles assumptions currently the should in required our with and Factors a available to trials, reconciliations the by turn new at we our to our measures clinical over to future, or events software prepared and strategies of our the you readouts in the may the GAAP our superior is only and on may and future addition Ramy. like accordance accelerate to and end measures. of made. make to statements number call and These substitute Form section the have GAAP to XXXX. important with Risk views a these

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

We pipeline. start are revenue continuing pleased the to in our year, and of our growth with proprietary advance with expectations delivering the line

our are full million, are was WeeX/MytX you for our clinical revenue guidance. first clinical I As SGR-XXXX, clearance hear today, and year totaling reiterating progressing million, with our studies. we programs in IND inhibitor. Total X quarter from will first Karen, we And software $XX.X $XX.X for announced Phase revenue the

emerging in biopharma increasing our with We global active multiple are of platform. and discussions companies adoption about

renewals we important the BMS the capitalize drug decisions. wave part the portfolio scale and well we assessing developed and driven based are computationally and the predict reverted on Collaborations to opportunities high on partners. are and interest continue While as part we prioritization molecular up positioned collaboration in year, of with programs. Today, see discovery business, us remainder to SOSX computation too and magnitude new with believe to with early the research it teams growing incorporating into routinely is to reported of of scale we have an at the discovered of rights from discovery customers to are of that collaborators existing our inhibitor in

a validating balance has sheet of our companies Our our successful also strengthening very equity cash our strategy, we co-founded. and overall been platform part with and distributions have venture activity from both

to pioneering over commercial We molecular scientific integrating have the been industry. position and computational years and to machine and frontiers for physics push leadership discovery continue XX in new our learning extend

an the or bold cause serious human of important a to such structurally predict off-targets toxicity for studies. most human known There effects initial of is vision with every an side that risk on have enabling We requirement protein emerging clinical models drug programs. genome to focus animal derail before

are developing requirements. actively solutions very meet these computational We to

key recent advances enzymes characterizing cytochrome as examples efforts. of such structure proteins are of PXXX and the hERG Our these

access in expand also data to is of March, teams extended enterprise interface. LiveDesign support have our to previously and platform. And that version informatics Biologics. Biologics. launched LiveDesign pleased only an molecules, We we to tools solution capabilities modeling new computational a centralize supports supported are informatics our in LiveDesign small and that allows discovery a to single drug we cloud-based

We would our our call this leadership multiple over are drive the to and our clear well data to the programs extend business software industry readouts. I adoption now positioned We Geoff. to clinical in see hand opportunities advance scientific advance all year. to to aspects of towards

software year guidance. see our for in opportunities revenue should good of quarter, QX from afternoon, of QX confidence solid the meeting year, reduced and these balance and were we revenue upside into everyone. a and renewals Showing benefit software the Thank QX with QX out some of expectations a our the but bumped Ramy, in handful you, the our growth of the full underpinning

year in U.S. the But and been expectations that China environment commercial business there. we based in renewals with below challenging has offset on the Our this many to have Europe. opportunities larger our impact

and companies of to continue and dollar emerging our beyond. XXXX size capabilities and paths multiple secure in multimillion contract We increases see software global to the enhance in of biopharmaceutical

portfolio we are in our entering our XXXX. proprietary and patients later clinic, for of have very insight clinical third also data with excited to proprietary are program have first We this or advanced in the year our a programs to now

were program QX XX% form and comments return as this about largely transition of number an across the from our revenue XXXX. in of and to BMS revenue XX% $XX.X last was effects more with year. our to total $X.X recur prior growth compared base to revenue constant an new proprietary $XX.X partnership compared quarter to that development revenue external anticipated QX and faster the discovery a increase last The offset professional to for million our last portfolio Finally, was over consistent million, that agreements QX maintenance service from Hosted year benefited further with projects and to hosted completed software opportunities. In renewals us significant did were in in software was grew was of native QX evaluate opportunity multiyear in licenses. Drug gradual combination line quarter QX, years. Maintenance hosted and hosted the than expectations compared consider revenue a of licenses contribution the software in or gives same customer million for not year. to X% SOSX relatively services of our and transitioned year. our software

of large payment the of with project The collaboration first associated included a progression XXXX milestone collaboration with a quarter BMS.

of The partner given revenue XXXX. revenue in to to new the million in and of discovery expect be We and activity. Total QX timing and continue value quarter-to-quarter development QX of about about variable difference uncertainty milestones due to business $XX.X $XX.X drug from discovery million timing to to drug due challenging to forecast, the decisions was revenue. compared was our

$X million was was QX to of XXXX. Our to compared million in technology costs. revenue cost mainly The due software increase $X.X higher

compared margin gross in higher XXXX, due technology expense. software for to QX mainly to the also Our was XX% XX% quarter

was due programs. Our compared in cost revenue $XX programs QX in staff drug XXXX. the from to to allocation discovery in of to cost CRO $X.X decrease elaboration to of shift million drug collaboration was and also discovery proprietary the of lower expenses The million

quarter BMS. margin gross drug milestone XX% Overall, when a from negative was XX% to to driven decline was a our The drug QX discovery single, by revenue. margin profit compared QX was XXXX in large XXXX. Our from payment in discovery relatively the compared benefited lower

in $XX and collaboration investments operating of and higher associated CRO be total compared in to was increases by same therapeutic expenses. Overall was $XX.X for mainly due to to to costs. proprietary continue between million R&D higher was compared higher our $XX was increase The our R&D approximately period our and and prior to expense their platform marketing to increased and balanced for Most headcount the headcount year. quarter and well the contributions XXXX. Sales as expense the allocation R&D. XX% of by million Turning the and therapeutic our R&D expenses. changing partly million programs by driven as

mainly slightly QX period associated accounting to year to compared in by which increase XXXX XXXX G&A the underlying higher royalty compared to due operating expenses QX in distribution million by convention. to $XX.X was mainly expense FTE X%, due of million decreased members was G&A R&D. was higher The flows with this in same Net XXXX, effect, in million $XX the expenses The QX a G&A in due $XX expenses. Total through increased decrease period and were XXXX. approximately the payments to ago. same

$XXX is in same our the position period reported fair compared fair on successful XXXX. compared changes million QX $X.X in to other was XXXX, QX $XX changed in value the ago. cash the million method our to of to associated same million was income and the of year in in XXXX in QX of Morphic equity Gain value [indiscernible] million. the was investments quarter, million in of period Total compared $X in quarter. the mainly of Structure in evaluation $X.X QX driven in ownership XXXX $XXX loss by million expense QX consisting ownership due QX in operating change driven compared XXXX, was million For of XXXX. the by income million XXXX, QX million in method change QX 'XX was $X other in distribution. during Change $XX.X with income equity balance, the was consisted XXXX The to or value Therapeutics investments the to $XX.X In our member $XX equity in a Structured IPO. Other

QX in of million compared loss to Our taxes million before profit $XX.X XXXX. pretax a $XXX was

in expense tax QX was $XX of tax year. last million in to expense compared million QX $X.X Our XXXX

to of a profit of $X.XX $X.XX XXXX. Our and method our per per fair XXXX. non-GAAP QX QX a loss value net XXXX $X.XX was was share changes XXXX share QX in to compared million equity QX gains On loss basis, in excluding diluted investments, a loss in for in share $X.XX compared in

million marketable and in in million million cash $XX end as of ATM. $XX million $XX activities realized quarter used our the QX from of securities cash in we cash at during cash to declined and to by $XXX sale the XXXX. marketable QX, operating by was balance of equity securities $XXX XXXX, end in operating compared QX million our Our was had our and million in offset XXXX in compared $X.X the cash the QX from total At

financial Our previously year provided guidance unchanged. is the for

for for about are contract outlook software and opportunities many in significant setups at the size We business our our customers. confident see of multiple

drug trajectory are the by year cash and with believe in front our are proprietary the consistent and our we expenses the encouraged medicines. discovery this our And our potential We of opportunities business by use and original interest expectations. of of

the our software range million. expect revenue to we XXXX, of in $XX $XX million be QX to For

on I'll therapeutic over now call comment Karen our the to to turn R&D.

and good Geoff, you, afternoon, everyone. Thank

continues programs. our therapeutics pipeline and proprietary advance Our to team collaborative

now SGR-XXXX we inhibitor, clearance the With X IND have WeeX/MytX stage of programs. proprietary clinical our

advancing continued cofounded several are our programs to we with companies have validation pipeline, of platform. proprietary trials partnered In in providing addition our collaborative at clinical or

we full of we development to part our BMS. collaboration that As Ramy SOSX with reported, right the have as candidate received discovered

transfer BMS acquisition candidate upon you and development conducting ongoing. know, inhibitor package The IND BMS SOSX acquired information completed oncology clinical earlier milestone SOSX studies. been clinical stage completing As of Schrödinger is year. We have enabling BMS when to received from the of company a its a a stage it this

as and the next therapeutic further within this well the our proprietary data assessment for steps opportunity portfolio on based of package landscape. the updated plans in overall determine as and context program from our of evolving the will the We investment BMS

project, we expect As of an and collaborations continue value continue the are be component strategy. important ahead, science, partnerships our with portfolio evaluate we our to to to we new and look where scope consistent

Turning to MALT-X our SGR-XXXX, inhibitor.

dose Phase Our escalation XX the is B-cell in study and with well. refractory I progressing lymphomas ongoing. patients We've relapsed study globally is sites to expanded

study the are the clinical of reminder, activity measures secondary to PK/PD primary the dose, endpoints. a As determine tolerability are and evaluate objectives the of safety recommended

track or on to in data 'XX in late We XXXX. have clinical are

expect also advancing also from that is patients announced with with I, this in Phase of SGR-XXXX dose inhibitor we leukemia report myelodysplastic in WeeX/MytX completed, Today, we SGR-XXXX, or FDA and to data clearance study syndrome. The XXXX. study steps CDCX acute trial Our our dose a in escalation IND late for escalation initial we or well 'XX our received myeloid multiple progressing inhibitor.

is a evaluate safety expect I to recommended Phase begin in PK/PD open patients solid for preclinical demonstrated Activities the Our sustained in tumors. tumor patient favorable maintaining and data we intermittent sites designed an study are dosing to study exhibited dose SGR-XXXX package third enrolment and quarter. clinical SGR-XXXX safety establish and The while growth underway the profile the of with schedule. to inhibition a using

with advanced including replication ovarian chains breast predicted and include The study or with cancer sensitive population WeeX/MytX solid cancer, inhibition, cancer, solid to elevated stress. will WeeX be patients tumors uterine to

In programs in of addition, several of EGFR and are advancing we areas high including discovery NLRPX. CXXXS, PRMTX-MTA interest, inhibitors

We across other observed identified programs. profile potent that design selective may and inhibitors become challenges have product

the on XXXX. In identifying or for in track candidates about across small the advancing administration multiple early-stage we development collaborative our portfolio, are with an intravenous progress to antibodies switch support we are inhibitors we pleased areas. In anticipate molecule summary, are We previously proprietary in progress submission required IND addressed that disease target by modality programs and made we additional and poised advancing all are collaborative we we programs. Behind next select our XXXX have clinical to With generate excited making year, proprietary this to X generation advancing readouts by independently. stage have clinical our XXXX value them ventures and Phase programs, towards or we new inflection of and advancing to from molecules partnerships, points SGR-XXXX enter pipeline. I through the of and clinic to studies be with across a opportunities are excited

our our now in first-in-class turn months. I'll We progress updating are call look about to and opportunities to forward excited Ramy. portfolio coming our within and you on the best-in-class the back

you, Thank Karen.

As open start the are and further our year. to progress updates continuing make questions. excellent work We mission. this off goals throughout we are this the employees year. for time, and you of an are instrumental commitment against the to heard, the providing for At year We appreciate to to our our forward hard look we'll lines

with [Operator our Jefferies. question first We'll take Michael Yee Instructions] from

Thank question software you the question, you for thank for update. the and Question on and on the pipeline.

some think, I is how to that? really probably trends, that comment little a that just about biggest bit business, core the Geoff, how pushed On fourth made a from appreciating was ongoing maybe QX. your talk And business quarter. to relates QX you about still quarter Can

dynamic. that So just comment on of some

B-cell molecule for be lymphomas? And deem new on for Karen, then to on going maybe would MALT-X the -- about can for a very talk pipeline, small efficacy you promising what positive the you study and and

the couple meeting expectations the between of lighter. relatively think a renew knew nonrenewals think any for a and contracts, shift that. in our bit on small difference contracts QX. in then they no end underlying we increase contracts don't the will just renew -- or Mike, any trends that We reflects the quarter, little logistics at These of business. being number into the didn't that really the there's like and don't of it mentioned, were and there's I QX anything reasons, that very I then

and anything that continue environment the outlook. very conviction outlook the in just have full to for see affected the don't high year We about external

our of that's as geography dropped impact large the off our the somewhat, tend be the to but what's to highlighted, and there, given big will it's big not driver concentrated is relatively is on online the effects a that small. business in going -- smallest business going a quarter. in fourth have us renewals those for that I surprise have and I in The China renewals China not did highlight

of Mike, mechanism. think the given this broader to you're dose And was that aware, validated our escalation as see than Phase respect We your data been published I BTK, last in activity around XX% combination we're a the will clinically responses and years, ORR showing range -- I we that's -- mechanism, that giving you monotherapy as responses XX% few they MALTX the question mechanism, with with in obviously complete over in trial, also combination the or in trials. prior know on

activity, preclinically, but and would to activities progression. either combination BTK terms lot exciting, in be what that can of of or think with inhibitors also get showed preclinically, inhibitors, monotherapy we with So we you BCLX a obviously,

mechanism similar coming see MALTX And hope to so emerging data the the years. we from in

our from David And question take next Citi. Lebowitz we'll with

on to to but know should there you guess, of was hold? got mean, I progressing? -- that should on more. even expect, effort take this, to some are shift how the in more Could a we an smoothing efforts try I nature extent comment somewhat we result would see on And Michael, How to be that I out those trends little to the move revenues, up bit smoothed that contracts

Thanks very on-prem. seeing the much. Indeed, are for host over That's for transition we to some David. question,

first You in XX% revenue. fourth with hosted breakup year-over-year it of percentage about recent can total year, of of Q, the XX% it grew more software was revenue. the by was much and XX% the in this quarter in the in only quarter of Whereas see most in It last quarter. the software a

renewals down. going have quarters go these multiyear is large with we when the do contract to So hosted proportion

customers hosted switch think year. trend number long-term of will over we have we increase, hosted from that that significant that gradually the last the to proportion on-prem business is of However, a did

perhaps history before and software contracts with but of a business is that will complex immediately over those be hosted said, a in we we single years, will change But for nearly has different, continue but been time. of go over certain have do than XX do rapid, the that, every sort and contract over to all we've won't [indiscernible] our increase it around year my of longer or number It be and we company. increase. way years, so that honest can't to we think selling proportion think as that Now from transition, contracts

to move Scott next we'll with And KeyBanc. Schoenhaus

end recovery biotech peers on have Could potentially what some commentary. us we've mixed it's or on the some you're you give noted update space an had the seeing that markets, in

to wanted are your guidance what's you from us end I terms then hear guys So the and baked what into biotech seeing of remind markets. in

of for that last provided call we've up don't nonrenewals increase in build of provide companies booking $XXX,XXX ACV the quarterly year, nonrenewals. that we the in number of could in a or that there's We're companies trend. Sure, sort the highlight we ACV in in were it you tier an between $XXX,XXX tier. an in of and of the stabilization KPI in number did that that summers, increase nonrenewing data and seeing the small not continued numbers We that the a but seen increase see the any

see or they XXXX to would into about It normally expected those back longer there being at inquiries, result forward. our venture companies they increase realized get results, our than to that of in think That matrix seeing I will that we're And XXXX contracts. are seeing software. coming time are any coming offsetting who can a discussions, those forward we we new will the say have are in software but said, in but do engaging when an we creative over opportunities access ways hearing asking in we're perhaps

than those So rather definitely that we it I anything some would we're harvest characterize green shoots opportunities. can still seeing of but as

to with move Purohit Stanley. Vikram we next Morgan And

on the X, X pipeline and the full X we year So have then software guidance. on

late be and are pipeline, currently from how data define dataset guidance might of year-over-year So 'XX CDCX. do at scope on what how you the the behind the through visibility XQ could could software you then now some on that MALTX the point And what of XX% with initial X% be? And more available the think us come for your to thinking specifically or size there when about bookings the are now, growth? thinking scenarios about -- year, you of which guidance on 'XX and

So I can start.

to going think I commit data specific to we're to too So be it's that early sharing.

PK dose you trial a this As is PD. respect and know, escalation safety, with to

Our goal Phase a as to secondary clinical dose and determine II end activity a point. is recommended

gathering running. safety are we more the that we're trials However, and PK, in data PD

well. so And that's going ongoing and it's

course you 'XX, the that give any 'XX to of we've be at color early over might position it's share will update, what we so a an too on shared in but time. to that And period look like this through

either and year the on in give chip would the of full the about second your me bookings. answer us question circumstances you and an Let that guide lead to

First you, of to is outcomes. the range all, guidance most so remind guide likely of the to philosophy just to

we'll incorporate range range, think have don't know we range have with more low guide to We low likely. we think year. of ultimately, is the narrow information, We the as that do share And do it. get to it's the defined progress that outcome, will very on we either we probability information but right that And until course, want now. through or to either to side provided side but you extreme, what we the we high we but most hope get we

either In extremes, does drivers terms depend circumstances substantial it of to the the degree of the were nature a on those of to that renewals.

lower than want already then And they as more to sort range. to customers renew say are we example, us and if come basis, the drive on-prem if have that renew ask would the and range. contract we end who have annual the guidance forward For towards on of multiyear an customers revenue be it who would a of high we basis, to come

those driving that provide financing in and guidance is financed The the range. other of that might factor we some that towards would a conditions discussed the contribute some the biotech about and the purchase, to that of the if conversations see also trigger that we're relatively to of us considering end early-stage in fruition of if terms environment, providing we companies, revenue software companies those successfully upper our counter we

So X that's I variables those hope that contemplating. are mainly we're the helpful.

And our question with from Evan take we'll BMO. next Seigerman

is XXXX. for And MacKay on congrats on Conor This approval for the Evan. IND

number how about in a bit course, with to management balancing talk soon thinking partnerships it preserving either about also, can to collaborations then your With assets about economics? you're your or potential be how broader the And P&L the in assets, just of of internal as you clinic clinic, relates are thinking for and you business? data maturity and

collaborations that's Maybe -- for how...

Yes.

So I can that to either deeper of each that disclosed -- a just where the has mechanisms saying that's additive lead population drugs we responses. believe serves start by we've to mechanisms existing going

don't mechanisms, companies, important opportunity have you we combine And BTK view different to basically we products BCLX, development or for recognize As way well an in assets assets to programs our are aware, collaborations inhibitors. these as indications. various other for with example, those the

collaboration. very So to open we're

the important those gathering in obviously, But all of programs moment. [indiscernible] we're be at on to continue these discussions. We

contemplate just to very as space generally. the we that lot variety do see wide for me of advantage, that let business environment is companies the [indiscernible]. dynamic for our dynamic of discovery I different is drug a of computational Conor, on and deals environment, And in we And to opportunities add a deal think, collaborations. a types It

previously, said that. aren't I we guiding to Now

[indiscernible]. these value, environment but timing, forecast dynamic have those probability We and is discussions, that

those gross we've about opportunities communicating guided rate next while asking of slowing drivers, for haven't growth assuming slight that in different seeing think you're question been the we P&L us of improvements to are our to expenses first statistically see in expense your number margin. we we of we of have year, expenses a about a I that that trajectory management, hope terms In that

For for think it's G&A advancing additional relative our example, seeing the likely to going increase more small about continue a well. And be leverage substantially because increasing, some totality has to for required that on while marketing has operating is as in operating now capital sales the clinical been R&D, there R&D, the it on relatively that but will than which and significantly our and programs, it's contribution. past still increase you're seeing we is platform, leverage some to line, to slowly you're

don't our clear. forward. we a it's starting going I in response hope think that's R&D drive So large increase to

move We'll to Steven next TD Mah with Cowen.

X I've you've us gotten then companies Biologics. in biotechs? you are making the March? are since And or and for on of traction specifically, on Could LiveDesign adoption what got launch to customers any they pharma types color inquiries, give emerging some big

Yes.

So as launched and with number many a . it -- closely itself, we LiveDesign the they want to understand launches, companies very our of including what just worked would we with in requirements product. But of the

there incredibly So actually a demand But launch, sort since from so good the customers on been There about the new of given launch we've and like is what release excited interest. so solution we the number this presentations is really positive. so but or anything can't is it, all significant it's we're well right revenue that of a very far the the so is about launch now, comment this, far. going has feedback in not before the and clearly of pent-up for something the

that that is similar? a inhibitor it asset you the company asset. similar mechanism? Is acquired to similar Is fair appreciate to it Okay. back option last you guys know you got inhibitor from And why a Great. BMS guys X on question then that take they the enough. developed? That's that acquired same how I've they the the didn't that reverted But color BMS. SOSX I with on the do

basis benchmark will Yes. similar. that, a position a I view, I a say of obviously, PPI that think our of the BMS, from this the they're we're we BMS to and done. phase I program that very the the with on brought both program mechanism mean is discovery we have ran that happy in point compound very inhibitor mechanistically, profile to compound of in the during say were that and I that work think the is we

excited we remain about the So molecule.

that advanced is acquisition ours. that molecule they than acquired through obviously, their more think I

industry actually an work of to these we compare. so of compounds ahead as have see to And how all obviously us

I how they in think early, other too So each yes, against clinic. up to the stack saying obviously, it's

long Okay. will what it? internal Got And how evaluation proceed evaluation in and it. with to do think take the you the

It's IND-enabling to determine. BMS of hard data a getting process little We from back studies been early have are conducting. obviously in very the from they the

again, exactly, we've understand I say to so and profile the but obviously, And about seen can't far. we're I excited opportunity hurry what the think, a in So here. we're

long. it won't hopefully, take So too

Bank America. We'll move of next with to Michael Ryskin

Great.

on just exactly financials you've I curious, past, to Just think associated that of other like had a process there some sent point, the I'm fee you of details with back, In when those there anything up First, the just want expect some might follow last I or sort the is discontinuation. any in be quarter? reverting quarter? programs recognized rights? second milestone BMS first Or around in the do it that it. the

we answer or -- short isn't a because any accelerate. the additional fee returned has that with their us have had on is any no, There do this transitioned milestone to payable milestone we transition. we program that and revenue Mike, portfolio, associated to being with previously nor from -- prior

So during a fact QX. it wasn't contributing

about since follow-up, talked my of science for of then And the you think, part couple it's really the a quarters material answer. Easy been, portfolio. Okay. I guys

that. on I'd I thought ask So

Just see any if and just but get give apprise sort updates ton it's always going there. in of a there? I of of Anything anything us us there's doesn't to the would new background to interesting know on light, -- --

Yes. Sure.

that a And progress that's really think we're really really, is progress on we was was talked thing So -- the actually about went on so the stage the really excited This with is X-year side project it have this with that But basic rewards, the really a about we're -- on well so hard in we're science we're project, pleased the before, will materials what science. that's most of was all with on Gates that at and problem the basis excited that have collaboration is science. significant about. renewed. it And we as really the was we problem. initial that hard really -- problems, the as the success [indiscernible]

if I big we're in successful to project, impact. the the it a think said, really We have potential as has

as scale the break down. and different pleased far really continues to as with to of progress. add bringing we that -- business not before, down the we the There new disclosing continues It we're customers, we not revenue into up core hope -- As the We're the be really don't question. revenue said for the the continue business, but customers. that we're answers other I to components.

Hewitt We'll take Capital. next from with question our Matt Craig-Hallum

leveling and up, little Geoffrey, about back some bit. kind of kind off R&D of a the your expense first Maybe of goes to this comments

want R&D a of to which call As this one Is do it, the to of looking a a year, more kind II? and Or and X.X there. Phase out into and we of couple obviously we over those kicking up, you've is got us part where go you've look then Just maybe years? flattening the year, of out at trials to off. of will next, trying on next the expense it figure you got WeeX, kind Phase year of over wrapping that And help be function of that I next? do move programs out kind

due with in a platform. R&D understand I flattening the the fact, we the Yes, our investment to in And R&D think to trajectory. is that which we are that at Okay. different respect is phenomenon, question about our scale

opportunity into and a of indicated, environment. and R&D of We've portion think previously it's discoveries, of substantial I industry translate such in new investment our we dynamic the As research that is capabilities a lot still terms then platform. in this an exciting that we new space can a

we driving get but not we're don't to that So needs larger. that a think lot back

of we up new think the manage investment our programs year much same to is of at a we're We to making we're we portion, so wave that would scale sort but comment keep and programs programs the next after year. ability the not where drug that component the that. the if wave organization, wave after or second development the can't And new in have XX of discovery so come again, we R&D that, of up, a that's terms with wave XX a -- discover and there. scaling The next molecules general of next

need increase. see lot of don't So pieces, we both to a of those

investment overall the of Now of you that relatively but an pace up, the correctly our R&D be there rest total on clinical that piece pretty the spend been in go to small is R&D. identified the to We from a expect portion that increase likely has programs do clinical here. but is stable

you clear? see that's a that large where that. don't get Is just from so [indiscernible] We And here. up

on of funding how from the very last your customers of likely that's weighed obviously, in I back challenging helpful. commented guess, then side, so No, particular, And kind software you perspective, not the that renewing. super some or separately, fall, smaller -- a on Yes. hearing on

as quarters? -- saying, stimulus back it you'll maybe has there environment As will timing get the how well. didn't on ready recently, as they turn thinking that renew where funding that you about we're -- new Is around it as you that are quickly pretty announced improves, China improving we more customers environment be and reengage." like does those to start package previously, is Or quickly starting see "Okay, as started coming that start take a or now how to should to the

Yes.

for to be companies we to our will efforts. us expect So technology use a are to think And those what is new seeing to drug foundation happen asking as clear, we the come discovery I inquiries.

build like this that particular we in companies. sorts on those funding we're your those or company to after based all class, technology, this Now and are that availability companies of asking of drug going there's target our

them, Some may And the that all be are but seeing interest of of future. be well them it's uptick outlook. some them there, working capitalized, we're in are capitalized with into have too of bake to capitalized, and our that some an revenue early to of we

strategy. merge discovery shut my drug expectation China is some they based the in of down based companies have they've Or other been cases, or the they companies discontinued, their contribution not previously other that the Now in in focusing Those progress. U.S. clinical acquire they that on with In will cases, themselves. In whether shifted back, come companies. cases, other altogether they and their just they're are

and customers So we're software become drug back again. they discovery that come not assuming

we'll to move next Piper Sandler. with Catanzaro Joe

on a XXXX. one quick Maybe

seen And selecting stress. important. be patients space the with that patient really in mentioned, we've selection could elevated think you replication I Karen, strategy as

to about curious replication about hear stress. your elevated thoughts a you on be elaborate would bit I could going are and if you detecting and So sort thinking of how defining

know years particular shown Yes. strong efficacy to tumors WeeX there Great beyond already in uterine ovarian though have have for mean inhibitors believe been we all, that let's solid carcinoma, really mentioned Anderson We breast question. in be gynecological a several cancer have our genotypes, as We to those other we're know, you MD that sensitive us and there. of say just serous chemotypes -- great responses that I thought understand trials. collaboration help information really opportunities first to that with cancer, leveraging do solid are as forward and for we going with clinical tumors. tumor go that we sites,

to for collaboration think have opportunity As leverage to think you as But year. how going escalation look we're sensitive. select to the to to that be that we as the signals, set as in are most dose we from this the go information well efficacy about patients up know, we

be providing the updates So in on that future. we'll

Shibutani Sachs. to [Operator Chris Goldman Instructions] move with next We'll

A question pipeline. about well the question the the about as business as

trend X% the ACV gross that, the presumably closer level. to to sort business, the Can XX% range that of in of favorably number you're moving how or value customers X provided? And there. that the some to tend progressing are an margins provide to annual the tends you of you you On confidence year is insight into mid-XXs the what another, direction the then influence whether given on and that about contract and basis, terms within talk the annual XX% your versus having

I'll had and the Karen, someone to was the presence. a So Day, become secondly, emerged of the there the seeing, of trendy. what market gross at the little that targets to end -- the there? And customers this mention tends guys also PRMTX explain somewhat particular, mix bit NLRPX identified last buzz think about. Street of year you [indiscernible] help me how could couple and potential has I In that the has a if at year, impact of I to then you R&D when you're

you about an with XXXX, that something that of would leverage advancing the on a carry, plan to speak? race And to what's guys in So so cost contemplate those, like? would is domain you that to the something partnership towards there over but be forward horse purely on talk IND into take or you shifting still possibly the of is a get as to able cross way some

let last Karen to I'll I'll Chris. couple or other answer the X Thanks, questions, of answer the X.

'XX higher multiyear are in of from which that than quarter is and break driven ACV. revenue was 'XX, contribution deal. will recognizing communicated beginning last the X-year from and ACV revenue trends the by growth growth ACV this highlighted growth that margin, be year, year last years, out ACV the We by the deals that fourth So quarterly, the we significantly definitely growth. future significant year a and effectively with 'XX, growth And we disclosed large exceeded that but revenue ACV don't we've a for

ACV with we're is ultimate to significantly this growth above than was qualitatively, of an true year sort revenue was year. quarter, expecting but likely is it growth that we higher growth, what full for in be the revenue it ACV don't first significantly And and So the have the consistent growth. number,

Now trends, do in number KPIs. terms [indiscernible] of in customer of the we our

other to to [indiscernible] the get KPI contribute this about the ability confidence outlook year, specific ACV last numbers about the and margin. their highlighted the you to have expecting. And positively the trajectory we those we is that this and to remain that think revenue I implication, that don't to -- We achieving positive we're mixed year but by gross I I at guidance question. and us going of sorry, the we share, trend growth then don't numbers year. look numbers guide pretty to that. the could have

software by margin, So had for quarter, the years like one revenue most renewal significant software, very didn't tends a gross influenced whereas the providing overall, contribution gross gross we margin gross If where is lot example, access revenue the being actual have recently multiyear that a bring the a of we includes to deals. X deals, and that margin hosted of lift to recognized as the where multiyear that a high we down. had, or to have we're X in tends step-up that out, margin revenue somewhat we and that large

convinced in our we very are we There only in that that -- an the first time. margin over I to to and dialing I very substantial in, -- will this so was it think margin, bit flagged small little is time. similar the there's amounts technology by confident be gross positively spend actually be guidance that Now up will we in to that our but up year. overall, increase of quarter. trend continue we're think But going increase reason trend that gross I over think do gross that last a wouldn't think will year, trend the margin it to tick

Karen? So,

Sure. Yes.

companies. with year PRMTX-MTA of the been a So and over the you're lot from has NLRPX last interesting right, pretty other disclosures

both about excited are We programs.

a is diseases. as in there NLRPX Parkinson's I first of as think have potential they peripheral inflammatory a are disease what for indications in well that number common potential, obviously, of number

opportunity solid there's also number but tumors, a brain of in PRMTX, tumors. For

So both in optimization both these our stage. working to the optimization They're in of have programs portfolio. on We're theories. we're hard the excited multiple

the of penetration, I brain for these both which is work described that important opportunity programs. feature is of a leverage to one is think and we to our platform Day clearly optimize that Pipeline at key And the underway. features

picking I [indiscernible] sort to -- too of early think it's the talk rate. about in

we're with would your loan think, And ] we're other income was think or that with collaboration we pleased then I these the seeing. whether question, I develop progress [ others.

about remain working conduct collaboration to clinical early are in discussions, think those we we think right but to indications also sort and opportunities us, would of open are we I which to open trials. now

So again, with make posted you we we'll keep as that. progress

today's this questions further call. That am I at no concludes time. showing

now disconnect. may You