BusinessWire

Schrödinger Reports First Quarter 2020 Financial Results and Recent Business Updates

Total revenue of $26.2 million and strong growth of 26% year-over-year

Record software revenue of $23.8 million, up 28% year-over-year

Raised $209.6 million in net proceeds through initial public offering

Conference call today, Wednesday, May 13, 2020 at 8:30 a.m. ET

NEW YORK--(BUSINESS WIRE)--Schrödinger, Inc. (Nasdaq: SDGR), whose physics-based software platform enables discovery of high-quality, novel molecules for therapeutics and materials, today announced financial results for the first quarter ended March 31, 2020.


“The first quarter was marked by a significant milestone for Schrödinger with the completion of our successful IPO, which is a credit to our employees and our commitment to advancing the science underlying our platform,” said Schrödinger CEO Ramy Farid, Ph.D. “We are proud of what our team has accomplished, and we will continue to innovate as we work towards our mission of improving human health and quality of life by transforming the way therapeutics and materials are discovered.”

First Quarter Financial Results

Revenue was $26.2 million for the first quarter of 2020, a year-over-year increase of 26%.

Software revenue was $23.8 million for the quarter, representing a 28% increase from the first quarter of 2019. Drug discovery revenue was $2.4 million for the quarter, representing an 11% increase from the first quarter of 2019.

Gross profit reached $15.6 million in the first quarter versus $13.0 million in the first quarter of 2019. Software gross margin in the first quarter was 83%, unchanged from the first quarter of 2019.

Operating expenses for the first quarter of 2020 were $27.4 million, representing an increase of 47% from the first quarter of 2019.

Net loss, after adjusting for non-controlling interests, was $13.8 million, compared to $5.8 million in the same period in 2019.

Schrödinger ended the first quarter with cash, cash equivalents, restricted cash and marketable securities of $288.8 million.

“We are very pleased with our performance in the first quarter of 2020. Our revenue growth reflects the continuing trend of increased adoption of our physics-based solutions by pharmaceutical, biotechnology, and industrial companies,” said Schrödinger CFO Joel Lebowitz. “This quarter we also continued to invest heavily in research and development to advance our wholly-owned programs and the science underlying our platform.”

First Quarter & Recent Business Updates

Advancing the underlying computational platform. Schrödinger released new software capabilities to expand the domain of applicability of its technology and improve upon the accuracy of its methods. This includes a next-generation version of its protein refinement software package and advances in ADME/Tox property predictions.

Progressing internal drug discovery programs, including Wee1 kinase inhibitor and MALT1 inhibitor. Schrödinger expects to begin the nomination of development candidates in its wholly-owned pipeline for preclinical development by the end of 2020 and initiate IND-enabling studies by the first half of 2021. “Our integrated drug discovery teams have been able to continue advancing the programs by leveraging our computational platform, which allows for large-scale evaluation of molecules with significantly reduced reliance on wet lab experiments,” said Karen Akinsanya, Ph.D., Chief Biomedical Scientist and Head of Discovery R&D. “Further, despite the challenges of COVID-19, our global network of CROs has continued to support the progress of these programs with minimal delays.”

Expanding an existing collaboration with AstraZeneca to focus on refining a biologics modeling solution. In March, Schrödinger announced an expanded collaboration with AstraZeneca with the aim of accelerating the development of antibody and protein-based therapeutic candidates by enhancing Schrödinger’s free energy perturbation technology (FEP+) for the optimization of key properties of biologics, such as affinity and selectivity.

COVID-19 business impact. “While we did not see material impacts to our business during the first quarter, certain market risks are beginning to emerge that could affect our software growth and the timing of our drug discovery revenues in 2020. Some customers may experience budget pressures and potentially delay purchases, or our sales could be impacted by our inability to engage with customers in person. The crisis could also delay the progress of certain collaboration programs, particularly ones that are in clinical studies or preparing to enter clinical studies,” Mr. Lebowitz said. “We view these risks as temporary, and we believe we have ample resources to manage our business effectively during this time. We do not envision a long-term impact on our ability to execute on our strategy.”

Joining alliance to combat COVID-19. Schrödinger has joined a multi-company philanthropic effort to discover and develop novel small-molecule antiviral therapeutics to address COVID-19. The intent of the alliance, which to date also includes Takeda, Novartis, Gilead, and WuXi AppTec, is to make any discoveries from this alliance available to the public. There is no expectation that this effort will generate revenue for any of the companies involved in the alliance, including Schrödinger.

“We are proud to be involved in this alliance and hopeful the alliance will contribute meaningfully to addressing this global health crisis,” Dr. Farid said.

Webcast and Conference Call Information

Schrödinger will host a conference call to discuss its first quarter financial results on Wednesday, May 13, 2020 at 8:30 a.m. EDT. The conference call can be accessed live over the phone by dialing (833) 727-9520 (domestic) or +1 (830) 213-7697 (international) and refer to conference ID 2783269. The webcast can be accessed under "News & Events" in the investors section of Schrödinger’s website, https://ir.schrodinger.com/news-and-events/event-calendar. The archived webcast will be available on Schrödinger’s website following the event.

About Schrödinger

Schrödinger’s industry-leading computational platform to accelerate drug discovery and materials design is deployed by leading biopharmaceutical and industrial companies, academic institutions and government laboratories worldwide. Schrödinger is also applying its computational platform to a diverse and extensive pipeline of drug discovery programs in collaboration with pharmaceutical companies and has co-founded leading biotech companies. In addition, Schrödinger is using its platform to advance a pipeline of internal, wholly-owned drug discovery programs.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 including, but not limited to those regarding our expectations about the speed and capacity of our computational platform, our plans to continue to invest in research and our strategic plans to accelerate the growth of our software business and advance our collaborative and internal drug discovery programs, our expectations related to the use of our cash, cash equivalents, and marketable securities as well as our expectations related to the COVID-19 pandemic’s impact on our business. Statements including words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "project," "should," "target," "will," "would" and statements in the future tense are forward-looking statements. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Actual results may differ materially from those described in these forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and factors that are beyond our control, including the demand for our software solutions, our ability to further develop our computational platform, our reliance upon third-party providers of cloud-based infrastructure to host our software solutions, our reliance upon our third-party drug discovery collaborators, the ability to retain and hire key personnel and the direct and indirect impacts of the ongoing COVID-19 pandemic on our business and other risks detailed under the caption "Risk Factors" and elsewhere in our Securities and Exchange Commission filings and reports, including the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2020, as well as future filings and reports by us, including our Quarterly Report on Form 10-Q for the quarter ending March 31, 2020. Any forward-looking statements contained in this press release speak only as of the date hereof. Except as required by law, we undertake no duty or obligation to update any forward-looking statements contained in this press release as a result of new information, future events, changes in expectations or otherwise.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except for share and per share amounts)

 

 

 

 

 

 

 

 

Assets

 

March 31, 2020

 

 

December 31, 2019

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

144,749

 

 

$

25,986

Restricted cash

 

 

500

 

 

 

500

Marketable securities

 

 

143,505

 

 

 

59,844

Accounts receivable, net of allowance for doubtful accounts of $50 and $50

 

 

16,272

 

 

 

18,676

Unbilled and other receivables

 

 

1,908

 

 

 

7,062

Prepaid expenses

 

 

5,881

 

 

 

6,468

Total current assets

 

 

312,815

 

 

 

118,536

Property and equipment, net

 

 

6,488

 

 

 

6,268

Equity investments

 

 

15,156

 

 

 

15,366

Right of use assets

 

 

13,241

 

 

 

12,762

Other assets

 

 

2,172

 

 

 

2,338

Total assets

 

$

349,872

 

 

$

155,270

Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit)

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

6,675

 

 

$

3,524

Accrued payroll, taxes, and benefits

 

 

4,745

 

 

 

7,034

Deferred revenue

 

 

21,710

 

 

 

25,054

Lease liabilities

 

 

5,851

 

 

 

5,584

Other accrued liabilities

 

 

3,185

 

 

 

3,824

Total current liabilities

 

 

42,166

 

 

 

45,020

Deferred revenue, long-term

 

 

2,125

 

 

 

2,205

Lease liabilities, long-term

 

 

9,133

 

 

 

8,888

Other liabilities, long-term

 

 

900

 

 

 

900

Total liabilities

 

 

54,324

 

 

 

57,013

Commitments and contingencies (Note 4)

 

 

 

 

 

 

 

Convertible preferred stock:

 

 

 

 

 

 

 

Series E convertible preferred stock, $0.01 par value. Authorized zero and 77,150,132 shares; zero and 73,795,777 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

 

 

 

109,270

Series D convertible preferred stock, $0.01 par value. Authorized zero and 39,540,611 shares; zero and 39,540,611 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

 

 

 

22,000

Series C convertible preferred stock, $0.01 par value. Authorized zero and 47,242,235 shares; zero and 47,242,235 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

 

 

 

19,844

Series B convertible preferred stock, $0.01 par value. Authorized zero and 29,468,101 shares; zero and 29,468,101 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

 

 

 

9,840

Series A convertible preferred stock, $0.01 par value. Authorized zero and 134,704,785 shares; zero and 134,704,785 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

 

 

 

30,626

Total convertible preferred stock

 

 

 

 

 

191,580

Stockholders' equity (deficit):

 

 

 

 

 

 

 

Common stock, $0.01 par value. Authorized 500,000,000 and 425,000,000 shares; 50,122,938 and 6,121,821 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

501

 

 

 

61

Limited common stock, $0.01 par value. Authorized 100,000,000 and 146,199,885 shares; 13,164,193 and zero shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

132

 

 

 

Additional paid-in capital

 

 

414,248

 

 

 

11,655

Accumulated deficit

 

 

(118,922

)

 

 

(105,096

)

Accumulated other comprehensive (loss) income

 

 

(442

)

 

 

16

Total stockholders’ equity (deficit) of Schrödinger stockholders

 

 

295,517

 

 

 

(93,364

)

Noncontrolling interest

 

 

31

 

 

 

41

Total stockholders’ equity (deficit)

 

 

295,548

 

 

 

(93,323

)

Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)

 

$

349,872

 

 

$

155,270

 

 

Condensed Consolidated Statements of Operations (Unaudited)

 

(in thousands, except for share and per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

Software products and services

 

$

23,812

 

 

$

18,605

 

Drug discovery

 

 

2,362

 

 

 

2,136

 

Total revenues

 

 

26,174

 

 

 

20,741

 

Cost of revenues:

 

 

 

 

 

 

 

 

Software products and services

 

 

4,001

 

 

 

3,133

 

Drug discovery

 

 

6,548

 

 

 

4,604

 

Total cost of revenues

 

 

10,549

 

 

 

7,737

 

Gross profit

 

 

15,625

 

 

 

13,004

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

13,700

 

 

 

8,438

 

Sales and marketing

 

 

4,789

 

 

 

5,093

 

General and administrative

 

 

8,936

 

 

 

5,086

 

Total operating expenses

 

 

27,425

 

 

 

18,617

 

Loss from operations

 

 

(11,800

)

 

 

(5,613

)

Other (expense) income:

 

 

 

 

 

 

 

 

Change in fair value

 

 

(3,079

)

 

 

(627

)

Interest income

 

 

699

 

 

 

438

 

Total other expense

 

 

(2,380

)

 

 

(189

)

Loss before income taxes

 

 

(14,180

)

 

 

(5,802

)

Income tax expense

 

 

91

 

 

 

46

 

Net loss

 

 

(14,271

)

 

 

(5,848

)

Net loss attributable to noncontrolling interest

 

 

(445

)

 

 

(54

)

Net loss attributable to Schrödinger common and limited common stockholders

 

$

(13,826

)

 

$

(5,794

)

Net loss per share attributable to Schrödinger common and limited common stockholders, basic and diluted:

 

$

(0.34

)

 

$

(0.98

)

Weighted average shares used to compute net loss per share attributable to Schrödinger common and limited common stockholders, basic and diluted:

 

 

40,666,970

 

 

 

5,938,260

 

 

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(14,271

)

 

$

(5,848

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Noncash revenue from equity investments

 

 

(46

)

 

 

(46

)

Fair value adjustments

 

 

3,079

 

 

 

627

 

Depreciation

 

 

877

 

 

 

877

 

Stock-based compensation

 

 

1,775

 

 

 

520

 

Noncash research and development expenses

 

 

435

 

 

 

 

Noncash investment accretion

 

 

83

 

 

 

(1

)

Decrease (increase) in assets:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

2,404

 

 

 

1,065

 

Unbilled and other receivables

 

 

5,154

 

 

 

973

 

Reduction in the carrying amount of right of use assets

 

 

1,299

 

 

 

1,311

 

Prepaid expenses and other assets

 

 

(1,106

)

 

 

87

 

Increase (decrease) in liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

2,110

 

 

 

1,028

 

Accrued payroll, taxes, and benefits

 

 

(2,289

)

 

 

(685

)

Deferred revenue

 

 

(3,378

)

 

 

(2,714

)

Lease liabilities

 

 

(1,266

)

 

 

(1,469

)

Other accrued liabilities

 

 

(638

)

 

 

(348

)

Net cash used in operating activities

 

 

(5,778

)

 

 

(4,623

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(843

)

 

 

(1,065

)

Purchases of equity investments

 

 

(2,869

)

 

 

 

Purchases of marketable securities

 

 

(127,109

)

 

 

(21,337

)

Proceeds from sale and maturity of marketable securities

 

 

42,908

 

 

 

6,325

 

Net cash used in investing activities

 

 

(87,913

)

 

 

(16,077

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Issuances of common stock upon initial public offering, net

 

 

212,277

 

 

 

 

Issuances of Series E preferred stock, net

 

 

 

 

 

4,951

 

Issuances of common stock upon stock option exercise

 

 

177

 

 

 

115

 

Contribution by noncontrolling interest

 

 

 

 

 

100

 

Net cash provided by financing activities

 

 

212,454

 

 

 

5,166

 

Net increase (decrease) in cash and cash equivalents and restricted cash

 

 

118,763

 

 

 

(15,534

)

Cash and cash equivalents and restricted cash, beginning of period

 

 

26,486

 

 

 

77,716

 

Cash and cash equivalents and restricted cash, end of period

 

$

145,249

 

 

$

62,182

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow and noncash information

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

64

 

 

$

62

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

254

 

 

 

 

Acquisitions of right of use assets in exchange for lease obligations

 

 

1,778

 

 

 

149

 

Right of use assets recognized on adoption

 

 

 

 

 

16,475

 

Accrued offering costs

 

 

786

 

 

 

 

 


Contacts

Media Contact:
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Investor Contact:
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Stern IR, Inc.
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212-362-1200