Schrödinger (SDGR) Jefferies London Healthcare Conference 2024 summary

Technology platform and business model

• Combines physics-based methods and AI to predict chemical attributes, enabling accurate and efficient drug discovery.

• Three value streams: software sales, pharma collaborations, and proprietary drug pipeline.

• Software business generated $153M in 2023, with high retention and global customer base of ~1,800.

• 18 pharma collaborations to date, including a major new deal with Novartis.

• Proprietary pipeline includes eight+ programs, with three in phase I clinical trials.

Recent collaborations and financial impact

• Novartis collaboration includes $150M upfront, milestones up to $2.3B, and royalties on global sales.

• Software contract with Novartis expanded to industry-leading scale, boosting Q4 revenue.

• Upfront payment recognized over four years, with revenue ramping in 2025-2026.

• Gates Foundation funding supports multi-year predictive toxin initiative for off-target profiling.

• Q3 2023: $31.9M software revenue (+10%), drug discovery revenue down due to milestone timing.

Pipeline and clinical development

• Three clinical programs: MALT1 inhibitor (B-cell malignancies), CDC7 inhibitor (AML/MDS), WEE1/PKMYT1 inhibitor (solid tumors).

• MALT1 phase I data expected in first half of next year, focusing on monotherapy and combination potential.

• WEE1/PKMYT1 co-inhibitor aims to improve efficacy and safety in gynecological cancers, with data expected by end of next year.

• Proprietary programs leverage internal software for drug development, aiming for proof of concept and clinical advancement.