Schrödinger (SDGR) Jefferies London Healthcare Conference 2024 summary

Technology platform and business model

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

• Generates value through a growing software business, pharma collaborations, and a proprietary drug pipeline.

• Software business had $153 million revenue in 2023, with high retention and global adoption among pharma companies.

• 18 pharma collaborations to date, including a recent multi-target deal with Novartis, expanding into new therapeutic areas.

• Proprietary portfolio includes eight-plus active programs, with three in phase I clinical trials.

Recent collaborations and financial impact

• Novartis collaboration includes a $150 million upfront payment, milestones, and royalties, with revenue recognized over four years.

• The deal expands Novartis' software usage to an industry-leading scale and introduces new therapeutic areas.

• Software revenue will see a Q4 bump due to the Novartis agreement, with ongoing contributions in future quarters.

• Total potential value from Novartis deal could reach $2.3 billion, contingent on milestones and royalties.

• Additional funding from the Gates Foundation supports a multi-year initiative to characterize off-target proteins for safer drug development.

Pipeline and clinical development

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

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

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

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

• Historical collaborations have led to marketed products and advanced clinical assets with partners like Agios and Nimbus.