Schrödinger Q1 2024 Financial Results

Schrödinger, Inc., a leader in physics-based computational platforms for drug and material discovery, reported its financial results for the first quarter of 2024. The company announced total revenue of $36.6 million, a notable decrease from the $64.8 million recorded in the same quarter of the previous year. The decline was attributed primarily to a significant collaboration milestone payment received in early 2023.

Software revenue showed modest growth, rising 3.7% to $33.4 million from $32.2 million in the first quarter of 2023. This increase was driven by higher contributions from hosted licenses, despite being partially offset by multi-year agreements signed in the previous year.

Drug discovery revenue experienced a sharp drop, falling to $3.2 million from $32.6 million. The previous year's first quarter included a large collaboration milestone payment, which greatly boosted that period's revenue. The software gross margin was slightly lower at 76%, down from 78% due to increased technology expenses.

Operating expenses rose to $86.3 million, up from $76.2 million, primarily due to higher research and development (R&D) costs. The company reported other income of $13.2 million, a significant decrease from $186.0 million in the first quarter of 2023. The previous year's figure included a $147.3 million gain from Nimbus's TYK2 inhibitor sale to Takeda.

As a result of these financial shifts, Schrödinger posted a net loss of $54.7 million, compared to a net income of $129.1 million in the first quarter of 2023. The company also reported a non-GAAP net loss of $62.4 million for the quarter, up from $27.6 million in the same period last year. As of March 31, 2024, Schrödinger had cash, cash equivalents, restricted cash, and marketable securities totaling approximately $435.7 million, down from $468.8 million at the end of 2023.

In terms of new developments, Schrödinger has received FDA clearance for its investigational new drug application for SGR-3515, a novel Wee1/Myt1 inhibitor. The company plans to begin a Phase 1 clinical study for SGR-3515 in patients with solid tumors later this year. Additionally, the ongoing Phase 1 clinical studies for SGR-1505 and SGR-2921 are on track, with data expected in late 2024 or 2025.

Schrödinger also highlighted the launch of LiveDesign Biologics in March, a cloud-based informatics solution aimed at centralizing computational modeling tools and data for drug discovery teams. This new product builds on their existing LiveDesign offering, which focuses on integrating tools and data for small molecule design.

The company is making strides in validating computational predictive models for off-target drug activity, which is increasingly important for predicting drug toxicity risks before animal or human trials. Recent advances include characterizing the structure of key proteins like hERG and cytochrome P450 enzymes.

Schrödinger's proprietary pipeline continues to advance. Besides SGR-3515, the company is progressing with the Phase 1 dose-escalation study of SGR-1505 in patients with relapsed/refractory B-cell malignancies and the Phase 1 study of SGR-2921 in patients with acute myeloid leukemia or myelodysplastic syndrome.

Moreover, the rights to the SOS1 inhibitor, discovered in collaboration with Bristol Myers Squibb, have reverted to Schrödinger. This change is due to portfolio prioritization decisions at Bristol Myers Squibb. Schrödinger continues to work on its discovery pipeline, including targets such as EGFRC797S, PRMT5-MTA, and NLRP3, and anticipates submitting at least one investigational new drug application in 2025.

Overall, Schrödinger remains committed to advancing its computational platform and drug discovery programs, despite the financial challenges in the first quarter. The company looks forward to the continued development and validation of its proprietary and collaborative drug discovery efforts.