UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the transition period from to (Mark One) Commission File Number: 001-39206 ________________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR WASHINGTON, DC 20549 ________________________________________ Schrodinger, Inc. o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FORM 10-Q ________________________ ...

Schrödinger, Inc. (NASDAQ:SDGR) Q1 2023 Earnings Conference Call May 4, 2023 4:30 PM ET Company Participants Jaren Madden - Senior Vice President, Investor Relations and Corporate Affairs Ramy Farid - Chief Executive Officer Geoff Porges - Chief Financial Officer Karen Akinsanya - President of R&D, Therapeutics Conference Call Participants Vikram Purohit - Morgan Stanley David Lebowitz - Citi Chris Shibutani - Goldman Sachs Michael Ryskin - Bank of America Operator Thank you for standing by. Welcome to Schr ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ________________________________________ FORM 10-Q ________________________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39206 ________________________________________ ...

Schrödinger, Inc. (NASDAQ:SDGR) Q4 2022 Earnings Conference Call February 28, 2023 4:30 PM ET Company Participants Jaren Madden - Senior Vice President, Investor Relations and Corporate Affairs Ramy Farid - Chief Executive Officer Geoff Porges - Chief Financial Officer Karen Akinsanya - President of R&D, Therapeutics Conference Call Participants Do Kim - Piper Sandler David Lebowitz - Citi Gary Nachman - BMO Capital Markets Wolf Chanoff - Bank of America Operator Thank you for standing by. Welcome to Schröd ...

Enhanced Platform Capabilities • Initiated SGR-1505 Phase 1 trial Second Quarter 2022 Supplemental Slides February 28, 2023 Transforming Discovery of Therapeutics and Materials This presentation contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this presentation, including, without limitation, statements regarding ...

Part I [Business](index=7&type=section&id=Item%201.%20Business) Schrödinger operates a dual business model, licensing its computational platform and advancing proprietary and collaborative drug discovery programs Financial Performance (2020-2022) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Total Revenue** | $181.0 million | $137.9 million | $108.1 million | | **YoY Growth** | 31% | 28% | - | | **Net Loss** | ($149.2 million) | ($101.2 million) | ($26.6 million) | - The company operates through two primary business segments: a software business that licenses its computational platform and a drug discovery business that utilizes the platform for its own and partnered programs[26](index=26&type=chunk) Software Business Customer Metrics | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Customers with ACV > $100,000 | 227 | 190 | 153 | | Customers with ACV > $1.0 million | 18 | 15 | 16 | | Customers with ACV > $5.0 million | 4 | 2 | N/A | | Customer Retention (ACV > $100k) | 96% | ≥96% | ≥96% | - The proprietary drug discovery pipeline is advancing, with key programs including: **SGR-1505 (MALT1 inhibitor)** in Phase 1 clinical trial, **SGR-2921 (CDC7 inhibitor)** IND application expected in the first half of 2023, and **SGR-3515 (WEE1 inhibitor)** IND application expected in 2024[32](index=32&type=chunk)[79](index=79&type=chunk) - A significant collaboration with Bristol-Myers Squibb (BMS) includes a **$55.0 million upfront payment** received in 2020, an additional upfront payment in December 2022, and eligibility for up to **$2.7 billion in total milestones** across all potential targets[33](index=33&type=chunk)[80](index=80&type=chunk) - In February 2023, the company received a **$111.3 million cash distribution** from its equity stake in Nimbus Therapeutics, with an additional **$36.0 million expected in Q2 2023**[72](index=72&type=chunk) [Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant financial, operational, and drug discovery risks, including a material weakness in internal controls - **Financial Risk:** The company has a history of significant operating losses, with a **net loss of $149.2 million in 2022** and an accumulated deficit of **$379.1 million** as of December 31, 2022[331](index=331&type=chunk) - **Business Risk:** Future operating results are highly dependent on software license renewals and the ability to sell additional solutions, facing strong competition from established players and AI-focused startups[354](index=354&type=chunk)[361](index=361&type=chunk)[363](index=363&type=chunk) - **Drug Discovery Risk:** The company and its collaborators may never succeed in developing and commercializing drug products, with preclinical study outcomes not predictive of clinical trial success and a high risk of failure at all development stages[383](index=383&type=chunk)[390](index=390&type=chunk)[416](index=416&type=chunk) - **Internal Control Risk:** A material weakness was identified in the company's internal control over financial reporting for the year ended December 31, 2022, related to the revenue process for drug discovery arrangements[23](index=23&type=chunk)[575](index=575&type=chunk) - **Operational Risk:** The COVID-19 pandemic has caused and may continue to cause delays in drug discovery programs, particularly affecting contract research organizations (CROs) and contract manufacturing organizations (CMOs)[440](index=440&type=chunk) [Unresolved Staff Comments](index=101&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the SEC - None[588](index=588&type=chunk) [Properties](index=101&type=section&id=Item%202.%20Properties) The company's principal facilities are leased office spaces, primarily in New York and Portland - The company's principal executive office is approximately **136,047 square feet** of leased space in New York, New York, with the lease term extending to December 2037[589](index=589&type=chunk) [Legal Proceedings](index=102&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings - The company is not currently a party to any material legal proceedings[591](index=591&type=chunk) [Mine Safety Disclosures](index=102&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - Not applicable[592](index=592&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=102&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq, with no cash dividends paid or planned - The company's common stock trades on the Nasdaq Global Select Market under the symbol "SDGR"[595](index=595&type=chunk) - The company has never paid cash dividends and does not anticipate paying any in the foreseeable future, intending to retain earnings for business development and expansion[599](index=599&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=103&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Total revenue grew 31% in 2022, but net loss widened due to increased R&D and G&A expenses, with strong liquidity Results of Operations Summary (2022 vs. 2021) | Line Item | 2022 (in millions) | 2021 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenues** | $181.0 | $137.9 | 31% | | Software Revenue | $135.6 | $113.2 | 20% | | Drug Discovery Revenue | $45.4 | $24.7 | 84% | | **Gross Profit** | $101.0 | $65.6 | 54% | | **Total Operating Expenses** | $247.8 | $177.1 | 40% | | Research and Development | $126.4 | $90.9 | 39% | | General and Administrative | $90.8 | $64.0 | 42% | | **Loss from Operations** | ($146.8) | ($111.4) | 32% | | **Net Loss** | ($149.2) | ($101.2) | 47% | - The increase in drug discovery revenue was primarily due to the progress of collaborations and the timing and achievement of milestones[667](index=667&type=chunk) - R&D expenses increased by **$35.5 million**, driven by higher personnel costs and CRO expenses related to the expansion of proprietary drug discovery programs[673](index=673&type=chunk) - As of December 31, 2022, the company had **$456.3 million** in cash, cash equivalents, restricted cash, and marketable securities, supplemented by a **$111.3 million cash distribution** from Nimbus in February 2023, which management believes is sufficient to fund operations for at least the next 24 months[706](index=706&type=chunk)[708](index=708&type=chunk) - Critical accounting policies involve significant judgment in revenue recognition, particularly in allocating transaction prices, constraining variable consideration like milestones, and measuring progress in collaboration agreements[728](index=728&type=chunk)[734](index=734&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=123&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks include interest rate sensitivity and foreign currency fluctuations, neither deemed material - The primary market risk is interest rate sensitivity on the company's portfolio of cash equivalents and marketable securities, where an immediate **10% change in interest rates** is not expected to have a material effect[736](index=736&type=chunk) - The company is exposed to foreign currency exchange rate risk but does not currently hedge this exposure, as it is deemed insignificant[737](index=737&type=chunk) - Management does not believe that inflation had a material effect on the business or financial results for the years ended December 31, 2022 and 2021[739](index=739&type=chunk) [Financial Statements and Supplementary Data](index=125&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited financial statements are presented, with an adverse opinion on internal controls due to a material weakness - The independent auditor, KPMG LLP, issued an adverse opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2022[745](index=745&type=chunk)[758](index=758&type=chunk) - A material weakness was identified related to a deficiency in the design of a control in the revenue process to determine when performance milestones in a drug discovery arrangement were probable of achievement[760](index=760&type=chunk) - Critical Audit Matters identified by the auditor were: (1) Estimation of total costs to perform for the Bristol-Myers Squibb collaboration and (2) Identification of performance obligations in complex or unusual revenue arrangements[749](index=749&type=chunk)[753](index=753&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=125&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes or disagreements with its accountants - None[940](index=940&type=chunk) [Controls and Procedures](index=125&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls were ineffective due to a material weakness in revenue recognition, now under remediation - Management concluded that disclosure controls and procedures were not effective as of December 31, 2022, due to a material weakness in internal control over financial reporting[942](index=942&type=chunk)[945](index=945&type=chunk) - The material weakness was a design deficiency in the revenue process control for assessing the probability of achieving performance milestones in new drug discovery contracts[945](index=945&type=chunk) - This weakness led to a **$1.7 million understatement** of drug discovery revenue, which was corrected before the financial statements were issued, and a remediation plan is being implemented[947](index=947&type=chunk)[950](index=950&type=chunk) [Other Information](index=126&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[954](index=954&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=126&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not Applicable[955](index=955&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=127&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference - Information is incorporated by reference from the upcoming 2023 proxy statement[958](index=958&type=chunk) [Executive Compensation](index=127&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the proxy statement - Information is incorporated by reference from the upcoming 2023 proxy statement[960](index=960&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=127&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference from the proxy statement - Information is incorporated by reference from the upcoming 2023 proxy statement[961](index=961&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=127&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Related party transactions and director independence information is incorporated by reference - Information is incorporated by reference from the upcoming 2023 proxy statement[962](index=962&type=chunk) [Principal Accountant Fees and Services](index=127&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Principal accountant fees and services information is incorporated by reference - Information is incorporated by reference from the upcoming 2023 proxy statement[963](index=963&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=128&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including financial statements and material contracts - This section lists all exhibits filed with the Form 10-K, including the company's Restated Certificate of Incorporation, material contracts such as the collaboration agreement with Bristol-Myers Squibb, and required SEC certifications[969](index=969&type=chunk) [Form 10-K Summary](index=132&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for Form 10-K - None[977](index=977&type=chunk)

Financial Data and Key Metrics Changes - Total revenue for Q3 2022 was $37 million, a 24% increase compared to the prior year [10][17] - Software revenue was $24.7 million, consistent with expectations and similar to $24.3 million reported in Q3 2021 [17] - Drug discovery revenue was $12.3 million, up from $5.6 million in Q3 2021, driven by collaborations and milestone achievements [18] - Gross profit increased to $17.2 million, a 55% year-over-year increase [18] - Operating expenses rose to $63.4 million from $45.8 million in the same quarter last year [19] - Net loss for Q3 2022 was $39.9 million, compared to a net loss of $35 million in Q3 2021 [19] - Cash position at the end of Q3 was approximately $479 million, down from $513 million on June 30, 2022 [19] Business Line Data and Key Metrics Changes - The company has 18 proprietary drug discovery programs, with significant progress in both collaborative and proprietary projects [9][29] - Drug discovery revenue for the year is now expected to be between $45 million and $48 million, up from a previous expectation of $35 million to $45 million [23] Market Data and Key Metrics Changes - The company is experiencing strong growth in software licensing revenue, despite challenges in the macroeconomic environment [25] - The guidance for software revenue has been narrowed to a range of $122 million to $127 million for 2022, reflecting various market factors [21] Company Strategy and Development Direction - The company aims to accelerate growth in its software business and advance its drug discovery programs [5][11] - A partnership with Lilly was announced for the discovery of small molecule compounds, with potential milestone payments of up to $425 million [12][33] - The company is focused on maintaining a balanced business model that leverages its computational platform for drug discovery and materials design [9][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver continued growth despite a challenging economic environment [25][26] - The company is committed to advancing its proprietary programs and believes in the potential of its computational platform to create value [25][41] Other Important Information - The Phase 1 study of the MALT1 inhibitor, SGR-1505, is now open for patient enrollment [12][36] - The company plans to present new preclinical data for its CDC7 inhibitor, SGR-2921, at the ASH Annual Meeting [39] Q&A Session Summary Question: Impact of guidance components on software revenue - Management detailed the impact of foreign exchange, small biotech customers, and larger customers on software revenue guidance, indicating that all three factors contributed equally to the changes [44][47] Question: Details on MALT1 trial enrollment - Management confirmed that they are actively working on activating clinical sites in the U.S. and are considering global sites as well [48][51] Question: Increase in drug discovery guidance - The increase in drug discovery revenue guidance was attributed to successful advancements in collaborations and the recognition of previously deferred revenue [53][55] Question: BMS collaboration discontinuation - Management explained that BMS made a strategic decision to deprioritize a neuroscience program, but the company remains optimistic about the program's potential and will continue to invest internally [60][61] Question: Cash burn expectations - The company reported a cash burn of approximately $34 million for the quarter and expects cash burn to moderate as the software business grows [101][102]

Financial Data and Key Metrics Changes - Total revenue for Q2 2022 was $38.5 million, representing a 29% increase compared to Q2 2021 [9][17] - Software revenue was $30 million, a 25% growth year-over-year [8][17] - Drug discovery revenue was $8.5 million, up from $5.7 million in Q2 2021 [19] - Gross profit was $17.1 million, reflecting a 43% increase over the same quarter last year [19] - The company recorded a net loss of $47.7 million for Q2 2022, compared to a loss of $35 million in Q2 2021 [21] Business Line Data and Key Metrics Changes - Software revenue growth was driven by increased adoption from existing customers and new customer additions [18] - Drug discovery revenue included $5.4 million from collaboration with Bristol-Myers Squibb and preclinical milestones [19] Market Data and Key Metrics Changes - The company ended the quarter with approximately $513 million in cash, down from $529 million at the end of Q1 2022 [22] - The company expects software revenue for Q3 2022 to range from $23 million to $25 million, similar to Q3 2021 [24] Company Strategy and Development Direction - The company aims to accelerate growth in its software business and advance drug discovery programs [5] - The company is focused on maintaining a strong financial position to fund operations and advance clinical studies [10] - The company plans to continue investing in its platform and pipeline while pursuing profitability [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining full-year financial guidance despite anticipated fluctuations in software revenue [9][25] - The company expects total annual revenue to be between $161 million and $181 million, indicating 17% to 31% growth over 2021 [25] Other Important Information - The company submitted its first internal IND for the MALT1 inhibitor SGR-1505 and is preparing to initiate a Phase I trial [12][31] - The company has added four new early discovery programs in precision oncology and immunology [40] Q&A Session Summary Question: Clarification on Q3 software guidance and customer renewals - Management noted that Q3 is typically the lowest revenue quarter and there are fewer large customers up for renewal [49] Question: Customer spending patterns and ACV growth - Management indicated no signs of weakness in customer spending and maintained guidance for ACV growth in 2023 [51][52] Question: New business wins in life sciences and material sciences - Management highlighted that growth primarily comes from existing customers, with some new customer growth observed [58] Question: Internal capabilities for drug development - Management confirmed the addition of experts to the team to support upcoming clinical trials [60] Question: Visibility on new oncology and immunology programs - Management stated that new programs are being developed with a focus on differentiation and validation [64] Question: Details on the design of the SGR-1505 study - Management explained that the study aims to establish safety and tolerability, with pharmacokinetic and pharmacodynamic data being collected [68] Question: Impact of recent discontinuation of a Wee1 inhibitor on their program - Management expressed optimism about their Wee1 inhibitor program, emphasizing enhanced selectivity and drug-like properties [71]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39206 Schrodinger, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 95-4284541 (State or other jurisdiction of ...

Transforming Discovery of Therapeutics and Materials May 4, 2022 First Quarter 2022 Supplemental Slides Cautionary Note and Disclaimer This presentation contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this presentation, including, without limitation, statements regarding the potential advantages of our physics-b ...