Schrodinger(SDGR) - 2024 Q3 - Quarterly Report

Financial Performance - The company reported significant operating losses and expects to incur losses over the next several years[11]. - Total revenues for Q3 2024 were $35.29 million, a decrease of 17.3% compared to$ 42.57 million in Q3 2023[19]. - The net loss for Q3 2024 was $38.14 million, compared to a net loss of$ 62.02 million in Q3 2023, showing an improvement of 38.5%[22]. - Operating expenses for Q3 2024 totaled $86.15 million, up from$ 79.83 million in Q3 2023, reflecting a 7.9% increase[19]. - The company reported a gross profit of $17.73 million for Q3 2024, down from$ 23.64 million in Q3 2023, a decrease of 25.1%[19]. - Net loss for the nine months ended September 30, 2024, was $146.9 million compared to a net income of$ 71.4 million for the same period in 2023[26]. - Cash used in operating activities for the nine months ended September 30, 2024, was $126.3 million, an increase from$ 99.5 million in the same period of 2023[26]. - Total stockholders' equity as of September 30, 2024, was $449.4 million, down from$ 563.6 million at the end of September 2023[24]. - The company reported a fair value adjustment loss of $27.8 million for the nine months ended September 30, 2024[26]. - The company reported a consolidated net loss of$ 38,136 for the three months ended September 30, 2024, compared to a net loss of $62,024 in the same period of 2023[164]. Revenue Sources - A substantial portion of the company's revenue is generated from life sciences industry customers, making it vulnerable to industry-specific factors[11]. - The company’s software business derives revenue from five sources, including on-premise software license fees and hosted software subscription fees[55]. - Software products and services revenue increased to$ 31.88 million in Q3 2024 from $28.90 million in Q3 2023, representing an increase of 6.9%[19]. - Revenue from drug discovery services for the three months ended September 30, 2024, was$ 2,813, a decrease of 77.9% from $12,730 in the same period of 2023[69]. - The total software revenue for the nine months ended September 30, 2024, was$ 100,703, an increase of 11.5% from $90,469 in the same period of 2023[64]. - The Company recognized$ 1.1 million and $10.1 million in revenue associated with the collaboration agreement with Bristol-Myers Squibb for the three and nine months ended September 30, 2024, respectively, compared to$ 11.2 million and $40.0 million in the same periods of 2023[79]. Research and Development - The company is focused on expanding its proprietary drug discovery programs and plans to submit investigational new drug applications to the FDA[4]. - Research and development expenses increased to$ 50.98 million in Q3 2024, compared to $46.83 million in Q3 2023, an increase of 4.6%[19]. - Research and development expenses for the nine months ended September 30, 2024, were$ 12,512, up from $11,422 in 2023, indicating a year-over-year increase of 9.5%[123]. - The company has limited experience in clinical development, which may impact the success of its programs[11]. - The company relies on third parties for clinical trials, which may affect the timeline for seeking marketing approval[11]. Strategic Initiatives - The company aims to accelerate the growth of its software business and acquire new customers[4]. - The company is pursuing multiple business strategies and expects to expand its development and regulatory capabilities[13]. - The company emphasizes the importance of retaining key executives and attracting qualified personnel for future success[13]. - The company acknowledges the potential impact of geopolitical and global economic developments on its operations[5]. Cash and Assets - Cash and cash equivalents as of September 30, 2024, were$ 160.42 million, up from $155.32 million at the end of 2023[17]. - Total current assets decreased to$ 456.40 million as of September 30, 2024, down from $567.80 million at the end of 2023, a decline of 19.6%[17]. - Total liabilities decreased to$ 219.87 million as of September 30, 2024, down from $254.40 million at the end of 2023, a reduction of 13.5%[17]. - Cash and cash equivalents at the end of the period were$ 170.2 million, compared to $255.6 million at the end of September 2023[26]. - The company's total assets measured at fair value as of September 30, 2024, amounted to$ 457,027, with cash and cash equivalents at $170,176 and marketable securities at$ 228,263[95]. Stock and Compensation - The company has authorized 500,000,000 shares of common stock and 100,000,000 shares of limited common stock as of September 30, 2024[112]. - The company’s stock incentive plans include the 2010 Stock Plan, 2020 Equity Incentive Plan, 2021 Inducement Equity Incentive Plan, and 2022 Equity Incentive Plan[118]. - Total stock-based compensation for the nine months ended September 30, 2024, was $37.4 million, up from$ 35.3 million in the same period of 2023[26]. - Total stock-based compensation expense for the three months ended September 30, 2024, was $12,398, compared to$ 12,654 for the same period in 2023, reflecting a decrease of 2%[123]. - The intrinsic value of options exercised during the nine months ended September 30, 2024, was $1,534, compared to$ 7,099 for the same period in 2023, showing a decrease of 78%[139]. Collaborations and Agreements - The Company entered into a research collaboration and license agreement with Novartis, with an initial upfront fee of $150 million and potential total milestones of up to$ 2.272 billion[166]. - The collaboration with Novartis includes an initial upfront fee of $150.0 million and potential total milestones of up to$ 2.272 billion[185]. - The company is eligible to receive up to $482.0 million in total milestone payments from Bristol-Myers Squibb for ongoing collaborations[183]. - Contribution revenue from the Bill & Melinda Gates Foundation is recognized on a cost reimbursement basis for services in women's health[196].