Schrodinger(SDGR) - 2022 Q1 - Quarterly Report

Financial Performance - Revenue for the three months ended March 31, 2022, was $48.7 million, representing a year-over-year growth of 51% compared to $32.1 million in the same period of 2021[168]. - The net loss attributable to common stockholders for the three months ended March 31, 2022, was $34.4 million, compared to $0.0 million for the same period in 2021[168]. - Total revenues for the three months ended March 31, 2022, were $48,663,000, representing a 51% increase compared to $32,127,000 for the same period in 2021[197]. - Drug discovery revenues increased by 169% to $15,582,000 in Q1 2022 from $5,787,000 in Q1 2021, driven by collaboration milestones and research funding[199]. - Gross profit for the three months ended March 31, 2022, was $27,983,000, a 73% increase from $16,164,000 in the same period in 2021[197]. - General and administrative expenses increased by 65% to $22,133,000 in Q1 2022, up from $13,389,000 in Q1 2021, reflecting the costs associated with operating as a public company[197]. - Loss on equity investments was $1.8 million in Q1 2022, primarily due to the realized loss on the disposal of equity stake in Relay Therapeutics[212]. - Change in fair value resulted in a loss of $6.2 million in Q1 2022, compared to a gain of $24.8 million in Q1 2021, a change of $30.9 million[213]. - Interest income decreased to $328,000 in Q1 2022 from $420,000 in Q1 2021, a decrease of $92,000[214]. - The company reported an accumulated deficit of $264.4 million as of March 31, 2022[217]. Cash Flow and Investments - Cash, cash equivalents, and marketable securities totaled $529.0 million as of March 31, 2022[219]. - Net cash used in operating activities was $39.7 million in Q1 2022, compared to $10.9 million in Q1 2021[227]. - Investing activities provided approximately $36.3 million of cash in Q1 2022, primarily from marketable securities maturities[230]. - Financing activities provided approximately $0.9 million of cash in Q1 2022 from stock option exercises[232]. - The company plans to utilize existing cash primarily to fund software and drug discovery activities[222]. Research and Development - The company expects to submit an IND application to the FDA for the MALT1 program in the first half of 2022 and initiate a Phase 1 clinical trial in the second half of 2022[160]. - The company expects research and development expenses to increase substantially in absolute dollars as it continues to invest in drug discovery programs and platform advancements[187]. - Research and development expenses rose by 30% to $27,822,000 in Q1 2022, up from $21,448,000 in Q1 2021, primarily due to increased personnel-related expenses and CRO costs[209]. Collaborations and Partnerships - An exclusive collaboration with Bristol-Myers Squibb included an upfront payment of $55.0 million and potential milestone payments of up to $2.7 billion[165]. - The collaboration with Zai Lab Limited could yield up to approximately $338 million in milestone payments and 50% of profits from commercialization in the U.S.[166]. - The company acquired XTAL BioStructures, Inc. to enhance its service offerings in structural biology[167]. - The company has joined a multi-company effort to develop antiviral therapeutics for COVID-19, with no expectation of revenue generation from this initiative[173]. - The company has experienced minimal impacts from the COVID-19 pandemic on its business operations as of March 31, 2022[170]. Software Segment - The software segment generates revenue from software licenses, subscriptions, maintenance, professional services, and contributions[163]. - The gross margin for software products and services was 77% in Q1 2022, slightly down from 78% in Q1 2021, attributed to investments in large-scale deployments and increased royalty fees[205]. - The company plans to make focused investments in sales and marketing to expand its customer base and increase software sales to existing customers[188]. Future Expectations - Drug discovery revenue is expected to trend higher as collaborations advance, with milestone payments increasing in magnitude as programs progress[180]. - Fair value gains and losses from equity investments are expected to fluctuate significantly in future periods[193].