Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $54 million, a 54% increase from Q3 2024, driven by strong execution across the business [5][9] - Software revenue was $40.9 million, representing a 28% year-over-year growth, exceeding expectations [5][10] - Drug discovery revenue was $13.5 million, up from $3.4 million in Q3 2024, reflecting successful execution across collaborations [10] - Net loss was $33 million, or $0.45 per diluted share, compared to a net loss of $38 million, or $0.52 per diluted share in Q3 2024 [11] Business Line Data and Key Metrics Changes - Software gross margin remained at 73% for both Q3 2025 and Q3 2024 [10] - R&D expenses decreased by 16% to $42.8 million from $51 million in Q3 2024, primarily due to lower employee-related expenses [10] - Sales and marketing expenses decreased by 8% to $9.5 million, while G&A expenses decreased by 13% to $21.7 million [10] Market Data and Key Metrics Changes - The company updated its software revenue growth guidance for 2025 to 8%-13% from 10%-15% due to delays in pharma scale-up opportunities [6][11] - Drug discovery revenue guidance was increased to $49-$52 million, slightly exceeding prior expectations of $45-$50 million [12] Company Strategy and Development Direction - The company is focusing on increasing customer adoption of its software, delivering scientific advancements, and advancing its therapeutics portfolio [9][20] - The decision was made to not advance internal discovery programs into the clinic independently, aiming to improve operational efficiency and long-term profitability [7][51] - The company plans to leverage partnerships for clinical development, allowing for a broader range of discovery programs [37][51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term potential of the business despite current macroeconomic pressures [6][12] - There are early signs of recovery in the biotech sector, including capital markets and new capital formation, which could create additional opportunities [12] - The company remains committed to managing expenses and expects cash used in operating activities to be significantly lower than in 2024 [13][14] Other Important Information - The company has made significant improvements to its platform, including enhancements for challenging modalities and ongoing beta testing for predictive toxicology solutions [8][20] - The company has generated approximately $600 million in cash from collaborations and licensing activities since 2020 [20] Q&A Session Summary Question: Implications of reduced spend year over year - Management confirmed that a $30 million expense reduction was announced in May, with more than half achieved, aiming to improve profitability [23][24] Question: Software guidance and market slowdown - Management acknowledged a slowdown in customer discussions and delays in scale-up opportunities, leading to a slight reduction in software revenue guidance [27][30] Question: Predictive toxicology product monetization - The predictive toxicology solution is still in beta, with significant interest from customers, but it is too early to discuss monetization [32][33] Question: Discovery programs and partnerships - The company will continue to work on discovery stage programs and seek partnerships for clinical advancement, emphasizing the value of discovery partnerships [36][37] Question: Update on SGR-1505 and clinical data - Management provided updates on SGR-1505, highlighting a complete response in an aggressive lymphoma patient and upcoming data presentations [58][61] Question: NLRP3 inhibitor SGR-6016 progress - The company is excited about SGR-6016, a brain-penetrant NLRP3 inhibitor, and is in discussions with potential partners for its development [45][48] Question: Novartis partnership progress - Management reported excellent progress with Novartis, with teams working well together on program advancements [53][55]