Schrodinger(SDGR)2022-11-04 00:20Financial 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]