On March 4, 2021 Schrödinger, Inc. (Nasdaq: SDGR), whose physics-based software platform is transforming the way therapeutics and materials are discovered, reported financial results for the fourth quarter and full year ended December 31, 2020, and provided its financial outlook for 2021 (Press release, Schrodinger, MAR 4, 2021, View Source [SID1234576100]).
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"2020 was a very strong year for Schrödinger across all aspects of our business. Software revenue increased substantially, and we expect continued growth in 2021. We believe this growth reflects the power of our physics-based platform to accelerate the discovery of new medicines and materials," stated Ramy Farid, Ph.D., chief executive officer at Schrödinger.
"We finished 2020 in a strong financial position. Looking across multiple key indicators, we believe our underlying business is poised for continued growth this year," said Joel Lebowitz, chief financial officer at Schrödinger. "Importantly, our balance sheet and growing revenue enable us to make strategic investments in both our computational platform and our internal pipeline to build for the future."
Business Highlights
Delivered strong operating performance and strategic execution
Reported 28 percent total revenue growth in the fourth quarter of 2020, driven by continued uptake of Schrödinger’s core technologies including FEP+ and its enterprise solution, LiveDesign
Entered into a strategic collaboration with Bristol Myers Squibb to discover, develop, and commercialize therapeutics in multiple disease areas. Under the terms of the agreement, Schrödinger received $55 million in an upfront payment and is eligible to receive up to $2.7 billion in preclinical, development, regulatory and sales-based milestone payments in addition to royalties on net sales of each product commercialized by Bristol Myers Squibb.
Ended the fourth quarter of 2020 with cash, cash equivalents, restricted cash and marketable securities of $643.2 million, compared to $599.5 million at September 30, 2020
Progressed internal pipeline
Presented preclinical data on the company’s MALT1 inhibitor program at the American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting highlighting that its MALT1 inhibitors demonstrated anti-tumor activity alone and in combination with approved anti-cancer therapies in models of B-cell lymphoma
Continued to advance multiple programs toward IND-enabling studies; subject to completion of the preclinical data packages, the company expects to submit up to three IND applications in 2022, with the first submission expected in the first half of next year
Advanced discovery efforts to allow addition of new programs to the company’s internal pipeline in 2021
Advanced the science underlying Schrödinger’s computational platform
Expanded its collaboration with Google Cloud to further increase the speed and capacity of its computational platform, effectively tripling Schrödinger’s previous throughput under the collaboration
Released a major update to Schrödinger’s proprietary force field, called OPLS4, which underlies Schrödinger’s most powerful molecular design technologies, such as FEP+, allowing for even greater accuracy of the computational predictions
Published four scientific papers, including a publication describing how to improve outcomes for fragment linking, an important technique used in early drug discovery, to potentially enable the design of novel drug-like inhibitors for challenging targets
Fourth Quarter 2020 Financial Results
Revenue was $33.0 million for the fourth quarter of 2020, an increase of 28 percent compared to the fourth quarter of 2019.
Software revenue was $25.0 million for the fourth quarter of 2020, an increase of 42 percent compared to the fourth quarter in 2019.
Drug discovery revenue was $8.1 million for the fourth quarter of 2020, compared to $8.3 million in the fourth quarter of 2019. Drug discovery revenue in the fourth quarter of 2020 included $1.0 million related to the $55 million up-front payment from the strategic agreement with Bristol Myers Squibb announced in November 2020.
Gross profit was $19.0 million in the fourth quarter of 2020, an increase of 22 percent over the fourth quarter in 2019. Software gross margin was 77 percent in the fourth quarter, compared to 79 percent for the same period in the prior year.
Operating expenses for the fourth quarter of 2020 were $35.6 million, compared to $23.4 million in fourth quarter of 2019.
Other income, which included gains on equity investments, changes in fair value of such investments and interest income, was $5.2 million in the fourth quarter of 2020 compared to $0.7 million for the fourth quarter of 2019. Other income for the fourth quarter of 2020 included a $5.2 million non-cash gain from Schrödinger’s equity stake in Morphic Therapeutic.
Net loss, after adjusting for non-controlling interests, was $11.1 million for the fourth quarter of 2020, compared to a net loss of $6.8 million in the fourth quarter of 2019.
Full Year 2020 Financial Results
Total revenue was $108.1 million for 2020, an increase of 26 percent compared to 2019.
Software revenue was $92.5 million for 2020, an increase of 39 percent over 2019.
Drug discovery revenue was $15.6 million for 2020, compared to $18.8 million in 2019.
Gross profit was $63.5 million for 2020, an increase of 29 percent over 2019. Software gross margin was 81 percent for the year, compared to 80 percent in 2019.
Operating expenses for 2020 were $124.4 million, compared to $87.8 million in 2019.
Other income, which included gains on equity investments, changes in fair value of such investments and interest income was $34.6 million in 2020 compared to $12.7 million in 2019. Other income for 2020 included a $17.6 million non-cash gain from Schrödinger’s equity stake in Relay Therapeutics and a $13.7 million non-cash gain from the company’s equity stake in Morphic Therapeutic, partially offset by a loss of $3.0 million related to the company’s equity stake in Nimbus Therapeutics.
Net loss, after adjusting for non-controlling interests, was $24.5 million for 2020, compared to a net loss of $24.6 million in 2019.
At December 31, 2020, Schrödinger had cash, cash equivalents, restricted cash and marketable securities of $643.2 million.
Full Year 2020 Key Performance Indicators
Total annual contract value (ACV) was $92.1 million in 2020, up 22 percent over 2019
Number of customers over $1 million in ACV was 16 in 2020, up from 10 in 2019
Number of customers over $100,000 in ACV was 153 in 2020, up from 131 in 2019; customer retention in this cohort was 99 percent
Number of Active Customers with ACV over $1,000 was 1,463, up from 1,266 in 2019
For additional information about our Key Performance Indicators, see "Operating Metrics" below.
Full-Year 2021 Revenue Outlook
As of March 4, 2021, Schrödinger expects total revenue to range from $124 million to $142 million, with software revenue expected to range from $102 million to $110 million, and drug discovery revenue expected to range from $22 million to $32 million for the fiscal year ended December 31, 2021.
Webcast and Conference Call Information
Schrödinger will host a conference call to discuss its third quarter financial results on Thursday, March 4, 2020, at 8:30 a.m. ET. The conference call can be accessed live by dialing (833) 727-9520 (domestic) or +1 (830) 213-7697 (international) and referring to conference ID 9686253. The webcast can also be accessed under "News & Events" in the investors section of Schrödinger’s website, View Source The archived webcast will be available on Schrödinger’s website following the event.