Schrodinger, Inc. · NASDAQ:SDGR
Schrodinger — Investor Presentation (June 2020)
38 slides from Schrodinger's investor presentation, Jun 12, 2020
Slide 1: Schrödinger: Transforming Discovery of Therapeutics and Materials
SCHRÖDINGER Transforming Discovery of Therapeutics and Materials
Slide 2: Cautionary Note and Disclaimer
Cautionary Note and Disclaimer This presentation contains certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this
Slide 3: We are transforming the way therapeutics and materials are discovered
Schrödinger We are transforming the way therapeutics and materials are discovered We have developed an industry-leading physics-based computational platform that enables discovery of high-quality molecules for drug development and materials applications faster than traditional methods, at a lower co
Slide 4: Demonstrated track record of revenue growth with large market opportunity
Demonstrated track record of revenue growth with large market opportunity Revenue ($M) Continued momentum in 1Q 2020 with record total revenue of $26.2M and 26% growth versus Q1 2019 Large market opportunity to improve traditional drug discovery and materials design Industry-leading computational pl
Slide 5: Strong leadership team – global presence
Strong leadership team – global presence Ramy Farid, PhD President & CEO Joel Lebowitz Chief Financial Officer Karen Akinsanya, PhD EVP, Chief Biomedical Scientist, Head of Discovery R&D Robert Abel, PhD EVP, Science Shane Brauner Chief Information Officer Cony D’Cruz Chief Business Officer Yvonne T
Slide 6: Financing History: $425M capital raised since formation
Financing History: $425M capital raised since formation in 1990 Proceeds $31M $52M $110M $232M* Round Series A Series B, C, D Series E Q4 2018 – Q2 2019 IPO February 2020 Investors David E. Shaw Bill Gates Diversified investor base: Healthcare, HC Technology, Biotech, Tech * Gross proceeds 6
Slide 7: Designing drugs is extremely hard
Designing drugs is extremely hard! Complex, lengthy, capital-intensive, and prone to high failure rates Need to identify a molecule that balances a large number of anti-correlated properties: Potency Selectivity Solubility Bioavailability Clearance / half-life Permeability Drug-drug interactions Syn
Slide 8: The drug discovery problem
The drug discovery problem If we could calculate all the properties with perfect accuracy, designing drugs would be significantly faster and cheaper, and would produce higher-quality molecules VISION OF THE FUTURE “All” synthesizable molecules Select THE best molecule Property 1 Property 2 Property
Slide 9: Potential solutions to the drug discovery problem
Potential solutions to the drug discovery problem The field has been trying for decades to calculate properties of molecules using computers – two major approaches: • Knowledge-based machine learning (often referred to as AI) • If AI can beat humans at chess and Go, recognize faces in photos, autono
Slide 10: Why is drug discovery extremely hard?
Why is drug discovery extremely hard? Due to complexity of the properties, very difficult to predict properties prospectively 10
Slide 11: Combining accuracy of physics with speed of machine learning
Combining accuracy of physics with speed of machine learning 1 billion molecules 1,000 random molecules 1 DAY Train machine learning model Score 1 billion molecules using ML model Top 5,000 molecules enriched in “good” molecules 1-2 DAYS Synthesize 10 molecules ~ 8 molecules that advance the program
Slide 12: Demonstrated benefits of Schrödinger platform
Demonstrated benefits of Schrödinger platform Reduces time and cost and increases quality as compared to traditional drug design Traditional Drug Design To identify a drug development candidate: • Manual molecule design • ~5,000 molecules synthesized and tested over ~4 – 6 years Drug development can
Slide 13: Schrödinger software business
Schrödinger software business 1,266 customers with over $1,000 ACV in 2019, including biopharmaceutical companies, materials science companies, academic institutions, and government laboratories Software ACV 16% CAGR since 2013, 18% year-over-year growth for both 2018 and 2019 96% or higher retentio
Slide 14: Collaborative Programs
Collaborative Programs(1)(2) The below summarizes the stages of development of certain of our collaborative programs. During 2019, we collaborated on more than 25 drug discovery programs, producing revenues in the form of research fees and milestones, and potential for option payments and future roy
Slide 15: Collaboration programs – current and future revenue/income potential
Collaboration programs – current and future revenue/income potential Equity positions in our collaborators and co-founded companies(1)(2) Company Equity Ajax Therapeutics, Inc. 8.7% Bright Angel Therapeutics Inc. 33.3% Faxian Therapeutics, LLC (JV) 50.0% Morphic Holding, Inc.(3) 2.7% Nimbus Therapeu
Slide 16: Expansion and advancement of collaborative programs driving revenue growth
Expansion and advancement of collaborative programs driving revenue growth Number of Collaborative Programs 2013 9 2014 10 2015 15 2016 16 2017 19 2018 20 2019 29 Drug Discovery Revenue ($M) 2017 $4.9 2018 $6.8 2019 $18.8 Our opportunity to receive potential drug discovery revenues is generally limi
Slide 17: Schrödinger internal drug discovery pipeline
Schrödinger internal drug discovery pipeline Five wholly-owned programs, currently in discovery, are being advanced internally in oncology with a plan to expand to other areas and indications in the future PROGRAM SDGR1 Replication Stress Response SDGR2 DNA Damage Response SDGR3 Oncogenic Activation
Slide 18: Synergistic business models
Synergistic business models Improve – Internal drug discovery group helps us refine our software solutions, making them better for our commercial customers Validate – Success in drug discovery projects validates platform, which should increase attractiveness of our platform to customers Apply – Soft
Slide 19: Drug Discovery
SCHRODINGER. Drug Discovery
Slide 20: A diverse portfolio of collaborative programs
A diverse portfolio of collaborative programs(1)(2) Programs Progressed by Collaborator Collaborator Indication Status Oncology FDA Approved Oncology FDA Approved Oncology Discovery AJAX Oncology Discovery Antifungal Discovery Undisclosed Discovery Fibrosis IND Enabling Inflammatory Bowel Diseases I
Slide 21: Multi-target collaboration with Takeda
Multi-target collaboration with Takeda* Programs Progressed by Schrödinger We and Takeda reach mutual agreement on targets of interest We execute projects and retain all IP rights until Takeda exercises option Takeda has option rights to acquire programs at lead optimization or development candidate
Slide 22: Target selection strategy for wholly-owned programs
Target selection strategy for wholly-owned programs Structural & Modeling Enablement Therapeutic Potential Pathway Precedence Human Genetics Unsolved Design Challenges Potential Value of Mechanism for Indication of Interest Structurally Enabled Biological Rationale Priority Targets Therapeutic Momen
Slide 23: Wholly-owned internal oncology drug discovery programs
Wholly-owned internal oncology drug discovery programs Target cancer cells with unrepaired or under-replicated DNA by forcing them into replication stress and mitotic catastrophe Suppress dysfunctional signaling caused by inherited or acquired genetic mutations or chromosomal aberrations in proteins
Slide 24: SDGR1 & SDGR2 target cancer through replication stress and DNA repair mechanisms
SDGR1 & SDGR2 target cancer through replication stress and DNA repair mechanisms Cancer cells depend on checkpoint kinases to repair DNA damage and adapt to genotoxic stress Inhibition of these kinases leaves cancer cells vulnerable to failed DNA damage repair and high levels of replication stress,
Slide 25: SDGR1 CDC7 inhibitors show additive anti-proliferative effects with PARP inhibitors
SDGR1 CDC7 inhibitors show additive anti-proliferative effects with PARP inhibitors We have identified tight-binding, selective, novel CDC7 inhibitor series, some of which are brain-penetrant in preclinical studies Combining our CDC7 inhibitors with olaparib or other cell cycle inhibitors resulted i
Slide 26: SDGR2 Wee1 inhibitors have optimized selectivity and physiochemical properties
SDGR2 Wee1 inhibitors have optimized selectivity and physiochemical properties A third party Wee1 inhibitor, AZD1775, in Phase 2b clinical trials has shown partial responses in ovarian and lung cancer Existing Wee1 inhibitors inhibit polo-like kinase 1 (PLK1) and cause inactivation of a liver enzyme
Slide 27: SDGR3 MALT1 inhibitors are additive to covalent and non-covalent BTK inhibitors
SDGR3 MALT1 inhibitors are additive to covalent and non-covalent BTK inhibitors Mutations that trigger constitutive MALT1 protease activity and MALT1 fusions with cellular inhibitor of apoptosis (cIAP) are associated with aggressive forms of non Hodgkin B-cell lymphoma Our novel, oral allosteric inh
Slide 28: In vivo target engagement: accumulation of tumor BCL10
In vivo target engagement: accumulation of tumor BCL10 Inhibition of MALT1 protease activity leads to accumulation of uncleaved form of BCL10 as shown in cell based assays. PK/PD following Q.D. dosing of an example proprietary MALT1 inhibitor show increased levels of uncleaved tumor BCL10 after acut
Slide 29: SDGR4 & SDGR5: Protein-protein interaction inhibitors for VHL and KRAS-driven tumors
SDGR4 & SDGR5: Protein-protein interaction inhibitors for VHL and KRAS-driven tumors SDGR4 We are developing inhibitors of HIF-2á/ARNT heterodimerization for renal cell carcinoma caused by a germline mutation in the Von Hippel-Lindau (VHL) tumor suppressor for use as monotherapy or in combination wi
Slide 30: Our strategy: expand and advance collaborative and internal drug discovery programs
Our strategy: expand and advance collaborative and internal drug discovery programs Apply our latest technologies to the discovery of small molecules and biologics Add new collaborations that offer scientific synergies Maximize the value and commercial opportunities generated by program IP Advance o
Slide 31: Financials
SCHRODINGER. Financials
Slide 32: Strong operating momentum across the business
Strong operating momentum across the business Revenue ($M) CAGR $85.5 24% $18.8 96% Discovery $66.6 $55.7 $6.8 $4.9 $66.7 15% Software $59.9 $50.8 2017 2018 2019 $13.8 $20.7 $27.3 Deferred Revenue Cash ($M) 2017 2018 2019 1Q2020* Cash, cash equivalents, and marketable $36.3 $84.1 $86.3 $288.8 securi
Slide 33: Diversified business model
Diversified business model Global business(1) 7% Diversified software revenue contribution(2) 28% 72% No Single Customer Accounts for Greater Than 5% of Revenue (1) Represents percentage of FY 2019 total revenue (2) Represents percentage of FY 2019 software revenue
Slide 34: Operating framework with multiple growth opportunities
Operating framework with multiple growth opportunities Framework for Software Revenue Growth Larger-scale adoption and deployment Growing customer base Resulted in 18% CAGR in ACV and 15% CAGR in software revenue from 2017-2019 Framework for Drug Discovery Revenue Growth of and programs Growing numb
Slide 35: Q1 2020 and Q1 2019 Key Financial Data
Q1 2020 and Q1 2019 Key Financial Data Financial Results Data ($M) Q1 2019 Q1 2020 Y/Y % Software revenue $ 18.6 $ 23.8 28 % Drug discovery revenue $ 2.1 $ 2.4 11 % Total revenues $ 20.7 $ 26.2 26 % Gross profit $ 13.0 $ 15.6 20 % Software gross margin 83 % 83 % n/a Research and development expense
Slide 36: Full Year 2019 and 2018 Key Financial Data
Full Year 2019 and 2018 Key Financial Data Financial Results Data ($M) 2018 2019 Y/Y % Software revenue $ 59.9 $ 66.7 11 % Drug discovery revenue $ 6.8 $ 18.8 178 % Total revenues $ 66.6 $ 85.5 28 % Gross profit $ 42.9 $ 49.1 14 % Software gross margin 82 % 80 % na Research and development expense $
Slide 37: Schrödinger
Schrödinger We have developed a leading physics-based software platform We are transforming discovery of therapeutics and materials We are leveraging synergies between our multiple businesses We have a track record of revenue growth from long-standing, growing customer base We have diversified softw
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