Schrödinger, Inc. (NASDAQ:SDGR) Q3 2023 Earnings Call Transcript

Matthew Hewitt: To hear that you’re even having smaller customers stepping up, that actually is not what we’re hearing from other companies. Other companies are talking about the scaling back, the cutting of perceived cost places. So that’s actually a very positive development. I guess the second question for me regarding the two BMS programs that have reverted back to you. And I realize this might be still early days. But is this something where you will now take over those programs and look to re-out-license those or re-partner those? Or do you put them on a shelf and kind of wait for the market to improve or change? What happens to those two assets?

Karen Akinsanya: These programs actually address precedented targets. And we were progressing according to the agreed upon target product profile. As we’ve discussed, BMS elected not to proceed with further development for strategic reasons. We have a high degree of confidence in the work that’s been done in this collaboration. And we are going to evaluate, as we discussed, the fit of those programs with our portfolio. But as you point out, the targets are very interesting. And we believe that there may well, as Geoff put it, be an opportunity to create additional value from those programs, but we’re still discussing that internally.

Operator: Your next question comes from the line of Joe Catanzaro with Piper Sandler.

Joseph Catanzaro: Maybe just one quick one for me on the pipeline side. So, for 3515, I think this is the first As time you’re disclosing that it’s actually a dual inhibitor of Wee1 and PKMYT1. So, just wanted to see whether this feature was an explicit goal of your drug discovery efforts or whether this was kind of serendipitously realized after the fact. And what benefit you see over hitting both of these targets relative to one or the other?

Karen Akinsanya: Actually, we identified Myt1 as an important synthetic lethality gene for Wee1 inhibition in our patient derived models during the course of the program. We ended up selecting SGR-3515 from a number of series that were in our discovery lab. As our development candidate, we chose it because of its Wee1 and Myt1 activity, but also because of its differentiated pharmacological properties. Well, We’re obviously excited about this because of the information on synthetic lethality, and we decided to disclose it because of that activity and our excitement about taking this into the clinic.

Operator: [Operator Instructions]. Your next question comes from the line of Chris Shibutani with Goldman Sachs.

Chris Shibutani: Geoff. I know that Q4 has seasonally tended to be the time of year when you’re getting renewals happening with your existing customers. If I’m going to read into your comments about confidence and visibility, and while I know you’re not going to be guiding on 2024, we are now a month in, can you give us any sense for particularly maybe the higher velocity, those greater than $5 million average kind of utilization customers? How is that going? And that will be helpful. To be absolutely clear, for your December, mid-December analyst event, we should expect the focus to be entirely on the pipeline. Definitively the timing for when you would expect to provide that 2024 guidance would be when? Would it be the fourth quarter report? Is there a chance at the annual kickoff conference in January? Just some perspective would be helpful.

Geoff Porges: Look, I think we’ve made it clear throughout the year that we’re having very constructive discussions with our largest customers. And I think Ramy has made it clear that those discussions have progressed very nicely throughout the year and give us a lot of confidence about our guidance for the year. Equally, if we were certain that we were going to be outside the guidance range, we will obviously be updating our guide. And we think that those discussions position us well for next year. But we’re certainly not in a position to be providing guidance for next year. In terms of the timing for that guidance, because so much of our revenue, or at least our renewal activity is at the very end of the year, when our large customers say, okay, we’ve used our licenses for this year, this is the level of activity and utilization, and therefore we’re going to step up or change whatever next year, that happens at the very end of the year.