Q2 2021 Schrodinger Inc Earnings Call
Okay.
Yeah.
Operator: Thank you for standing by. And welcome to the Schrodinger conference call to review the company's second quarter financial results. My name is Kevin, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode.
Thank you for standing by.
And welcome to the Shorting our conference call to review the company's second quarter financial results. My name is Catherine and I'll be your operator for today's call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session. So I asked a question during the session you to press Star one on your telephone if you require any further assistance. Please press star zero. Please be advised this call is being <unk>.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 on your telephone. If you require any further assistance, please press star 0. Please be advised that this call is being recorded at the company's request. And now, I'd like to introduce your host for today's conference, Tracy Lester, our Executive Director of Corporate Communications. Please go ahead.
Quartered at the company's request now I'd like to introduce your host todays conference Traci Lessor Executive director of corporate Communications. Please go ahead.
Tracy Lester: Thank you and good morning everyone. Welcome to today's call, during which we'll provide an update on the company and review our financial results for the second quarter of 2021. Earlier this morning, we issued a press release summarizing our financial results and progress across the company, which is available on our website at www.schrodinger.com. Here with me today are Ramy Farid, President and Chief Executive Officer; Karen Akinsanya, Executive Vice President, Chief Biomedical Scientist, and Head of Discovery R&D; and Joel Lebowitz, Executive Vice President and Chief Financial Officer.
Thank you and good morning, everyone welcome to today's call during which we'll provide an update on the company and review our financial results for the second quarter of 2021.
Earlier. This morning, we issued a press release summarizing our financial results and progress across the company, which is available on our website at www Dot shorting our dotcom.
Here with me today are Rami, Fareed, President and Chief Executive Officer, Karen Atkins, Tanya Executive Vice President and Chief by Medical scientists and head of discovery, R&D and Joel Lebowitz Executive Vice President and Chief Financial Officer. Following our prepared remarks, we'll open the call for Q&A.
Tracy Lester: Following our prepared remarks, we'll open the call for Q&A. I remind you that during today's call, management will make statements related to our business that are forward-looking and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including without limitation, statements related to our future financial performance, including our outlook for the full year 2021, the potential advantages of our platform, our strategic plans to accelerate the growth of our software business and advance our collaborative and internal drug discovery programs, risks relating to the COVID-19 pandemic, our expectations related to the use of our cash, cash equivalents, and marketable securities, as well as our future operating expenses.
I'll remind you that during today's call management will make statements related to our business that are forward looking and are made pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of 1995, including without limitation statements related to our future financial performance, including our outlook for the full year 2021, the potential advantages of our plot.
Our strategic plans to accelerate the growth of our software business and advance our collaborative and internal drug discovery programs risks relating to the Covid 19 pandemic, our expectations related to the use of our cash cash equivalents and marketable securities as well as our future operating expenses.
Tracy Lester: These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies, and prospects, which are based on the information currently available to us and on assumptions we have made. Actual results may differ materially from those described in the forward-looking statements and are subject to a variety of assumptions, uncertainties, risks, and factors that are beyond our control, including demand for our software solutions, our ability to further develop our computational platform, our reliance upon our drug discovery collaborators and other risks detailed under the captioned risk factors and elsewhere in our most recent Securities and Exchange Commission filings and reports.
These forward looking statements reflect our current views about our plans intentions expectations strategies and prospects, which are based on the information currently available to us and what assumptions. We have made actual results may differ materially from those described in the forward looking statements and are subject to a variety of assumptions uncertainties risks and factors that.
Beyond our control, including the demand for our software solutions, our ability to further develop our computational platform our reliance upon drug discovery collaborators and other risks detailed under the caption risk factors and elsewhere in our most recent securities and Exchange Commission filings and reports.
Tracy Lester: Unless required by law, we undertake no duty or obligation to update any forward-looking statements discussed in this call as a result of new information, future events, changes in expectations, or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today. With that, I'd like to turn the call over to Ramy.
Except as required by law, we undertake no duty or obligation to update any forward looking statements discussed in this call as a result of new information future events changes in expectation or otherwise. These forward looking statements should not be relied upon as representing our views as of any date subsequent to today with that I'd like to turn the.
Call over to Rami.
Ramy Farid: Thanks, Tracy, and thank you everyone for joining us today. At Schrodinger, we have developed a computational platform that is transforming the way therapeutics and materials are discovered. The platform is enabling our customers and our internal teams to discover high-quality molecules for drug development and materials applications faster, at lower cost, and with, we believe, a higher probability of success compared to traditional methods. We license our platform to pharmaceutical, biotech, and materials companies, universities, and government labs worldwide.
Tracy and thank you everyone for joining us today at Schrodinger, we have developed the computational platform that is transforming the way therapeutics. Our materials are discovered the platform is enabling our customers and our internal teams to discover a high quality molecules for drug development and materials application faster at lower <unk>.
Cost and with we believe a higher probability of success compared to traditional methods.
License our platform, the pharmaceutical biotech and materials companies and universities and government labs worldwide as Karen will review. Shortly we are also advancing an internal drug discovery pipeline and leveraging our platform in a number of drug discovery programs in collaboration with pharmaceutical and biotech companies.
Ramy Farid: As Karen will discuss shortly, we are also advancing an internal drug discovery pipeline and leveraging our platform in a number of drug discovery programs in collaboration with pharmaceutical and biotech companies. We announced a new drug discovery collaboration this month with Xylab. The collaboration marks the first time we have the opportunity to co-develop and co-commercialize a therapeutic. Xylab has a deep pipeline in oncology with multiple approved products, and we are excited to be working with them.
We announced a new drug discovery collaboration this month with xylem.
<unk> marks the first time, we have the opportunity to co develop and co commercialize a therapeutic design lab has a deep pipeline in oncology with multiple approved products that we are excited to be working with them. The collaboration design will focus on a target in the area of DNA damage response, and important therapeutic strategy for a broad range of cancers.
Ramy Farid: The collaboration with Xy will focus on a target in the area of DNA damage response, an important therapeutic strategy for a broad range of cancers, and builds on the knowledge we have gained working on our own programs in this area.
And builds on the knowledge, we have gained working on our own programs in this area.
Ramy Farid: Under the terms of the agreement, I will make an upfront payment to help fund our share of research costs. We have co-development and co-commercialization rights that will allow us to share equally in the profits of a future marketed product in the U.S. if we choose to co-fund U.S. development. We are also eligible to receive up to approximately $338 million in preclinical development, regulatory, and sales-based milestone payments, as well as royalties on net sales outside the U.S.
Under the terms of the agreement signed will make an upfront payment to help fund our share of research costs, we have co development and co commercialization rights that will allow us to share equally in the profit of the future a marketed product in the U S. If we choose to co fund U S. Development. We are also eligible to receive up to approximately $338 million.
Preclinical development regulatory and sales based milestone payments as well as royalties on net sales outside the U S. This collaboration provides us with the opportunity to gain expertise in late stage clinical development and commercialization as well as the ability to participate more significantly in the downstream value of the program.
Ramy Farid: This collaboration provides us with the opportunity to gain expertise in late-stage clinical development and commercialization, as well as the ability to participate more significantly in the downstream value of a program. As you will hear shortly from Joel, we reported a strong second quarter with 29% revenue growth compared to the same period last year, and we ended the quarter with cash resources of $617 million. Our financial strength allows us to continue to invest in advancing our science, invest in growing our software business, advance our internal pipeline, and add new talent to support our strategic initiatives.
You will hear shortly from Joel we reported a strong second quarter with 29% revenue growth compared to the same period last year and we ended the quarter was cash resources of $617 million, our financial strength allows us to continue to invest in advancing our science invest in growing our software business advance our internal pipe.
Line and add new talent to support our strategic initiatives. We are excited by the progress. We've made as we continue to transform the way therapeutics and materials are discovered I will now turn the call over to Karen for an update on our drug discovery programs.
Thank you Rami and good morning, everyone. We are continuing to make important advances on many fronts across our internal pipeline and portfolio of collaborative programs.
Ramy Farid: We are excited by the progress we've made as we continue to transform the way therapeutics and materials are discovered. I'll now turn the call over to Karen for an update on our drug discovery programs. Thank you, Ramy, and good morning, everyone.
We have collaborations with both biotech and large pharmaceutical companies spanning a broad range of target classes and then these collaborations we are leveraging our platform at the same scale, we do internally.
Karen Akinsanya: We are continuing to make important advances on many fronts across our internal pipeline and portfolio of collaborative programs. We expect several collaborative programs to continue to advance in the clinic and new programs to enter the clinic this year. We are excited to begin working with our new partner, Xylab, on a program targeting DNA repair vulnerabilities in cancer that we anticipate will be synergistic with PARP inhibitors. Marketed PARP inhibitors have demonstrated efficacy in multiple cancers, but new regimens and combinations that result in durable responses are needed, especially in patients who relapse or become resistant to treatment.
We believe this level of large scale deployment enables us to more rapidly identify high quality development candidates.
We expect several collaborative programs to continue to advance in the clinic and new programs to enter the clinic this year.
We are excited to begin working with our new partner XI lab on a program targeting DNA repair vulnerabilities in cancer, but we anticipate will be synergistic with PARP inhibitors marketed PARP inhibitors have demonstrated efficacy in multiple tenses, but new regimens and combinations that result in durable.
On says on needed, especially in patients, who relapse or become resistant to treatment.
Karen Akinsanya: We are also continuing to build early-stage clinical experience to support the advancement of our internal programs. Today, I will highlight our three most advanced programs, MOLT1, CDC7, and WE1. We have initiated IMD-enabling studies for our development candidate targeting MOLT1, and we are working towards the nomination of development candidates for CDC7 and WE1. Subject to completion of the preclinical data packages, we expect to submit up to three IMD applications in 2022, with our first submission expected in the first half of next year.
We are also continuing to build early stage clinical experience to support the advancement of our internal programs.
Today I will highlight through our three most advanced programs moat, one C. D C. Seven and we won we have initiated the IMD, enabling studies for our development candidate targeting more one and we are working towards the nomination of development candidates for C. D C. Seven and we won subject.
The completion of the preclinical data packages, we expect to submit up to three O N D applications in 'twenty 'twenty two with our first submission expected in the first half of next year.
Karen Akinsanya: Starting with our MOLT1 inhibitor program, MOLT1 inhibition is gaining increasing attention as a therapeutic strategy to treat certain relapsed or resistant B-cell lymphomas and chronic lymphocytic leukemia. The MOLT1 enzyme is downstream of BTK in the NF-B signaling pathway, and constant activation of NF-B is a hallmark of several types of lymphoma.
Parting with Atmel, one inhibitor program note one inhibition is gaining increasing attention as a therapeutic strategy to treat certain relapsed or resistant b cell lymphomas and chronic lymphocytic leukemia.
The moat one enzyme is downstream of be teekay, and the Nf Kappa B signaling pathway and constant activation of Nf Kappa B is a hallmark of several types of lymphoma.
Karen Akinsanya: Preclinical data previously presented from our MOLT1 program showed potent in vitro inhibition of MOLT1 enzymatic activity and in vivo anti-tumor activity in mouse xenograft models of diffuse large B-cell lymphoma. Additionally, in in vivo patient-derived tumor mouse models, our MOLT1 inhibitors demonstrated dose-dependent anti-proliferative effects as monotherapy and in combination with abrutin In the second quarter, we selected a development candidate for this program and have since initiated GLPTOC studies required for IND submission.
Preclinical data previously presented for myeloma, one program showed potent in vitro inhibition of Mt. One enzymatic activity and in vivo antitumor activity in mouse xenograft models of diffuse large b cell lymphoma.
Additionally, in in vivo patient derived tumor mouse models, our moat, one inhibitors demonstrated dose dependent anti proliferative effects as monotherapy and in combination with Ibrutinib and Vanessa clogs, which are approved be teekay and Bcl two inhibitors respectively.
In the second quarter, we selected a development candidate for this program and have since initiated G. O P talk studies required for <unk> submission.
Karen Akinsanya: All our IND enabling activities are on track, and we expect to submit the IND and BEGIN Phase 1 studies in patients with haematological malignancies next year. Now I'll turn to CDC 7 and Wee One, two programs that target cancer through replication stress and DNA repair mechanisms. CDC-7 is thought to be linked to cancer cells' proliferative capacity and ability to bypass normal DNA damage responses.
All our Indiana, enabling activities are on track and we expect to submit the IMD and begin phase one studies in patients with Hematological malignancies next year.
Now I'll turn to see D. C. Seven and we won two programs that target cancer through replication stress in DNA repair mechanisms.
C. D. C. Seven is thought to be linked to cancer cells proliferative capacity and ability to bypass normal DNA damage responses.
Karen Akinsanya: Targeting proteins that play important roles in DNA replication and replication stress is gaining momentum as a therapeutic approach for cancer. Earlier this year, we presented preclinical data from our CDC-7 inhibitor program, which showed that our compounds are synergistic with several approved and investigational cancer therapies that modulate apoptosis, DNA repair mechanisms, and DNA checkpoints. These compounds significantly inhibited tumor growth in mouse models of both acute myeloid leukemia and colorectal cancer.
Targeting proteins that play important roles in DNA replication and replication stress is gaining momentum as a therapeutic approach for cancer.
Earlier this year, we presented preclinical data from our C. D. C. Seven inhibitor program, which showed the Tyler compounds are synergistic with several approved and investigational tenths of therapies that modulate apoptosis DNA repair mechanisms and DNA checkpoints.
These compounds significantly inhibited tumor growth in mouse models of both acute myeloid leukemia.
And colorectal cancer. The data we have generated to date suggests that we have an opportunity to develop a best in class inhibitor with a very favorable pharmacokinetic profile.
Karen Akinsanya: The data we have generated to date suggests that we have an opportunity to develop a best-in-class inhibitor with a very favorable pharmacokinetic profile. Our other DNA damage repair program targets WE1, a tyrosine kinase regulator of the G2M cell cycle checkpoint, which when inhibited, reduces cell viability by inducing apoptosis in cancer cells. We1 inhibitors from other companies have shown clinical proof-of-concept as monotherapy in uterine serous carcinoma. Combinations with chemotherapy, PARP inhibitors, and PD-1 antibodies are being pursued by others in the clinic. We have identified multiple WI-1 inhibitors that are highly selective for WI-1 and show strong pharmacodynamic responses and anti-tumor activity in vivo.
Other DNA damage repair program targets, we won a tyrosine kinase regulator of the G. Two am cell cycle checkpoint, which when inhibited reduces cell viability by inducing apoptosis of cancer cells.
We one inhibitors from other companies have shown clinical proof of concept as monotherapy in mutual series carcinoma.
[noise] combinations with chemotherapy pump inhibitors, and PD, one antibodies are being pursued by others in the clinic.
We have identified multiple we want inhibitors that are highly selective but we won.
And show strong pharmacodynamic responses and antitumor activity in visa.
Karen Akinsanya: Our molecules also have optimized drug-like properties, including no observable inactivation of CYP3A4, a key liver enzyme. We believe this profile limits the potential for accumulation and the need for dose adjustment of combination products. In summary, we have multiple programs advancing towards the clinic to enable up to three IND submissions in 2022. As these programs advance and transition into development, we are initiating new programs. We have begun drug discovery on an undisclosed target in immunology and have prioritized several additional program opportunities with human genetic support and emerging pharmacology data in oncology and immunology that we expect to advance this year.
Our molecules also have optimized drug like properties, including no observable inactivation of sit three for a key liver enzyme. We believe this profile limits the potential for accumulation and the need for dose adjustment of combination products.
In summary, we have multiple programs advancing towards the clinic to enable up to three <unk> submissions in 'twenty 'twenty two.
As these programs advance and transition into development, we are initiating new programs.
We have begun drug discovery on an undisclosed target in immunology and have prioritized several additional program opportunities with human genetics support and emerging pharmacology data in oncology and immunology, but we expect to advance this year.
David Neil Lebowitz: We are excited about the progress that we and our collaborators are making and look forward to updating you on our R&D activities throughout the year. I will now turn the call over to Joel to review our financial results. Thank you, Karen. And hello, everyone.
We are excited about the progress that we and our collaborators are making and look forward to updating you on our R&D activities throughout the year.
I will now turn the call over to Joe to review our financial results.
Thank you Karen and Hello, everyone. This morning, I'm pleased to discuss our financial results for the second quarter of 2021, and I'll also review our outlook for the year.
David Neil Lebowitz: This morning, I'm pleased to discuss our financial results for the second quarter of 2021, and I'll also review our outlook for the year. We reported total revenue of $29.8 million for the second quarter, up 29% compared to the second quarter of 2020. Software revenue was $24.1 million, representing 15% growth compared to the second quarter of 2020. The growth in software continues to reflect increased adoption of our platform by existing customers and the addition of new customers. Drug Discovery Revenue was $5.7 million for the quarter, compared to 2.2 million in the second quarter of 2020.
We reported total revenue of $29.8 million for the second quarter up 29% compared to the second quarter of 2020.
Software revenue was $24.1 million, representing 15% growth compared to the second quarter of 2020.
The growth in software continues to reflect increased adoption of our platform by existing customers and the addition of new customers.
Drug discovery revenue was $5.7 million for the second quarter compared to $2.2 million in the second quarter of 2020.
David Neil Lebowitz: Second quarter drug discovery revenue included $3.3 million recognized from our collaboration with Bristol-Myers. Discovery revenue also included a payment from a collaborator associated with the acquisition of intellectual property following the achievement of a lead optimization milestone. Gross profit was $12 million in the second quarter of 2021, compared to $13.6 million in the second quarter of 2020. Software gross margin was 77% in the second quarter of 2021, compared to 82% for the same period in the prior year, reflecting our planned investment to drive and support long-term, large-scale adoption of our platform.
Second quarter drug discovery revenue included $3.3 million recognized from our collaboration with Bristol Myers Squibb.
Discovery revenue also included a payment from our collaborator associated with the acquisition of intellectual property. Following the achievement of a lead optimization milestone.
Gross profit was $12 million in the second quarter of 'twenty 'twenty, one compared to $13.6 million in the second quarter of 2020 software gross margin was 77% in the second quarter of 2021 compared to 82% for the same period in the prior year, reflecting our planned investment to drive and support long term large scale adoption of our <unk>.
That's one.
Operating expense was $42.3 million compared to $30.7 million in the second quarter of 2020, reflecting our investment in R&D to advance our pipeline and our technology. The addition of staff to drive long term software sales growth and expenses required to build a public company infrastructure and support the company's growth as we scale globally.
David Neil Lebowitz: Operating expense was $42.3 million compared to $30.7 million in the second quarter of 2020, reflecting our investment in R&D to advance our pipeline and our technology, the addition of staff to drive long-term software sales growth, and expenses required to build a public company infrastructure and support the company's growth as we scale globally. Another expense, which includes changes in the value of equity investments, was $4.6 million in the second quarter of 2021, driven primarily by a loss of $4.9 million from the mark to market of our shares in Morphic Therapeutics.
Other expense, which includes changes in the value of equity investments was $4.6 million in the second quarter of 2021, driven primarily by a loss of $4.9 million from the mark to market of our shares in Morphic therapeutic this compared to $13.1 million in income for the second quarter of 2020, as we revalue our share.
Or is each quarter, we can experience significant fluctuations in the value of our holdings, depending on stock price movements the.
The value of our shares in Morphic recorded on our balance sheet as of the end of the second quarter was $48 million demonstrating the value. We have helped create through this collaboration so far.
We recorded a net loss after adjusting for non controlling interests of $34.6 million for the second quarter of 2021 compared to a net loss of $3.4 million for the same period last year. This year over year change was driven by quarterly fluctuations in the value of our collaboration equity, particularly our shares in Morphic.
David Neil Lebowitz: This compared to $13.1 million in income for the second quarter of 2020. As we revalue our shares each quarter, we can experience significant fluctuations in the value of our holdings, depending on stock price movements. The value of our shares in Morphic recorded on our balance sheet as of the end of the second quarter was $48 million, demonstrating the value we have helped create through this collaboration so far. However, we recorded a net loss after adjusting for non-controlling interest.
As well as planned investments in our business to drive long term growth.
We ended the second quarter with cash resources of $617 million compared to 649 million at the end of the first quarter of 2021.
In March we provided our financial outlook for the full year and today, we are reaffirming that guidance. We expect total annual revenue in 2021 to be in the range of $124 million to $142 million, which includes software revenue of $102 million to $110 million and discovery revenue of 22 to 32.
David Neil Lebowitz: 34.6 million for the second quarter of 2021 compared to a net loss of 3.4 million for the same period last year. This year-over-year change is driven by quarterly fluctuations in the value of our collaboration equity, particularly our shares in Morphic, as well as planned investment in our business to drive long-term growth. We ended the second quarter with cash resources of $617 million, compared to $649 million at the end of the first quarter of 2021.
Yeah.
Also we expect the majority of our second half growth in software revenue to occur in the fourth quarter.
Drug discovery revenue can be highly variable based on the timing of potential milestones related to collaboration agreements.
As we've said before we anticipate that full year operating expense growth will be higher than the 42% annual growth rate. We saw in 2020, primarily driven by our commitment to fund R&D to advance our technology and our internal drug discovery pipeline. We also anticipate that software gross margin will be lower than the 81% reported.
David Neil Lebowitz: In March, we provided our financial outlook for the full year, and today we are reaffirming that guidance. We expect total annual revenue in 2021 to be in the range of $124 to $142 million, which includes software revenue of $102 to $110 million and discovery revenue of $22 to $32. Additionally, we expect the majority of our second half growth in software revenue to occur in the fourth quarter. Drug discovery revenue can be highly variable based on the timing of potential milestones related to collaboration.
In 2020, reflecting investment to drive and support large scale adoption by our customers.
We continue to execute on our strategy across our business, our new collaboration with XI lab enables us to more significantly participate in the downstream value of the programs.
Our collaboration programs and internal pipeline are progressing and we are continuing to make scientific advances in our software to drive large scale utilization both in drug discovery and material science and finally, we have the resources to invest in our long term growth strategy I'll now turn the call back over to Robyn.
Thanks, Joe as we passed the halfway point in the year. We are very pleased with the progress we are making across our business. We continue to innovate and our technology is having a significant impact on our collaborative and internal drug discovery programs. Our internal programs are advancing toward the clinic our software customers are increasingly recognize.
David Neil Lebowitz: As we've said before, we anticipate that full-year operating expense growth will be higher than the 42% annual growth rate we saw in 2020, primarily driven by our commitment to fund R&D to advance our technology and our internal drug discovery pipeline. We also anticipate that software gross margin will be lower than the 81% reported in 2020, reflecting investment to drive and support large-scale adoption by our customers.
The benefits of deploying our solutions at scale and we are growing our team of exceptional scientists and professionals to deliver on our mission of transforming drug discovery of materials design at this time, we'd be happy to take your questions operator.
Ladies and gentlemen, if you have a question or a comment at this time. Please press. The Star then the one key on your Touchtone telephone. If your question has been answered or you wish to move yourself from the queue. Please press the pound key our first question comes from Michael Yee with Jefferies.
Oh, Hi, good morning, and thanks for the update thanks for the question.
Ramy Farid: We continue to execute on our strategy across our business. Our new collaboration with Xilab enables us to more significantly participate in the downstream value of the program. Our collaboration programs and internal pipeline are progressing, and we are continuing to make scientific advances in our software to drive large-scale utilization, both in drug discovery and material science. And finally, we have the resources to invest in our long-term growth strategy. I'll now turn the call back over to Ramy.
He wanted to ask around.
The confidence around your guidance and reflecting the confidence in your business.
Typically you're maintaining the guidance halfway through the year of one or two to 110 for software, but it feels like the low end of that would be a pretty big deceleration not only year over year.
Also just from the first half of what's going on this year. So two parts. One can you just comment on the lower half of your guidance, while youre maintaining the overall guidance.
And your confidence in hitting the higher end and then secondly, if covid may or may not be picking up is that actually a headwind or tailwind to your business, maybe just talk about how covid if at all impact. Thanks. Thank you so much.
Ramy Farid: Thanks, Joe. As we pass the halfway point in the year, we are very pleased with the progress we are making across our business. We continue to innovate, and our technology is having a significant impact on our collaborative and internal drug discovery programs. Our internal programs are advancing toward the clinic, and our software customers are increasingly recognizing the benefits of deploying our solutions at scale.
Joe do you want to take the first part of that question and I can.
Sure. Thanks, Mike Yeah. Thanks, Rami Thanks, Mike for your question sure. So as you mentioned, we're maintaining our overall guidance and our software guidance as a part of that.
And obviously that annual guidance provides you with our expectations for the back half of the year.
Operator: And we are growing our team of exceptional scientists and professionals to deliver on our mission of transforming drug discovery and materials design. At this time, we'd be happy to take your questions. Operator. Ladies and gentlemen, if you have a question or a comment at this time, please press the star, then the one key on your touch-down telephone. If your question has been answered or you wish to move yourself from the queue, please press the pound key.
So we have pretty good visibility on our business based on the fact that we have very high historical.
Our customer renewal rates.
But there is some inherent variability in the business, particularly with regards to new customers that we add each quarter as well as.
Decisions from our large customers who might be making.
Commitments for much larger deployment of our solutions in a particular quarter, which as you know is a key growth strategy for us.
Michael Jonathan Yee: Our first question comes from Michael Yee with Jeff... Hi, good morning, and thanks for the update. Thanks for the question. We wanted to ask around about the confidence around your guidance and how it reflects the confidence in your business. Specifically, you're maintaining the guidance halfway through the year of 102 to 110 for software. But it feels like the low end of that would be a pretty big deceleration, not only year over year, but also just from the first half of what's going on this year. So there are two parts.
No.
Some of these decisions actually individual decisions can be quite large and can have a pretty significant impact on a particular quarter growth rate. So as we look out to the rest of the year.
We think that the guidance that we've provided appropriately captures some of this inherent short term variability and where are you now and so that's why we reaffirmed the guidance.
And with regard to Covid as we talked about in 2020, I think a lot of software companies did the same thing there did seem to be.
Some.
David Neil Lebowitz: One, can you just comment on the lower half of your guidance while you're maintaining the overall guidance? You know your confidence and hitting the higher end, and then secondly, if COVID may or may not be picking up, is that actually a headwind or tailwind for your business? Maybe just talk about how COVID, if at all, impacts things. Thank you so much.
Sort of interesting uptake cents and renewed interest in computational methods as a result of our scientists essentially being locked out of their labs.
I'd say at this point and I think this is what we're hearing from a number of other companies that sort of accumulation of of the sort of the long term.
David Neil Lebowitz: Jill, you want to take the first part of that question, and I can... Sure. Thanks, Mike, for your question. Sure. So, as you mentioned, we're maintaining our overall guidance and our software guidance as a part of that, and obviously, that annual guidance provides you with our expectations for the back half of the year. So we have pretty good visibility into our business based on the fact that we have very high historical customer renewal rates.
Absence of travel and and and.
Face to face interactions I would say is is not helping.
It's making it of course more challenging.
To.
Initiate.
Strategic discussions not impossible, obviously, but it's more of a more challenging.
David Neil Lebowitz: But there is some inherent variability in the business, particularly with regard to new customers that we add each quarter as well as decisions from our large customers who might be making commitments for much larger deployments of our solutions in a particular quarter, which, as you know, is a key growth strategy for us. So some of these decisions, actually, individual decisions can be quite large and can have a pretty significant impact on a particular quarter's growth rate.
Again, especially given that it's now been approached I think you were a half a year and a half or so of <unk>.
Essentially zero zero travel.
Yeah.
That's very helpful. Thank you guys, yes, absolutely yeah.
Our next question comes from Michael Ruskin with Bank of America.
Hey, guys. Thanks for taking the question.
Really quick follow up on what Mike was just asking about you mentioned sort of strong renewal rates and softer business could you give us could you quantify that a little bit how has that trended in the first half of the year you're.
David Neil Lebowitz: So as we look out to the rest of the year, we think that the guidance that we've provided appropriately captures some of this inherent short-term variability. And so that's why we reaffirmed the guidance. And with regard to COVID, as we talked about in 2020, I think a lot of software companies did the same thing. There did seem to be some interesting uptakes and renewed interest in computational methods as a result of scientists essentially being locked out of their labs.
Are you still in that's really not in the high nineties.
Any impact as we sort of lap the comps from last year.
Sure. Thanks, Mike for the question so.
That's one of our annual key performance.
Indicators and we don't provide specific guidance. So we're reporting on the mid year.
Numbers as they can be affected by timing, but what I'd say is that you know last year, we came in at 99%.
Renewal of those contracts over 100.
David Neil Lebowitz: I'd say at this point, and I think this is what we're hearing from a number of other companies, the sort of accumulation of the long-term absence of travel and face-to-face interactions is not helping. It's making it, of course, more challenging.
$1000 and over the last seven years, it's never dipped below 96%. So we're pretty confident in our ability to continue to achieve.
Achieve a very high customer renewal rate.
Okay, I'll take that and then on the on the XI lab.
Michael Leonidovich Ryskin: [inaudible] That's very helpful. Thank you guys for both of those. Yeah, absolutely. Yep. Our next question comes from Michael Ryskin with Bank of America. Hey guys, thanks for taking the question. Um, really quick follow up on what Mike was just asking about. You mentioned sort of strong renewal rates in the software business. Could you give us could you quantify that a little bit? How has that trend been in the first half of the year? You know, you're still in the high 90s.
The collaboration we announced recently.
You mentioned first of all the upfront payment could you give us a sense of sort of outsized would be we saw some details there in terms of the potential milestones.
Specifically about the upfront.
And when it'll be recognized and then sort of a big breakthrough bigger picture question on that should we expect more deals like that you have a couple of different ways of working with biopharma or between the software business the jbs.
David Neil Lebowitz: You know, any impact as we sort of lap the comps from last year? Sure. Thanks, Mike, for the question. So that's one of our annual key performance indicators, and we don't provide specific guidance or reporting on the mid-year numbers, as they can be affected by timing. But what I'd say is that, you know, last year we came in at 99% renewal of those contracts over $100,000. And over the last seven years, it's never dipped below 96%.
The partnerships and now this is again something a little bit new.
Another Avenue, we expect you to.
For more going forward.
Sure I'll answer the first part maybe yes.
Get to the third.
So with regard to the size of the upfront payment we didn't disclose that it has to help US fund some of our research activities.
And we are still evaluating the accounting around this deal, but we expect that.
David Neil Lebowitz: So we're pretty confident in our ability to continue to achieve very high customer renewal rates. Okay, I'll take that. And then on the Xylab collaboration announced recently, you mentioned, first of all, the upfront payment. Could you give us a sense of sort of how sizeable it will be? We saw some details there in terms of the potential milestones, but specifically about the upfront payment and when it'll be recognized. And then sort of the bigger picture question on that: should we expect more deals like that?
Like many of these types of deals that the upfront payment will be recognized over a period of time.
And I think if you think about a typical deals where there's upfront payments that we've talked about in the past.
That has been the case and in many cases, it's been over several years.
Okay, and then with regard to this kind of deal yeah. We're very excited about this kind of deal we.
R and discussions with a number of companies around sort of innovative types of deals. This is the kind of thing as we've sort of talked about before you know we're not only innovating in the science, where we're definitely.
David Neil Lebowitz: You know, you have a couple of different ways of working with Biopharma or between the software business, the JVs, the partnerships, and now this is, again, something a little bit new. Is this another avenue we expect you to sort of explore more going forward? Sure, I'll answer the first part, and maybe Ramy might want to add to the third. So, with regard to the size of the upfront payment, we didn't disclose that. It is to help us fund some of our research activities.
Think pretty creative in the types of deals we've done as you can see from the history of the company going going all the way back to to Nimbus.
And we're very pleased with the Nate.
The nature of those interactions now and certainly expect to do other other collaborations in the future.
David Neil Lebowitz: And we are still evaluating the accounting around this deal, but we expect that, like many of these types of deals, the upfront payment will be recognized over a period of time. And I think if you think about typical deals where there are upfront payments that we've talked about in the past, that has been the case, and in many cases, it's been over several years. Okay, and with regard to this kind of deal, yeah, we're very excited about this kind of deal.
Okay. Thanks, so much.
Of course.
Our next question comes from Gary Nachman with BMO capital markets.
Hi, Good morning first for malt one what's involved in the IND, enabling studies what will be included in the preclinical package that you plan to file next year.
And I think you'll be presenting some preclinical data for one of your programs in the second half and what form do you think that's going to be.
David Neil Lebowitz: We are in discussions with a number of companies around some sort of innovative types of deals. This is the kind of thing we've sort of talked about before, you know, we're not only innovating in the science, but we're definitely, I think pretty creative in the types of deals we've done, as you can see from the history of the company going all the way back to Nimbus, and we're very pleased with the nature of those interactions now and certainly expect to do other collaborations in the future. Okay, thanks so much. Our next question comes from Gary Nachman with VMO Capital Markets. Hi, good morning.
And then last one so it seems like you are looking to expand your platform to other areas in materials like aerospace and electronics, how much youre getting an initiative will you have behind those efforts and how aggressive will you be finding partnerships in those areas relative to the life sciences that you've been doing more.
Thanks.
Yep, Great Karen do you want to take the first two and I'll cover the loss yeah.
Sure so with respect to the Muslim program we.
We'll be presenting the IMD, enabling package.
Gary Jay Nachman: First, for Malt 1, what's involved in the IND-enabling studies? What will be included in the preclinical package that you plan to file next year? And I think you'll be presenting some preclinical data for one of your programs in the second half. In what form do you think that's going to be? And then last one, so it seems like you're looking to expand your platform to other areas and materials like aerospace and electronics.
The FDA, which will include the results of J L. P talk studies.
All of that's M C.
Our support that we've got for our clinical.
Product and really the typical package that you would expect to see going into the FDA to support approval of the 90 and initiation of clinical studies.
With respect to the science, we've continued to make great progress that we've characterized that wont one inhibitor and.
Gary Jay Nachman: How much of an initiative will you have behind those efforts? And how aggressive will you be finding partnerships in those areas relative to the life sciences that you've been doing more of? Thanks. Great. Karen, you want to take the first two, and I'll cover the last one.
And a number of different models.
And have new data.
Respect to how <unk> perform.
Both alone as monotherapy and in combination with other products.
Karen Akinsanya: Yes. Sure. So with respect to the MOLT1 program, we will be presenting the IND-enabling package to the FDA, which will include the results of GLP-TOP studies, all of our CMC support that we've got for our clinical product, and really the typical package that you would expect to see going into the FDA to support approval of an IND and initiation of clinical studies. With respect to the science, we've continued to make great progress there. We've characterized our MOLT1 inhibitors in a number of different models and have new data with respect to how MALT1 performs, both alone as monotherapy and in combination with other products.
You can imagine we've been putting together abstract sending them out to the regular scientific forums and so we expect that.
To be able to shed some of that in one of those at scientific meetings. Later this year, so looking forward to that.
Yeah, and with regard to material science. Thanks for asking about that we're of course very very excited about the progress we're making on that on that business.
Increased adoption of the technology by as you said as you as you correctly pointed out by <unk> by a pretty diverse set of industries. We are as we've said before we are leveraging a lot of the existing technology, but as we get deeper and deeper into this.
Ramy Farid: As you can imagine, we've been putting together abstracts and sending them out to the regular scientific forums, and so we expect to be able to share some of that at one of those scientific meetings later this year. And with regard to Materials Finance, thanks for asking about that. We're, of course, very, very excited about the progress we're making on that business, the increased adoption of the technology by, as you correctly pointed out, a pretty diverse set of industries.
Field, we are recognizing areas, where we can build on the existing technology or develop new new advances and we are absolutely investing in that as a result of this sort of clear interest in <unk>.
Computation and quite a number again quite a number of these different fields. So it's a it's a very active area of research again, it's very important to point out it leverages a lot of the existing technology and where we're building on that.
Ramy Farid: We are, as we've said before, leveraging a lot of the existing technology, but as we get deeper and deeper into this field, we are recognizing areas where we can build on the existing technology and develop new advances. And we are absolutely investing in that as a result of this sort of clear interest in computation in quite a number, again, quite a number of these different fields. So it's a very active area of research.
Oh, and then you asked about collaborations.
That's absolutely something as we've talked about before that we're pursuing we're very pleased with the progress that's being made there with regard to discussions around collaboration and you should absolutely expect to hear more about that in the future about <unk>.
Collaborations following a very similar path that we took with our life Sciences, a number of years ago already mentioned Nimbus and of course, we've mentioned morphic.
Ramy Farid: Again, it's very important to point out that it leverages a lot of the existing technology, and we're building on that. Oh, and then you asked about collaborations. That's absolutely something, as we've talked about before, that we're pursuing. We're very pleased with the progress that's being made there with regard to discussions around collaborations, and you should absolutely expect to hear more about that in the future, about collaborations following a very similar path that we took with life sciences a number of years ago. I've already mentioned Nimbus, and, of course, we've mentioned Morphic.
We we learned so much from those collaborations that generated a lot of value those were incredibly important for Schrodinger Oh, that's not lost on us and that's something that we absolutely intend to pursue on the material science side as well.
Okay, great. Thank you.
Mhm.
Our next question comes from David Lebowitz with Morgan Stanley.
Thank you very much for taking my question. When you look back at 2020, there was a huge step up in HCV I believe 10 companies when it.
Ramy Farid: We learned so much from those collaborations. They generated a lot of value, and they were incredibly important for Schrodinger.
It went from 10 to companies.
Company 16 companies for that's right.
An ACB.
Ramy Farid: That's not lost on us, and that's something that we absolutely intend to pursue on the material science side as well. Okay, great. Thank you.
What quarter did you.
What does it do you see the bulk of that shift and I guess when do renegotiations.
David Neil Lebowitz: Our next question comes from David Lebowitz with Mork & Phelan. Thank you very much. When you look back at 2020, there was a huge step up in ACV, I believe, companies for companies over. What quarter?
With those particular companies, where and when are they on tap.
Sure I can talk about that.
Thanks, David So.
I think consistent with what we've been talking about this year that.
David Neil Lebowitz: What quarters did you see the bulk of that shift? I guess when we do renegotiations with those particular companies, when are they? Thanks, David. So I think consistent with what we've been talking about this year, that the fourth quarter is expected to provide most of the growth in the second half of the year. Just because of the seasonality and calendarization of our business on the software side, we do see a lot of contracts and a lot of large contracts renewing and, obviously, making decisions on what size to renew at in the fourth quarter. So we see it throughout the year really, but in the fourth quarter, there can be a concentration.
Fourth quarter is expected to be.
Most of the growth in the second half of the year.
You know.
A lot of it just because of the seasonality in calendar <unk> of our of our business on the software side, we do see a lot of contracts and a lot of large contracts renewing and obviously, making decisions on what size to renew at.
In the fourth quarter.
So we see it throughout the year really but the fourth quarter. There there can be a concentration.
David Neil Lebowitz: I'm sorry, the second part of your question was, again, remind me, please, I guess. Following up on that, when does the contract start something that would start that early or does it really come down much? Yeah, I can answer that, yeah, sorry, sorry, go ahead. The precedents are, are big purchasers, typically more like, Well, with regard to your question about when the negotiations start, you know, they actually really happen throughout the year.
Alright, and the second part of your question was again remind me please.
Yes.
Following up on that is is when do negotiations for those particular.
Contract start is it something that they would start this early or does it really come down much closer to the actual renewal date when those discussions occur.
I can answer yes, Oh, sorry, sorry go ahead historically, what's what's the precedents are.
Is are big purchasers typically more likely to continue being big purchasers.
Well with regard to your question about one the negotiations start.
They actually really.
Our happened throughout the year there are constant interactions.
David Neil Lebowitz: There are constant interactions with the companies throughout the year. You know, we're not just sort of, you know, sending the software over the fence and not speaking to them until a few weeks before the renewal. So, we're learning about the impact the software is having on the technology, and talking to them about new advances. Remember, we have four releases a year.
Oh, what the companies throughout the year you know, we're not just sort of you know sending the software over the fence.
Not speaking them until until a few weeks before the renewal.
So where we're learning about the impact of software is having on the technology talking to them about new advances remember we have four releases a year. So every time, there's a release there that's an opportunity to reach out talk about the new new tech new products that have come out new technologies.
David Neil Lebowitz: So, every time there's a release, that's an opportunity to reach out and talk about the new products that have come out, new technologies, new impacts that we're seeing from the collaborations. So, the discussions are really happening throughout the year, and obviously intensify as you get closer to the renewal. So, I hope that answers that part of the question. And then, I think you asked, "oh, yeah, go ahead." Are they the ones that usually do that?
New impacts that we're seeing from the collaborations in that so the discussions are really happening throughout the year, obviously intensify as you get closer to the renewal. So I hope that I hope that answers that part of the question.
And then I think you asked Oh, Yeah go ahead.
Their propensity to are they the ones that's usually yeah.
David Neil Lebowitz: Yeah, Well, again, when you see the kind of retention rate that we're having, right, in the very high 90s, there's no right that that's the answer there, right? If, if, if there were, we wouldn't have that kind of retention. Wright.
Well again, when you see the kind of retention rate that we're having right and the very high nineties. There's no right. That's that that's the answer there right. If if if there were we wouldn't have that kind of retention.
Right if.
David Neil Lebowitz: And one thing I can add to that, David, is that we're very pleased that in this quarter we're seeing the continued momentum and trends that we saw in previous quarters, which is driving growth on the software side, which is not just the addition of new customers but also customers increasing the adoption of our solutions. So we've seen that for several quarters as an ongoing trend, and so we think that we can continue in the future, encouraging customers to increase adoption of the solution at higher levels. Is it possible you could run through the...
A meaningful any cuts yet.
And the one thing I'm, sorry, Rama and one thing I can add to that David isn't it.
Very pleased that in this quarter that we're seeing the continued momentum.
And trends that we saw in previous quarters, which is driving the growth on the software side, which is not just the addition of new customers, but also customers increasing the adoption of our solutions. So we've seen that for several quarters as an ongoing trend and so.
We think that we can continue.
In the future and.
Encouraging customers to increase adoption of the solutions.
That higher levels.
And one additional question on the drug discovery side is it possible you could.
Run through the.
David Neil Lebowitz: Drugs from Partners that, I think we're all thinking about who should answer that. So I think Joel kind of hinted at that. It's very difficult to, first of all, it's difficult for us to predict when those sorts of events will happen, but it's also, because of the nature of the agreements and confidentiality and so on, that's not for us to be discussing. That's really for the collaborators, to be very open about where their programs are and their plans for the clinic.
Drugs from partners that we could expect to see data from.
Before year end.
Which drugs might actually step into the clinic.
Uh huh.
So I'll think about who should answer that.
So I.
I think Joel kind of hinted at that it's very difficult to foot first of all it's difficult for us to predict you know what when those sorts of events will happen, but it's also.
Because of the nature of the agreements and confidentiality and so on.
That's not.
For us to be presenting thats really for the collaborators.
Number of them have been pretty open about that I mean, one of them is a public company a number of them have been.
Very.
David Neil Lebowitz: So I think that's the kind of information that's pretty straightforward to get from the collaborations that we have where they have more advanced programs. A number of the other collaborations that we started more recently, of course, are earlier and are still in sort of stealthy mode. And so it'll take a little bit longer, of course, to hear about that. But I hope that answers the question. If not, please ask it another way; yeah, go ahead.
Open about where their programs are in their plans for the clinic. So I think that's the kind of information that's that's pretty straightforward to get from the collaborations that we have where they have more advanced programs.
A number of the other collaborations that we started more recently of course, our earlier and are still in sort of.
Stealthy mode, and so it'll it'll take a little bit longer of course to hear about that but.
I hope that's answering the question if not please ask it a different yes go ahead.
David Neil Lebowitz: Okay, great. Our next question comes from Matt Hewitt with Craig Howlett. Good morning, and thank you for taking the questions.
Thank you very much for taking my questions.
Okay great.
Our next question comes from Matt Hewitt with Craig Hallum.
Good morning, and thank you for taking the questions a couple on utilization and then I've got one regarding the new collaboration but regarding utilization.
Matthew Gregory Hewitt: A couple on utilization, then I've got one regarding the new collaboration. But regarding utilization, can you give us a sense for how many of your customers are coming back multiple times during a year to increase their capacity versus just coming in once a year and adding what they believe they will need for the upcoming year? Sure.
Can you give us a sense for how many of your customers are coming back multiple times during the year to increase there.
Capacity versus just coming in once a year and adding what they believe they will need for the upcoming year.
David Neil Lebowitz: Yeah, that's a good question. We can't really quantify that. But what we can say is the very, very large majority of deals are annual.
Sure Yeah. That's a good question, we can't really quantify that.
But what we can say is the very very large majority of deals are.
Our annual there are a few examples.
David Neil Lebowitz: There are a few examples of customers that purchase the software in a way that does require an increase during the year as the number of We currently have six of the collaborative programs that we're involved in are 9D enabling studies, and four are in phase one. Just to give a sense of sort of where those programs are. I'm so sorry to do that, but I just wanted to throw that in there.
Of customers that.
Purchased the software in a way that does require tight.
<unk>.
Upping during the year as the number of compounds that theyre running calculations on as they hit the limits that they that they purchase but that's unusual the large large majority of our annual licenses just going back I think to the question just before just one that I'm really sorry to do this.
Just a little bit of information that might be useful to have we currently have.
David Neil Lebowitz: Did you have another question, or did I answer your question? Yeah, I did. And that's fine. Regarding visibility, how much visibility do you have into your current customers' utilization trends? And does that enable you, given where we are at this point in the year, you know where the customer is from a utilization perspective, and you can see the growth. Does that really help you from a projection standpoint on what that customer is likely to renew at? No, we do not have insight into their usage. That's something that is closely held by the customers. That's not something that we have the ability to quantitatively look into.
Six of the collaborative programs that we're involved in are 90, enabling studies and four in phase one just to give a sense of sort of where those brokers I'm. So sorry to do that but I just wanted to throw that in there.
Did you have another question or did I answer all right yeah, Yeah, I didn't know, but then that's fine rigor.
Regarding it.
Visibility.
How much visibility do you have into your current customers utilization trends and what does that enable you given where we're at this point in the year, you know where the customer is at from a utilization perspective, and you can see the growth does that really help you from a projection standpoint on what that customer's likely to renew at.
No we do not have insight into their usage that is something that is a closely held.
So the customers that's not something that we have.
The ability to quantitatively look into that we do however of course.
David Neil Lebowitz: We do, however, of course, know one thing that's important here, which is... We know how they're capped. Obviously, we know how many licenses they have. We don't know if they're maxing those out, but we know what their maximum is. And we know that about almost every one of our customers, including the largest customers. The maximum number of calculations they can run is still an order to two orders of magnitude lower than what we're using in our collaborations and what we're using internally.
No one thing that's important here, which is.
We know how how they're capped obviously, we know how many licenses. They have we don't know if they're maxing goes out, but we know what their maximum is.
And we know that in almost every one of our customers, including the largest customers.
The maximum number of calculations. They can run is still in order to two orders of magnitude lower than what what are what we're using in our collaborations and what we're using internally.
David Neil Lebowitz: And so we can have those sorts of discussions, and we're engaged in those discussions. So even though, again, we don't have access to the exact usage, you know, day to day, there is that general knowledge. And that's what the nature of the discussions generally is.
And so and we can have those sorts of discussions and we're engaged in those discussions so even though again, we don't have access to the exact usage you know day to day.
There is that general knowledge and that's what the nature of the discussions generally are.
David Neil Lebowitz: First of all, pointing out that fact that I just said, and then talking about how, you know, what's the how are we going to get to higher usage? And often that requires training, expertise, both, by the way, technical and, you know, both on the technical side. So for example, obviously, to be able to run that number of calculations, you need access to a lot of computers, and that generally happens through the cloud. So there's training there on how to use the cloud at this large scale. And then obviously, you know, deploying the technology from the point of view of science as well. That's really helpful. Thank you.
First of all pointing that fact out what I, just said and then talking about hot.
What's the.
How are we going to get to those higher usage and often that requires training expertise at both by the way technical.
Both on the technical side. So for example, obviously to be able to run that number of calculations you need access to a lot of computers and that has to that generally occurs through the clouds. So theres training there.
To use the cloud at this large scale on that obviously deploying that technology from the point of view of the science as well.
That's really helpful. Thank you and then I guess, one last one from me shifting gears, a little bit regarding the collaboration with XI lab.
Ramy Farid: And then, I guess one last one for me, shifting gears a little bit, regarding the collaboration with Xylab, were they an existing customer? Or how did that relationship come about? And as you look at it, are you typically seeing that these customers are new to the platform? Or are existing customers saying that, you know, we would really appreciate your help and assistance to kind of work through these calculations and this work?
Were they an existing customer or how did that relationship come about and as you look at it adding more of these types of partnerships are you typically seeing that these are these customers are new.
To the platform or are they existing customers, saying that you know we would really appreciate your help and assistance to kind of work through these calculations and this this work.
Yeah.
Ramy Farid: Yeah. Thinking back at all of the collaborations we've done, either they were with companies that were newly created, so of course, you know, we didn't know, but there was somebody in the VC that funded them or one of the founders that knew Schrodinger from a previous interaction. Remember, we're pretty well known in the field, and I think it's hard to find somebody who doesn't know who Schrodinger is or has some kind of experience with the software, either in the current position they're in or from a previous position. That was the case with Xi as well.
Thinking back at all of the collaborations we've done either they were with companies that were newly created so of course, you know where did no, but but there was somebody in the either in the VC that funded them or one of the founders that that new schrodinger from a preview.
As you know interaction remember, where we are pretty.
You know, we're we're pretty well known in the field and and and I think it's hard to find somebody who doesn't know who showed me where it had some kind of experience with the software either in the current position there in or from a previous position that was the case with XI as well we've known them.
Ramy Farid: We've known them for a while. We've known members of the board, things like that, and so that's generally how it's going. There isn't usually any sort of surprise or an interaction where there wasn't already some previous sort of interaction with some key person at the company. I hope that's answering the question. Yeah, that helps. Well, ladies and gentlemen, this does conclude the Q&A portion of today's conference and also concludes the conference call for today. You may all disconnect and have a wonderful day.
For a while we've known members of the board.
Things like that and so.
Yeah.
That's generally how it there isn't usually some sort of surprise R. R and interaction where there wasn't already some previous sort of interaction with some key person at the company.
That's answering the question yeah that helps thank you.
Ladies and gentlemen, this does conclude the Q&A portion of today's conference. It also concludes the conference call for today, you may all disconnect and have a wonderful day.
Thank you thank.
Thank you everybody.