Q3 2022 Schrodinger Inc Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Everyone. Thank you for standing by.
With your third quarter of 2022 financial results My name is Chris and that'd be your operator for today's call.
At this time all participants.
The only mode.
Presentation that there'll be a question and answer session.
Question the assertion.
One one on your telephone.
This call is being recorded at the company's request now I'd like to introduce you hold for today's carpets.
<unk> <unk>.
President of Investor Relations and corporate Affairs. Please go ahead.
Thank you and good afternoon, everyone welcome to today's call during which we will provide an update on the company.
Third quarter, 20th 22 financial results.
Today, we issued a press release them right they're finished.
Finish the results in progress across the company, which is available on our website at <unk> Dot Com here with me on a call today around me for me Chief Executive Officer, Jeff Cortez, Chief Financial Officer.
President therapeutic.
Following are prepared remarks.
I'd like to remind you that during today's call management will make statements related to a business that are forward looking under made pursuant to the safe Harbor provision of the private Security Litigation Reform Act of 1995, including without limitation.
Related to our outlook for the full year 2022 and for the fourth quarter ending December 31st 2022.
Plan to accelerate the growth of our software business and events are collaborative and proprietary drug discovery program, the timing of potential Andy submissions and the initiation of clinical trials for our proprietary Tech discovery program.
Critical potential is favorable properties of our compound.
Spectation is related to the use of our cash resources as well as our future operating expenses. These forward looking statements reflect our current news about our plans and ketchup expectations strategies and prospects.
Based on the information currently available to us.
She has to be <unk>.
Actual results may differ materially from what we project today due to a number of important factors, including the considerations described and the risk factor section and elsewhere in the filing to me make with the S. D. C. We're putting our Form 10-Q that a period ended September 30th 2022. These forward looking statements represent our views only as of today, Let me caution you that we.
May not update them in the future, but as a result of new information feature that's or otherwise.
I'd like to turn the call over to Bonnie.
And thank you everyone for joining us today.
The computational platform that is transforming the way therapeutics and materials are discovered our platform has enabled us to create a balanced business model with each component of our business, providing a distinct risk reward profile.
Since our software to Biopharma and materials companies as well as government and academic institutions around the world.
Licensing is continuing to provide a growing source of revenue that enables continued investment and innovation.
Additionally, we work on collaborative projects that are contributing to our deflecting drug discovery revenue and we have a.
[noise] expanding portfolio of 18 proprietary drug discovery programs with first in class or best in class potential.
Today, we reported total revenue for the third quarter of $37 million or 24% increase over the prior year. The strong growth was driven primarily by approximately 12 million in drug discovery revenue.
Third quarter software revenue was 24.7 million, which was in line with our expectations.
Out to the remainder of the year, we have tightened our 2022 financial guidance and are pleased to remain within the original total revenue range, even in a challenging economic environment.
A moment, Jeff will review, our third quarter financial results and provide more detail on our fourth quarter and full year 2022 financial guidance.
Here shortly from Karen we are also continuing to make progress across our pipeline of collaborative projects and proprietary programs today, we announced that our phase one study.
S. T. R 15 O five is open for patient enrollment. We also reported that in December we will present, new preclinical data for our CDC seven inhibitor.
921, but the average annual meeting.
We are also continuing to expand our drug discovery portfolio, and recently announced a partnership with Lily for the discovery of small molecule compounds for an undisclosed target.
The agreement, we receive an upfront payment and are eligible to receive up to $425 million in discovery development and commercial milestone payments as well as royalties on sales.
We are pleased with the progress we have made so far this year, particularly in a challenging macroeconomic environment fundamentals of our business are strong.
A solid cash position, having ended the third quarter with approximately $479 million.
We are continuing to focus on executing across all aspects of our business to generate value as we advance our vision of transforming drug discovery and materials design I will now turn the call over to Jack to review, our third quarter financial results and financial guidance.
Hello, everyone.
Can also be here with the claim today for my first spiritual results call <unk>.
Hope you heard it plus one day, we have a deep and broad computational platform British creating value through technology licensing collaborations under development about proprietary programs.
We delivered a strong third quarter driven by better than expected drug discovery revenue.
Increasing contribution from drug discovery refresh the positive returns were saying for me investments, where you're married in that business over the last four years.
The underlying trends in the software business, a strong and the reporter growth reflects the effect of significant multiyear contract revenue recognized in queue through 2021.
Adjusting for those large pre purchases in the prior year software revenue growth in Q3 would've been consistent with the growth reported in Q1 and Q2 this year.
Total revenue was 37 million for the quarter up 24% compared to the third quarter of 2021.
Software revenue was 24.7 million in line with our expectations and similar to the $24.3 billion reported for the third quarter of last year.
Discovery revenue was $12.3 million for the third quarter of 2022 compared to $5.6 million in the third quarter of 2021.
Drug discovery revenue for the quarter included $9.9 million in revenue recognized for our ongoing collaboration with Bristol Myers Squibb as.
As well as revenue for milestones related to other collaborative and proprietary programs.
During the quarter the rights to one of our collaboration Programmes reverted to us after BMS elected not to proceed with further development.
Resulted in increased revenue recognition due to accelerate the completion of our obligations related to the program during the period.
Gross profit with $17.2 million in the third quarter compared to 11.1 million for the third quarter of 2021, representing.
Representing a 55% increase year over year.
Software gross margin was 72% in the third quarter of 2022, which is similar to the third quarter last year and consistent with our expectations.
Operating expenses were $63.4 million compared to 45.8 million for the same quarter last year.
The increased expenses reflect growth and head count continued investment in our platform the progress of our proprietary and collaborative programs.
We recorded a net loss of 39.9 million for the third quarter of 2022 compared to a net loss of $35 million for the same period in the prior year.
We ended the quarter with cash cash equivalents marketable securities and restricted cash balances of approximately $479 million compared to approximately $513 million June 30th 2022.
I will now turn to our financial guidance for 2022.
With one quarter remaining in the year, we are upgrading our full year financial guidance.
We have now or to arrange the total revenue guidance for the year. We now expect total revenue for 2022 to be in the range of $167 million to $175 million compared to our prior range of 161 going into $181 million.
The mid point of our range is 171 million, which is the same mid point is that prior guidance.
A new range corresponds to 21% to 27% growth over 2021.
Now expect software revenue to range from $122 million to $127 million compared to 126 million to 136 million previously.
The reduced range is based on several factors that have emerged in the last three months.
Continuing effect in queue for.
These factors include a modest impact from foreign currency lower than anticipated adoptions scale up by smaller biotech companies impacted by the capital markets environment.
Uncertainty about the timing of increases in adoption with our technology, among our largest customers.
Those increases typically occur in queue for.
New guidance reflects remaining uncertainty about our customers here in purchase decisions.
The implied queue for revenue range of 34% to $39 million reflects the potential for significant contracts to still be completed in queue for which are excluded from the lower end of the guidance ranch.
We are increasing the range of are expected drug discovery revenue for 2000 $22 million to $45 million to $48 million compared to our prior expectation of $35 million to $45 million.
A greater than anticipated drug discovery revenue for the year is driven by BMS, a strategic decision not to advance one collaboration program and by meeting milestones other drug discovery collaboration Department programs.
The remaining uncertainty for the year relates to the timing of completion and revenue recognition for certain other outstanding collaboration projects.
Finally, we now expect that operating expense growth for the year will be approximately 40% compared to our prior expectation with just under 42% growth.
The lower growth and expenses reflects our latest expectations for the timing of hiring the other expense drivers.
We continue to expect a software gross margins to be in the mid seventies.
We are very encouraged challenging macroeconomic environment.
<unk> continues to grow strongly.
We are committed to delivering continued growth in software licensing revenue in to building increasing value in a collaboration and proprietary programs.
A balance sheet as strong as our technology platform is becoming more and more validated and differentiate it.
With technology licenses in place across the biopharmaceutical industry.
Partlet programs and collaborations with some of the largest and most innovative companies in the industry and 18 proprietary programs advancing through development. We are very confident that we will deliver continued growth and increasing value in the coming quarters.
I will now turn the call over to count for an update on a drug discovery programs. Thank you Jackson good afternoon, everyone.
We are continuing to make important progress across the heart failure within a collaborative pipeline. There are nine programs currently in the clinic and 12 projects are advancing through the discovery phases. Additionally over the last five years, we have continued to increase the number of proprietary programs out of therapeutics could you. Please working.
On Tuesday, our proprietary portfolio.
Includes 18 programs, some of which apartment and some of which are wholly owned.
As we discussed it platform day cumulative technical success rate <unk> collaborators cheeping across the growing number of completed and ongoing programs signals meaningful improvements relative to published industry averages.
We believe this is a very promising trends that highlights the power as our computational platform.
As programs complete discovery and move into the clinic, we are able to initiate new programs.
Heard some rami, we recently entered into a new relationship with Lily to advance the discovery slow molecules for an undisclosed target Lilly.
<unk> will be responsible for disease model studies completion of preclinical and clinical development as well as commercialization of the product.
Notably the program Handoff Killilea cuz earlier than in our collaboration with BMS them Takeda.
In addition to an upfront payment we are eligible to receive up to 425 million in discovery development and commercial milestone payments and royalties on future thousand all geographies.
New program is the 15th so which we are eligible to receive royalties uncommercial sales.
Jeff mentioned BMS made a strategic decision to Deprioritized one of our partners programs.
Given the progress we have made him look genetically validated target we have elected to continue to invest in the program internally.
But to be able to share more information about this and other proprietary programs. In 2023. We are also exploring an alternative targets with mutual interest with BMS.
Turning to a wholly owned pipeline today I will review our three most advanced programs.
One has emerged as a potential therapeutic target for the treatment of b cell malignancies, including relaxed or resistant a b C. D. L. B C L and mantle cell lymphoma with initial clinical signs already described by others and Cielo and S. L. L.
While our current focus is on be some malignancies, there isn't matching electric chair, suggesting that Brooklyn inhibition could also have potential in solid tumors and auto immune disease.
Today, we announced that the phase one study of Al <unk> inhibitor S. G. L 15 O five is open to patient enrollment.
This dose escalation trial will evaluate the safety pharmacokinetics pharmacodynamic and early signals of antechamber activity of S. G. L 15 O five as monotherapy.
Once the recommended dose is determined and expansion cohorts. This plan to evaluate S. G. L 15 O five in combination with other therapies, such as BT K N B C. L. Two inhibitors.
Is the first clinical study emerging from our proprietary pipeline and marks an important milestone for our company.
Amazing to have only one program clinical data from other companies. We one program says provided evidence of clinical activity in several forms of cancel the high unmet need including proof of concept of nutrient and ovarian cancers.
From other <unk> programs have also underscored the importance of identifying highly selective molecules with optimize properties that can help avoid drug drug interactions and duff targets effects that have been observed with we Wanna inhibitors.
We have already identified compounds from multiple leads series the chart potent selective I'll demonstrate antechamber activity wave Desireable Aadmi pharmacokinetic and Pharmacodynamic properties. We are continuing preclinical studies and now expect to selected development candidates in the first half of 2023.
And submit to 90 in the first half of 2024, we believe taking additional time to characterize and benchmark, having the molecules will afford us the opportunity to advance a potential best in class, we want inhibitor for using combinations.
Now I will turn to a C. D C. Seven program a target in the DNA damage repair pathway.
Today, we announced that we will present, new preclinical data for around with C. D. C. Seven inhibitor S. G 29, 21 at the American Society of Hematology, All Ash annual meeting next month.
And the abstracts published today, we report the S. G 29, 21 demonstrated strong antitumor activity in vitro and M. L cell models and <unk> models S. G. 29, 21 also shows strong antitumor activity and a.
Some lines resistant to flip three inhibitors.
Clients and other standard of cat agents, suggesting that C. D. C. Seven inhibition is a potential therapeutic strategy for treating patients with relapsed store refractory AML.
Look forward to presenting the four poster on December 11th.
We are also making progress towards our IMD submission for this program and continue to expect to submit to 90 to the F. D. A in the first half of 2023.
Check to regulatory clearance, we expect to initiate a phase one study in the second half of 2023.
In summary, our diverse portfolio of discovery and development programs is advancing activities to expand a wholly owned programs in oncology and immunology progressing.
We are pleased with the value we have already generated from our portfolio.
[noise] cited about the value creation opportunities ahead.
Look forward to updating you on our R&D progress over the coming months.
I will now turn it back over to rummy. Thanks, Karen we are really pleased with our third quarter results in the progress we are making this year, we have a strong balanced business model based on a highly validated software platform and we remain focused on the key objective that we believe will generate value and position us for continued success at this time, we'd be happy to take.
Your questions operator.
Thank you.
To ask a question you'll need to press star one one on your phone. Please stand by as a compiled Q&A roster.
One moment, please while first question.
Oh first question will come from <unk> of Piper Sandler Your line is open.
Hi, Thanks for taking my question and congrats on the progress.
First on guidance, Jeff I was wondering if you could quantify the impact to the software of guidance from each of those components.
Opponents, you talked about the F X the smaller biotech Cup in a couple of customers over a larger customers one.
One of those groups influence.
More than the other and you said that the impact from effects with small Ah how small of it.
Sure. Thanks for the question.
So you're right those are the three buckets that I alluded to but let me give you a little bit more color on each of those first.
I Wanna fix our business is largely conducted <unk> contracts across the U S dollars, so relatively insulated against direct impact of of the exchange rate fluctuations up there was a modest impact in terms of our receivables and our cash balances that are held in other countries, but that's wrong.
Relatively small however, it is a.
It probably is a fully anticipated.
Which is that because contracts are priced in U S dollars for our customers, who tend to have relatively fixed budgets and local currencies dialed running up against the top end of their budgets earlier in the year.
You'll be less revenue for us and U S dollars than we have in some cases anticipated.
We're also finding that because of the highest value of software in the local countries, they're less opportunities to step up to a high level of great anticipated.
Huh.
Particularly having an effect on the 40% obviously about revenue that comes outside the U S. The second effect is the uncertainty and the and the Biopharma capital markets.
We're seeing a handful of customers who are scaling back to the software purchases as those small biopharma companies all out of consolidated or to conserve cash they're focusing on one or two of their priority clinical programs and not investing in further discovery. So we're seeing a little bit of effects of that but I think again the bigger hidden.
Effect is that we aren't seeing new companies created a lot of it.
Capital markets that become the growth contributors to our software for this year in the near future because capital markets. Just haven't been is also available to new and emerging companies such new companies that showed up in 202021 hasn't shown up this year in the same numbers.
Lastly.
I mentioned, the large customers typically towards the end of the year, we see step ups and adoption biologic customers. We still believe there are opportunities for those step up towards the end of the year, but there is more uncertainty about windows step ups will occur and also about the magnitude of them and that uncertainty is boats reflected in the range of.
Guidance, but also the charge you back to the overall guidance in terms of the answer to a direct question three effects, probably roughly equal in terms of the magnitude of the impact.
Contribution to the change in the cards I hope that answers the question for you though.
Yes, thanks for all the details, Jeff and Ah Ah Ah Ah question for Karen.
One trial, you're you're ready to start enrolling patients he talking about how many clinical sites you plan to activate and if you have.
Other geographic locations, you said the U S or do you plan to open up a clinical effect for.
Hi, there, yes, we have been working very hard on initiating this study as you know this is an important goal for us to see it and we're pleased with the progress we are reaching out broadly to sites in the US Is you know lymphoma is a very active space right now we.
Has a handful of sites that we're working with very actively and we continue to evaluate the opportunity to consider site.
Obviously broadly across the U S. But also globally, we haven't taken that off the table at this point and so that's something we continue to discuss and monitor as this trial continue to move bullet.
Great. Thanks for taking my questions.
Thank you.
One moment please for our next question.
Oh next question will come from David Lebowitz of City. Your line is open.
Thank you very much for taking my question.
It gets moving on to the guidance for the drug discovery business, which which have moved slightly above the the prior guidance.
Could you just elaborate more on where that might've come from this year and how this increase.
Might or might not affect Ah.
Previously.
Provided number of $100 million for 2000 twenty-three. Thank.
Thank you.
Uhm.
I will just comment really quickly this is ronnie on the.
The comment you made or the question about the hundred million. So if you remember that was strategic objective that we provided the beginning of 22.
We still believe that we can achieve that goal of $100 million in drug discovery revenue.
And in February will actually provide formal guidance on on that number, but Karen or Jeff Jeff I think you are going to respond to the first part of the question.
Oh, Hi, David.
So you are what we praise the revenue.
Revenue gardens for the for drug discovery.
<unk> came from the the recognition of the revenue from one of the BMS programs. The program that we alluded to that was returned to us and.
We are continuing to investigate internally, but it also came from a number of both the collaborations where we've successfully advanced programs to the point, where we think it's reasonable to rescue some of that revenue that previously being held in the deferred account and so that's flowed through is recognized revenue or were expected to in some cases has.
We were above the law render that guidance after three quarters of the year and so we are inevitably going to be in the branch and we think it's reasonable to expect that will be above the <unk>, but the rationale given what we say.
Thank you for taking my question.
Thanks, David.
Thank you.
One moment please for our next question.
Uhm next question will come from Michael G O Jeffries your line is open.
Hi, This is John from Mike two questions on on our end. The first just did in a little deeper entourage discovery. So you you've raised guidance.
Oh I was just wondering if there's any revenue from 20 to 23 tried just a report forward that plays a part into the race guidance for the remainder of this year.
If you could give some more color on that that would be great and such.
Such an question on the.
B M S discontinuation.
Provide some more color as to why they chose to discontinue that collaboration thank you.
Jeff you want to answer the first part and then we can hang over to Karen shook up.
So.
<unk> and but the previous answer.
Revenue is a composite of.
W that we recognized across multiple programs and collaborations. So we've we've advanced the revenue recognition on one of the programs as or alluded to in the BMS collaboration.
But the target for next year includes a host of different programs and opportunities Mmm.
So.
It's Robyn you alluded to we still see that is achievable Ah we I wouldn't say it was revenue that was pulled forward because we don't actually count on that revenue until we see it as being highly achievable. So professor has occurred and we recognize that during this period doesn't necessarily.
But we were assuming that it was guard worker its entirety next year forecasts are actually probability waited basket.
Different slices. So nothing is a shared 100 per cent probability until we recognize it.
Great and then Karen on the message decision, yes, certainly well first of all let me say that the BMS collaboration is going really well and as you know we added that'd be great author and 21.
The joint steering Committee.
<unk> looked at the progress on the discovery Phase of this program. We also work looking forward clinical phase and while we both agree that we've made exceptional progress on advancing compounds during discovery.
B M. S made the strategic decision that they no longer expect to invest in development in neuroscience program.
I want to emphasize that we remain really excited about this program and the molecules. We've identified so the target it's genetically validated and those initial signs of translation in the clinic by others and said.
We plan to continue investing in the target in the program and as we mentioned earlier, we look forward to sharing Laura bounce. It in 2023, along with the update on the rest of Apple earlier.
Oh, well I want to also say of course, the the Jesse continues to look for opportunities on the horizon jointly do that and so we are continuing to discuss the potential for a new program with the M. S.
Great. Thank you.
Thank you.
Okay hold on please file next question.
Next question will come from Gary Nachman of BMO capital market. Your line is open.
Hi, Good afternoon, Jeff just following up on the three effects to the software revenues. So how much of that is a near term issue versus something that could be more protracted well into next year and.
Don't understand exactly how you're thinking about the low end of of the guidance at this point. So how much conservatism is in there for the larger customers in.
Rob Me just you know maybe you're broader comments on economic challenges of the academic environment, how that's impacting the software business just talk more about those dynamics.
And and how that's being weaved into the situation that you're saying.
So let me do you want me to jump in and I'll I'll address the first part of the jurors yeah. Please Jeff. Thank you.
Okay. So so.
I certainly think a lot about about this your question.
What what's likely to consist versus what is transferred.
Think that the currency effective I alluded to his guard post the same headwinds for next year that it's been in the second half of this year, particularly we all know what exchange rates down and how that sort of.
Cause disruptions.
So I think that will will rebase those comfort so I'll take the international customers will be much better position with.
Solid foundation to deliver groceries each year.
In terms of the the large customers.
The sense I get from talking to our account managers is that it's a question of of of timing not it's it's <unk> and then what's the magnitude of those opportunities as but we just do have to.
Recognize that we're getting close to the end of the year I don't want to have.
Sounds like committed to finalize those transactions so.
That's what's encompassed in the range of the remaining guidance there and then the third factor that I alluded to which is the capital markets environment, but in biotech.
Gary if either of us can predict what started happening but capital markets.
Then we probably are in the wrong situations.
I think that most people think that the the problem. The current difficulties in raising money in biotech will persist well into next year. So.
I don't expect there to be a a host of new biotech customers small biotech customers that are formed with ambitious drug discovery goals have lots of capital at least for the next few months. So that's something that we anticipate there'll be some some some sort of tire levels well into next year I hope that.
Just some color.
And then with regard to the academic environment I'm, sorry can you just clarify what you were referring to is that what you said you said academic.
Yeah, I thought you had like comments in the prepared remarks, just about the economic challenges and I thought I heard you say the academic environment in general.
Maybe I misheard that but just.
[noise] of how that's impacted me overall software business in terms of your academic customer I mean, everything that jeffords, describing feels like it's more than just a corporate level, but.
You do have customers in the academic environment, So I'm, assuming they have a budget.
That's right that's well we happen not to mention anything about academic environment, but it's finally, it's still it's still a good question. So happy happy to address it yeah, Yeah, as you know and it's right and we we really value the academic part of part of our business not only for the revenue generation, obviously, it's a smaller fraction relative to the commercial.
Component, but of course. This is you know in a sense feeding the market right is training the future scientists and and it it's very important and as far as all of our analysis to date looking at it we're not seeing a significant impact are there from funding. It continues to grow very similar rates that we've seen.
Over the years and we continue to see more and more of these more and more universities actually focusing on computation and training and and we play a role in that by the way. We have now provided courses online courses and curriculum too.
To provide to professors who are increasingly interested in teaching computation. Our platform has really increased and the success of the platform has increased the demand for for <unk> for people to learn computation and then those students are then going off and <unk>.
And and becoming customers at at at company. So that's all going really well.
Okay.
Yeah that was good [laughter] nah I dunno, yeah, it's been a long day, but anyway. Thank you for that and then one other question, which I know you did not address but I do think your complaint. So how how do you think the inflation reduction act will impact your business over time.
Yeah, how will biopharma companies reevaluate their drug discovery strategies, especially with small molecule development. We know some of the potential challenges. There. So you think this will help you or hurt you How're you guys thing yeah, Yeah, Here's how we're thinking about it. It's a it's an important question and of course, it's it's on a lot of People's minds. So.
The trend that we've really been seeing for awhile of a shift from small molecule too biologics and farmer that started a number of years ago is certainly continuing and there it's likely that the.
Inflation reduction Act is is is contributing to that now the exciting thing is that we have been again like I said. This is a trend that started before this act and we've actually been focused on advancing our physics based platform to address <unk>.
<unk> and and protein therapeutics and remember the platform is completely agnostic to modality physics is physics and predicting the potency of a small molecule to a protein actually has the exact same physics is predicting the potency of a large molecule to a protein. So this is an area we've been worse.
<unk> and we've actually already demonstrated in a number of important projects, including our collaboration with Astrazeneca that our platform can actually b I used very efficacious Lee in the design of a biologics. So we're continuing so if the answer to your question is yeah, we're engaging more and more and conversations.
Around either our customers using our platform to advance their own programs or even potential partnerships, obviously building on what what we what we started a number of years ago I remember I was two and a half years ago. The the astrazeneca collaboration so and we're continuing to invest in advancing the competition a platform to address.
Have a broader range of of of challenges in the design of of biologics.
Yeah, and maybe we can just add obviously with a greater emphasis on speed to get to a development candidate and sits about molecules. Obviously at small molecule platform has an important impact and the speed of programs and we think that will be important that company.
They approached target that can't be addressed by biologics.
We hope to help in some way.
Kenneth a really important point yep.
Okay, great. Thanks again thanks.
Thank you.
One moment please for our next question.
Next question.
<unk> will come from Vikram per on it of Morgan Stanley . Your line is open.
Great. Good afternoon. Thanks for taking my question. So just one quick one from our side on the one program now that you have sites open for enrollment I just wanted to see if you could share some color about what you expect the initial phase of enrollment to be here and and what types of patient profiles and tumor types are you looking to to enroll initially and.
You think will be quick to enroll and then looking forward at what point do you think it's reasonable to expect some time like the data to be possible to communicate.
Yes, so in terms of the design and the patients that were enrolling in this trial.
This is a real actor distant uhm.
Lymphoma trial, it does enroll all comments with that profile.
The focus of this trial, it's really does escalation to determine safety tolerability to gather data on pharmacokinetics <unk> dynamic, we will though be collecting scan information from patients, which will allow us to determine if there are any initial signs of active.
<unk>.
And so well that focuses over stay on the safety Tolerability, we remain open to assessing any signs of activity as the trial proceeds.
In terms of timing, we obviously have just begun our enrollment here and well obviously moving as quickly as we can we don't necessarily at this point have specific timelines, we can share with you when we will be able to disclose data.
Obviously as we make progress.
We'll be updating you on that and uhm sharing.
Sharing information as and when we are in a good position to do so as a dose escalation trial proceeds obviously that can take some months, while you're studying patient population as opposed to healthy volunteers, if you'd like that.
Understood and then a quick follow up then.
Maybe a catch all question on business development, then looking for 2023.
What's your appetite for partnerships and.
If there's appetite.
What forms of partnerships could be could be interesting to you.
I can start as you know we've been really focused on it.
Improving the opportunities we have in the business development space over the last five to 10 years.
Essentially has taken to choose but a different form the first digit dinovo collaborations as you know we have a lot of equity relationships that establish.
Established.
A decade ago, we've moved forward now into these dinovo collaboration.
We are collaborating with companies like Lily and Vms discover molecules that they will then develop.
<unk>, where we have co development Ah Coke commercialization obtain right.
And so all of those types of conversation continue.
We will also be focusing obviously a lot more time has gone on the partnering and collaborations around our wholly owned assets.
And that will obviously, a <unk> a new set of business development relationships for US were again, we will be looking to in some cases retain rights to programs, but in other cases, as we said before where it makes sense for a partner to accelerate the access to patient the access to.
Combination agents, we may well be like Outlicensing those products the time that a new line of sight to that right. Now we're really excited about the move into the clinic for our asset.
Gathering data that will be all the states.
Sharing more as more there's more.
<unk> over the next years of though.
Okay understood. Thank you.
Thank you.
And again to ask a question you won't need to press star one one on your phone standby as he compiled the Q&A roster.
Again, one moment for our next question.
And our next question will come from <unk>.
Roger of bearing capital market. Your line is open.
Hey, good afternoon, everyone. Just two quick what was for me on the first side bonus software business would be.
Forward.
And are you working on introducing any new software products to maybe expand the scope of your portfolio for customers or are you just more so committed to reinvesting in the development of your existing solutions.
Just thinking about different ways to your bullshit growth in this segment and then secondly, just what should we expect an annual Casper and over the near term is internal clinical developed.
Development Costco.
So on the first question did you say energy or did you say in general just the whole platform I I wasn't sure I missed one of the words you said I said in general just working in general Yeah, New software solutions that can be swearing the discovery development cycle, just one yeah, yeah perfect. Yeah. Thank thanks, that's a really important questions. So as you know, we really see ourselves as a sign.
Innovation company that that's been a long history of ours and it continues where really committed to continuing to make breakthroughs in in in the science and they fall into a number of categories. Obviously I won't spend humanity huge amount of time, but let me give you the high points one of the areas that.
We're really excited about.
That we think will have a big impact on growth in the future is in target enablement the number of targets.
For which we have structures and are therefore amenable that he's physics based methods is very small fraction of the human genome.
But there are now experimental and computational methods that are.
Promising to be really have the promise to be really transformational and we think in the future and the and the foreseeable future. We can enable nearly all targets. That's obviously incredibly exciting the other area that we're focused on is of course advancing those programs. So as we said many times a number.
Sure of the properties that we can compute with with essentially experimental accuracy is sufficient to have a profound impact on projects, but there's a lot more to be done there are a number of properties that we can't yet calculate with experimental level of accuracy and we're putting a lot of effort into that and with every property we add it.
It has that much more of an impact on on projects down the materials science. This is.
Area, we're very very excited about one of the areas that we've talked a lot about as in battery research. So at the moment batteries are essentially designed by trial and error and we see the impact of that we have batteries that are frustratingly long to take long to charge they get passivate. It some of them are flammable as we all know and we believe.
That at the core of all of those challenges is molecular design and physics based methods. So we're putting a pretty significant effort into advancing the science that sort of underlies the complex chemistry, that's occurring inside batteries up there.
Electric electric light interface, and we think with progress in this area that can have a really profound impact on the demand for the technology and the impact that it can have those are just a few examples.
Okay, Robishaw jumping on cash burn Oh, please yes.
Sorry for all of your second question. Thanks.
And you saw that we reported cash cash burn approximately 34 million this quarter compared with $16 million.
Last quarter, if you look over the year I think that it's it's.
Roughly being in the range of about $30 million per quarter at the end of it.
And a Q3, we have $479 million on the balance sheet. So approximately we have four years of cash.
I think that what we expect is.
Ah software business will continue to grow, but where I'm at the point now where we can start to see some operating leverage.
And we've invested pretty heavily over the last few years and we should should see the revenue could change the growth of the expenses.
Plus or so we think that the the overall cash burn should moderate.
And we still have a lot of opportunities.
It seems like equity investments in some of the programs and the talent alluded to.
Really we've been included in that balance sheet right now so I.
I see a lot of opportunities for additional cash to come in and also Ah moderation with our cash burn.
We have committed.
To profitability, we haven't set a timeline for that and I think you can see we're starting to see a really nice return from the investments we have been making the.
Discovery portfolio and is Rama described just see lots and lots of wrong way to create tremendous value from continuing to invest in our core platform. So it's it's so long answers to the question we have a great balance sheet.
So you're operating leverage on both sides of the business going forward, but equally terrific opportunities to continue to invest and we plan to prosecute those opportunities to their fullest.
Also makes sense that guys.
Thanks.
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