Schrodinger, Inc.

Everyone, thank you for standing by. Welcome to the Schrodinger Conference call to review third quarter 2022 financial results. My name is Chris, 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 will be a question and answer session. To ask a question during that session, you'll need to press star 1-1 on your telephone. Please be advised that this call is being recorded at the company's request. Now I'd like to introduce your host of today's conference, Ms. Jaron Madden, Senior Vice 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 and review our third quarter 2022 financial results. Earlier today, we issued a press release summarizing our financial results and progress across the company, which is available on our website at schrodinger.com. Here with me on our call today are Rami Fareed, Chief Executive Officer, Jeff Porges, Chief Financial Officer, and Karen Opensanya, President of R&D Therapeutics. Following our prepared remarks, we'll open the call for Q&A. I'd like to 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 provisions of the Private Securities Litigation Reform Act of 1995, including without limitation, statements related to our outlook for the full year 2022 and for the fourth quarter ending December 31st, 2022, our strategic plans to accelerate the growth of our software business and advance our collaborative and proprietary drug discovery programs, the timing of potential IND submissions and the initiation of clinical trials for our proprietary drug discovery programs, the clinical potential and favorable properties of our compounds, our expectations related to the use of our cash resources, as well as our future operating expenses. 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 what we project today due to a number of important factors, including the considerations described in the risk factor section and elsewhere in the filings we make with the SEC, including our Form 10-Q for the period ended September 30, 2022. These forward-looking statements represent our views only as of today, and we caution you that we may not update them in the future, whether as a result of new information, future events, or otherwise. With that, I'd like to turn the call over to Rami.

Thanks, Sharon, and thank you, everyone, for joining us today. We have developed a 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. We license our software to biopharma and materials companies as well as government and academic institutions around the world. Software 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 inflecting drug discovery revenue. And we have an 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, a 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. As we look 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. In a moment, Jeff will review our third quarter financial results and provide more detail on our fourth quarter and full year 2022 financial guidance. As you'll hear 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 of our MALT1 inhibitor SGR1505 is open for patient enrollment. We also reported that in December we will present new preclinical data for our CDC7 inhibitor SGR2921 at the ASH annual meeting. We are also continuing to expand our drug discovery portfolio and recently announced a partnership with Lilly for the discovery of small molecule compounds for an undisclosed target. Under the agreement, we received an upfront payment and are eligible to receive up to $425 million in discovery, development, and commercial milestone payments as well as royalties on net sales. We are pleased with the progress we have made so far this year, particularly in a challenging macroeconomic environment. The fundamentals of our business are strong, and we have 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 Jeff to review our third quarter financial results and financial guidance.