Schrodinger, Inc.

Thank you for standing by. Welcome to Schrodinger's conference call to review second quarter 2023 financial results. My name is Chris and I'll be your operator for today's call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again. Please be advised that this call is being recorded at the company's request. Now I'd like to introduce your host for today's conference, Ms. Jaron Madden, Senior Vice President, 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 second quarter 2023 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 Akinsanya, President of R&D Therapeutics. Following our prepared remarks, we'll open the call for Q&A. During today's call, management will make statements that are forward-looking and 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 2023, our quarter ending September 30th, 2023, our plans to accelerate the growth of our software business and advance our collaborative and proprietary drug discovery programs, the timing of, initiation of, and readouts from our clinical trials, the clinical potential and properties of our compounds, the use of our cash resources, as well as our future 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 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 10Q for the quarter ended June 30, 2023. These forward-looking statements represent our views only as of today, and we caution you that, except as required by law, We may not update them in the future, whether as a result of new information, future events, or otherwise. Also included in today's call are certain non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and should be considered only in addition to and not substitute for or superior to GAAP measures. Please refer to the tables at the end of our press release, which is available on our website, for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. With that, I'd like to turn the call over to Rami.

Thanks, Sharon, and thank you, everyone, for joining us today. This is an incredibly exciting and pivotal time for computationally driven drug discovery. The heightened interest in this field is undoubtedly driven by the promise that computers, and in particular artificial intelligence, can increase efficiency across the R&D continuum and deliver more drugs to patients faster. At Schrodinger, we have developed powerful physics-based methods and integrated them with the most advanced machine learning methods or artificial intelligence to accelerate discovery of higher quality molecules for both therapeutics and materials. Our leading platform is used by thousands of companies and research institutes worldwide. We extensively publish our underlying scientific advances, and we now have numerous success stories that have convincingly validated our approach. Eleven of the molecules we have discovered with our collaborators or independently are currently in the clinic, which includes two wholly owned molecules. We continue to heavily invest in advancing our computational platform to solve grand challenge problems in drug discovery and materials design. We have made excellent progress during the first half of the year. For the second quarter, we reported total revenue of $35.2 million, which was in line with our expectations. With respect to software revenue, we are in active discussions with more than a dozen global biopharma software customers about multi-year, multi-million dollar contracts. We are confident about our software revenue outlook for the year, given the stage of these discussions, the number of them, and the enthusiasm we are seeing from our customers to deploy our platform on their discovery programs at scale. In fact, our confidence in these opportunities has led us to increase our software revenue growth guidance for the year to 15 to 18%. As Jeff will describe shortly, we are reducing our 2023 outlook for drug discovery revenue. This adjustment primarily reflects expectations that some milestones previously anticipated in 2023 have shifted to 2024. As you will hear from Karen, we continue to make significant progress on our proprietary pipeline. Our two phase one studies for our MALT1 inhibitor SGR1505 are ongoing. and today we announced FDA clearance of our IND for our CDC7 inhibitor, SGR2921. With our proprietary pipeline advancing, we have expanded our leadership team with the addition of Margaret Dugan as Chief Medical Officer. Margaret brings more than 25 years of pharma experience and will be responsible for clinical development and regulatory strategy for our pipeline of wholly-owned programs, and we look forward to her contributions. We've made considerable progress in the first half of the year, and we are very excited about the opportunities that lie ahead in the second half of the year. I greatly appreciate the dedication and hard work of all our employees who are critical to achieving our mission. I will now turn the call over to Jeff.