Schrodinger, Inc.

Thank you for standing by. Welcome to Schrodinger's conference call to review our third quarter 2024 financial results. My name is Madison, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and 1 on your telephone keyboard. You may withdraw yourself from the queue by pressing star and 2. Please be advised that this call is being recorded at the company's request. Now, I would like to introduce your host for today's conference, Mr. Aaron Madden, Senior Vice President of Investor Relations and Corporate Affairs. Please go ahead.

Thank you and good morning, everyone. Welcome to today's call during which we will provide an update on the company and review our third quarter 2024 financial results. In addition to our press release announcing our third quarter results, we also issue the press release announcing our new research collaboration and expanded software licensing agreement with Novartis. Both press releases are available on our website at schrodinger.com. Here with me on our call today are Rami Fareed, Chief Executive Officer, Karen Akinsanya, President of R&D Therapeutics, and Jeff Porges, Chief Financial Officer. 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 2024, our plans to accelerate 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 anticipated benefits of our collaboration with Novartis, the use of our cash resources, and 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 Factors section and elsewhere in the filings we make with the SEC, including our Form 10-Q for the quarter ended September 30, 2024. 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 a 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. And with that, I'd like to turn the call over to Rami.

Thanks, Jaron, and thank you, everyone, for joining us today. At Schrodinger, we are transforming the way therapeutics and materials are discovered. Our industry-leading computational platform combines proven physics-based methods with the speed of machine learning to accelerate molecular discovery. Our platform is used by thousands of companies and research institutes worldwide, including every major pharmaceutical company. And the success of collaborators and co-founded companies reflects the power of our approach. Today, we are very pleased to review the progress we have made across the business this quarter, beginning with this morning's exciting news of our collaboration with Novartis. Under the multi-target collaboration, Schrodinger and Novartis will combine pre-existing research efforts to advance therapeutics for a number of undisclosed targets outside of oncology. Schrodinger will receive $150 million upfront and be eligible to receive up to $2.3 billion in milestone payments, as well as mid-single-digit to low-double-digit royalties on sales. This collaboration is a testament to the track record of our world-class discovery and translational science teams who are leveraging our leading computational platform at scale. Novartis also signed an expanded multi-year software agreement that substantially increases their access to our computational technology and enterprise informatics platform. The collaboration and software license agreement with Novartis combines further development of programs from our portfolio, commitment to develop candidates against targets of mutual interest, and increased scale deployment of our software by Novartis. We are seeing increased demand for these combination drug discovery software arrangements that leverage synergies between different components of our business. Turning to our financial results, total revenue for the third quarter was $35.3 million and software revenue was $31.9 million. While software revenue was slightly below our expectations, we are excited about the opportunities we have to finish the year strongly. Customer engagement is high. We are confident about the expected scale of customer renewals and scale-ups through the end of the year, and we have raised the lower end of our software revenue growth guidance for the year. Jeff will discuss our third quarter financial results and updated guidance in more detail shortly. We continue to see progress and value from companies we have co-founded. Ajax Therapeutics recently dosed the first patient in their first Phase 1 study. Nimbus announced updated Phase 1-2 clinical data for their HBK1 inhibitor, and we added $48 million to our cash balance as a result of Lilly's acquisition of Morphic. Our proprietary pipeline is also advancing, and we look forward to reporting initial data from all three of our clinical stage programs next year. Through the remainder of the year, we see clear opportunities to drive software growth, extend our scientific leadership, and advance our collaborative and proprietary pipeline. I will now turn the call over to Karen, who will discuss the Novartis collaboration in more detail and provide an update on our proprietary pipeline.