Shooting for $100M IPO, Schrödinger takes the wraps off its five internal drugs and discloses deal details
Just before last year’s JP Morgan confab kicked off, Schrödinger unveiled its first venture round featuring institutional investors before later closing the Series E at $110 million. This time around, the computational drug discovery experts are inserting themselves into the queue at the Nasdaq, gunning for a $100 million IPO.
Having honed its software expertise and built out its client base over three decades, Schrödinger boasts of a revenue stream that totaled $66.6 million in 2018. But as it devotes more of its attention to its internal pipeline, the New York company said it wanted to increase their capitalization and financial flexibility by entering the public market. There’s also a hint of M&A plans to come.
The S-1 filing shines a bright light on its hitherto stealthy pipeline, as well as the collaboration deals that it’s inked with multiple biopharma players.
Schrödinger’s entry into popular biotech consciousness had a lot to do with Nimbus and Morphic, two high-profile startups it’s helped launch and still holds stakes in. Nimbus, in particular, snagged a $1.2 billion deal to sell firsocostat, an inhibitor of acetyl-CoA carboxylase with potential in NASH, to Gilead. Of the $601.3 million that Nimbus has accrued, $46 million has gone to Schrödinger, the filing revealed.
“As our collaboration strategy has evolved, we are seeking to take more direct control and responsibility for all aspects of a drug discovery project and own a higher percentage of the value generated in the completed programs,” Schrödinger, led by CEO Ramy Farid, wrote.
One example of that is the pact with Takeda, where Schrödinger is keeping all the IP rights until their Japanese pharma partner decides to exercise its option to license the programs. While the duo initially started with three programs in schizophrenia, oncology, and neurodegenerative disease — Takeda has washed its hands of the schizophrenia program. Then there’s Faxian Therapeutics, Schrödinger’s 50/50 joint venture with Chinese CRO powerhouse WuXi, and Bright Angel Therapeutics, the Canadian biotech it founded with MaRS Innovation to fight fungal infections and kept 33% ownership of.
But nowhere is the desire to chart their own therapeutic path more fully fulfilled than in their internal drug discovery group, which is flourishing under the guidance of chief biomedical scientist Karen Akinsanya with 70 staffers and five programs. We knew that all of them are geared towards cancer, but Schrödinger finally revealed the targets for the IPO:
- SDGR1: CDC7 inhibitor to disrupt DNA replication initiation in cancer cells for solid tumors;
- SDGR2: WEE1 inhibitor to trigger DNA breakage and apoptosis in solid tumor cells;
- SDGR3: MALT1 inhibitor to block oncogenic activation of NF-kB among patients with non-Hodgkin’s lymphoma and chronic lymphocytic leukemia who are resistant to or have relapsed on BTK drugs;
- SDGR4: HIF-2 alpha inhibitor to treat renal cell carcinoma;
- and SDGR5: SOS1/KRAS inhibitor, its candidate for the hot KRAS field.
David E. Shaw and the Gates Foundation, which provided the first financing round and the subsequent three, respectively, remain the biggest stockholders, although their stakes aren’t spelled out.
CEO Farid took home a $633,101 pay package in 2019, about half of his compensation in 2018, which included an $80,000 bonus. Chief business officer Cony D’Cruz was rewarded $587,601 for his dealmaking hustle while chief legal officer Yvonne Tran received $547,618.