Schrödinger, a little-known software company that helps some of the largest pharmaceutical brands with drug discovery, made its public debut. The company closed its initial public offering on Monday, raising a total of $232.3 million in proceeds – more than originally planned.
Founded in 1990, Schrödinger has a behind-the-scenes role in discovering some of the compounds currently being developed by drugmakers. Where traditional drug discovery can be costly and time-consuming, with scientists designing, synthesizing and testing compounds, Schrödinger says its platform can predict the chemical properties of molecules, speeding up the process of discovering promising compounds.
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Schrödinger sold a total of 13.6 million shares of common stock priced at $17 per share, with underwriters purchasing an additional 1.78 million shares. Its stock was listed on Nasdaq as SDGR on Feb. 6, trading just below $27 on Tuesday afternoon.
Schrödinger names the top 20 pharmaceutical companies as its customers, with some of its disclosed partnerships including Bayer and Sanofi. The New York-based company had a total of 1,150 customers in 2018 and brought in a total of $66.6 million in revenue, according to its prospectus. Its largest customers accounted for roughly a third of that amount.
The company reported a net loss of $18.5 million at the end of 2018.
In the future, Schrödinger will focus on building out its software business. It sees growth opportunities in bringing on new customers and building out its work with existing partners. The company estimates that its largest customers are only purchasing enough software for one or two discovery projects – a fraction of their total drug discovery work.
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Schrödinger is also building its own internal drug discovery pipeline, which includes molecules targeting ovarian, pancreatic breast and lung cancers. Though this is a much smaller portion of Schrödinger’s business, it has seen some successes through partnerships. Nimbus, a spinoff of Schrödinger, sold its ACC inhibitor to Gilead Sciences for $1.2 billion.
Schrödinger has a total of 400 employees. Its investors include the Bill and Melinda Gates Foundation, WuXi App Tech, Deerfield and GV.
Joint book-running managers for the IPO included Morgan Stanley, BofA Securities, Jefferies LLC and BMO Capital Markets Corp.
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