Schrödinger
35-year-old physics-based drug-design software company (FEP+) that monetizes its own discovery work through partner equity, milestones and royalties — with no wet lab.
1. Core Product / Service
Schrödinger (Nasdaq: SDGR; New York; founded 1990 by Richard Friesner and William Goddard; IPO February 2020) sells computational chemistry software used across the top 20 pharma companies: FEP+ (free-energy perturbation, the de facto standard for potency prediction in lead optimization), Glide (docking), Maestro and LiveDesign (platform/collaboration), Desmond (molecular dynamics, originating from D. E. Shaw Research), Jaguar (quantum chemistry) and BioLuminate (biologics) [1][2]. In July 2026 it opened early access to Bunsen, an agentic AI "co-scientist" priced by throughput rather than seats; Bristol Myers Squibb agreed to deploy Bunsen across its research organization, with joint feature development and access to Schrödinger's RetroSynth synthesis planning; financial terms were not disclosed [3]. Dating differs between sources: the press release is dated 2026-08-05 (alongside Q2 results) [3], while market reports tie a BMS organization-wide deployment announcement and a +26% share move to 2026-09-17 [1].
The second engine is drug discovery: Schrödinger co-founds or partners on programs and is paid through upfronts, milestones, royalties and equity — a "carry" model rather than carrying clinical risk itself [1].
Wet lab: none. The FY2025 10-K states its principal facilities "consist of office space" — New York ~136,047 sf, Portland ~35,000 sf (lease ending September 2026), Hyderabad ~48,987 sf — and that discovery costs include third-party CROs that "support discovery activities" [4]. Synthesis and assays are outsourced; Schrödinger supplies computation and CRO management. PP&E is $19.5M (mainly office/IT) [4].
2. Target Users & Pain Points
- Pharma and biotech computational chemistry teams — 27 customers with >$1M ACV (average ~$3.9M); top-20 pharma ACV $80.8M [1]. Two customers made up 41% of 1H 2026 revenue [1].
- Pain addressed: wasted synthesis cycles in hit-to-lead and lead optimization; physics-based scoring reduces the number of compounds that must be made and tested.
3. Competitive Landscape
| Layer | Players | Vs. Schrödinger |
|---|---|---|
| Physics / classical CADD | OpenEye (Cadence), Cresset, Chemical Computing Group, BIOVIA (Dassault) | Incumbent peers; Schrödinger leads FEP |
| AI structure / generative | isomorphic-labs, chai-discovery, Boltz (open source), iambic-therapeutics | Commoditizing structure prediction and docking |
| AI biotech platforms | recursion-pharmaceuticals, insilico-medicine, xtalpi | Valued on pipelines; Schrödinger valued on software ACV |
| In-house pharma CADD | Most top-20 pharma | Customers and substitutes at once |
4. Unique Observations
- The asset-light extreme: among US AI-drug companies with SEC filings, Schrödinger is the only one with no lab property at all — versus ~146k sf at generate-biomedicines, ~78k sf at absci and 200k+ sf at recursion-pharmaceuticals [4].
- Carry has paid more than its own pipeline: equity monetizations from Nimbus (Takeda's TYK2 deal, $147.2M, 2023), Morphic (Lilly, $47.6M, 2024) and Ajax (Lilly, 2026: $10M milestone + $45.9M equity gain) total roughly $240–250M, while ~$500M of 2021–2024 R&D took three wholly owned programs into the clinic with one terminated and two seeking partners [1].
- Back to "shovels + carry": after terminating SGR-2921 (CDC7) in August 2025 following two patient deaths in AML considered drug-related, it co-founded Tectora (I&I) with NEA and RA Capital on 2026-09-09, contributing two early programs to a $55M Series A [1]. SGR-1505 and SGR-3515 (Wee1/Myt1) remain in Phase 1 with partners sought [1][5].
- Software growth is slowing: 2025 ACV $198.5M (+4%) with net retention falling from 113% to 100% (gross 96%); Bunsen's usage-based pricing is the lever management is relying on to re-accelerate [1].
5. Financials / Funding
| Item | Value |
|---|---|
| FY2025 revenue | $255.9M (software $199.5M); net loss $103.3M; R&D $173.1M [1][2] |
| Q2 2026 | Revenue $58.9M (+8% YoY): software $32.5M (−10%), drug discovery $23.0M (+65%); GAAP net income +$6.0M driven by the $45.9M Ajax equity gain, operating loss −$41.5M [1] |
| FY2026 ACV guidance | $218–228M (+10–15%) [1] |
| Balance sheet (6/30/26) | Cash and securities $418.8M, no debt [1] |
| Partnerships | Novartis (Nov 2024: $150M upfront, up to $2.27B milestones); Lilly expansion (up to $420M); BMS (2020); royalties on 16 partnered programs incl. Takeda's zasocitinib (TYK2, Phase 3 psoriasis) [1] |
| Headcount | 850 FTE incl. 363 PhDs; ~60 laid off in May 2025 [4] |
| Market cap | ~$2.32B at 2026-09-30 [1] |
Next disclosure: Q3 2026 results expected 2026-11-04 [1].
6. People & Relationships
- CEO: Ramy Farid (joined 2002, CEO since 2017); CFO: Richie Jain (since May 2025); Therapeutics R&D: Karen Akinsanya; Chair: Michael Lynton [1].
- Co-founder / director: Richard Friesner (Columbia).
- Major holders: Gates Foundation trust (~21.6% economic interest, partly in non-voting stock), BlackRock, Vanguard [1].
- Partners: Novartis, Lilly, BMS, Takeda (via Nimbus), NEA / RA Capital (Tectora).
- Peers: isomorphic-labs, chai-discovery, recursion-pharmaceuticals, iambic-therapeutics, xtalpi.
Sources
- [1] Schrödinger 10-K FY2025 (2026-02-25), 10-Q Q2 2026, 8-K Ex. 99.1 (2026-08-05), DEF 14A (2026-04-28) and company press releases (Tectora 2026-09-09), via SEC EDGAR (accessed 2026-10-01 to 2026-10-14)
- [2] Schrödinger IR, "Fourth Quarter and Full Year 2025 Financial Results" (accessed 2026-10-14)
- [3] Schrödinger press release, "Strategic Collaboration and Software Agreement with Bristol Myers Squibb to Deploy AI Co-Scientist Bunsen" (2026-08-05), via BioPharma Dive (accessed 2026-10-14)
- [4] Schrödinger 10-K FY2025, Item 2 (Properties) and Human Capital sections (accessed 2026-10-14)
- [5] AI drug-discovery company survey listing SGR-3515 (Wee1/Myt1) in Phase 1 (2026-08-22)