Big Pharma partner Schrödinger wants a $100M IPO

Computing-enabled R&D shop Schrödinger wants a $100 million IPO to help boost its nascent pipeline of wholly owned drugs.

New York-based Schrödinger has moved deeper and deeper into biopharma R&D over the past 15 years, following up an early drug discovery collaboration with the foundation of Nimbus Therapeutics and the escalation of its internal activities.

The shift in focus has ramped up Schrödinger’s financing requirements, leading it to raise $85 million at the start of last year followed by another round in May, bringing the total haul up to $110 million.

Invus, Pavilion Capital, Laurion Capital Management and Tubus Management—the investment fund of Michael Antonov, a co-founder of Facebook-owned virtual reality player Oculus—were among its more recent backers.

Schrödinger is underpinned by computing but has been using its VC raises to step up its drug R&D activity. The company has built a team of drug discovery and translational scientists, given them access to its computing capabilities and tasked them with advancing internal, wholly owned candidates.

To date, Schrödinger has shared few details of the specifics of its internal activities, reflecting their early-stage nature. But its track record of playing a role in two Agios cancer drugs that won approval and the several undisclosed assets in the clinic demonstrate its credentials.

The computing side of Schrödinger’s platform aims to predict how strongly a potential drug will bind and affect a target protein with the goal of optimizing its chemical properties and reducing the number of compounds that need to be synthesized before settling on a lead candidate.

From this side of its business, it’s penned deals with the likes of Sanofi, AstraZeneca and Bayer to help the Big Pharmas boost their own drug discovery efforts.

The company also recently brought on translational science veterans from Merck and Eisai to help move its internal programs out of the discovery phase.

Now, just ahead of the annual J.P. Morgan Healthcare Conference, the life science software maker turned drug discovery biotech is looking for an extra $100 million from the public markets.

In its filing with the Securities and Exchange Commission, the company said that “biopharmaceutical companies are increasingly adopting our software at a larger scale, and we anticipate this scaling-up will drive future revenue growth,” adding that in 2018, “all of the top 20 pharmaceutical companies, measured by revenue, licensed our solutions, accounting for $22.0 million, or 33%, of our 2018 revenue.”

On Schrödinger's internal programs, it added that since mid-2018: “We have launched five internal, wholly-owned programs. Our current programs are focused on discovering and developing inhibitors for targets in DNA damage response pathways and genetically defined cancers. In the future we expect to expand into other therapeutic areas.

“We plan to begin to initiate investigational new drug, or IND-enabling studies for our programs by the first half of 2021. While our revenue-generating collaborations are an important component of our business, our strategy is to pursue an increasing number of wholly-owned programs, and strategically evaluate on a program-by-program basis entering into clinical development ourselves or out-licensing programs to maximize commercial opportunities.”

The company booked $77 million in revenue for the 12 months ended Sept. 30 and plans to list on the Nasdaq under the symbol "SDGR."