Schrödinger, Inc.

Company Overview

Business Model: Schrödinger, Inc. transforms molecule discovery through its differentiated, physics-based computational platform. The Company generates revenue by licensing its software platform to biopharmaceutical and industrial companies, academic institutions, and government laboratories. Additionally, Schrödinger, Inc. applies its platform to advance a broad pipeline of drug discovery programs, both in collaboration with leading biopharmaceutical companies and through its own proprietary drug discovery programs, which are advanced through preclinical and clinical development.

Market Position: Schrödinger, Inc. is a leader in physics-based computational drug discovery. Its platform, which integrates rigorous physics-based methods with machine learning, offers significant advantages in accuracy, speed, scale, and quality, enabling the evaluation of billions of molecules per day and demonstrating an eight-fold increase in identifying molecules with desired affinity in a peer-reviewed study. In 2025, all of the top 20 pharmaceutical companies (by 2024 revenue) licensed Schrödinger, Inc.'s solutions, accounting for 37% of software revenue and 41% of annual contract value (ACV). The average ACV for commercial customers with over $1.0 million in ACV grew to $3.9 million in 2025 from $3.3 million in 2024, indicating increasing adoption and scaling of the platform among its largest customers.

Recent Strategic Developments:

• Platform Expansion: Launched an initiative in 2024 to expand its computational platform to predict toxicology risk early in drug discovery, funded by $19.5 million in grants from the Bill & Melinda Gates Foundation. A beta version is available to customers, with commercial launch expected in 2026.
• New Product Launches: Released RetroSynth, a machine learning-based retrosynthetic analysis method, in the first quarter of 2026. Announced that Lilly TuneLab, a platform launched by Eli Lilly and Company, will be available in LiveDesign in January 2026.
• Key Collaborations:
  • Entered into a research collaboration and license agreement with Novartis Pharma AG in November 2024 for the discovery, research, and preclinical development of small molecule compounds, including a three-year software agreement.
  • Expanded research collaboration with Eli Lilly and Company in February 2025 to add an undisclosed immunology target.
  • Expanded collaboration with Otsuka Pharmaceutical Co., Ltd. in January 2025 to add an undisclosed central nervous system disease target.
  • Extended a three-year agreement with Gates Ventures, LLC in August 2023 to develop and apply atomistic simulation methods to improve battery performance.
• Proprietary Program Adjustments: Discontinued the clinical development program for SGR-2921, a CDC7 inhibitor, in August 2025 due to safety concerns observed in its Phase 1 clinical trial.
• Operational Restructuring: Restructured operations in May 2025, reducing workforce by approximately 7% (60 employees) and implementing focused cost reductions, expected to result in approximately $70 million in total savings and improve operational efficiency. The Company plans to explore strategic partnerships for SGR-1505 and SGR-3515 programs to advance development beyond ongoing Phase 1 clinical trials, rather than initiating additional clinical trials independently.

Geographic Footprint: Schrödinger, Inc. maintains direct sales operations in the United States, the European Union, United Kingdom, Japan, India, and South Korea, with sales distributors in other markets, including China. In 2025, approximately 40% of total revenues were generated from customers outside the United States. The Company's computational platform is applied to materials science in fields such as aerospace, energy, semiconductors, electronic displays, and chemicals.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 55.7%
• Operating Margin: -65.2%
• Net Margin: -40.4%

Investment in Growth:

• R&D Expenditure: $173.1 million (67.7% of revenue)
• Capital Expenditures: $1.4 million (Purchases of property and equipment)
• Strategic Investments: In 2024, Schrödinger, Inc. received $47.6 million from the disposition of its equity stake in Morphic Holding, Inc. due to its acquisition by Eli Lilly and Company. The Company also received $19.5 million in grants from the Bill & Melinda Gates Foundation in 2024 for its predictive toxicology initiative. In December 2025, Schrödinger, Inc. entered into a three-year agreement with a third-party cloud provider with a minimum payment obligation of $82.0 million for compute power.

Business Segment Analysis

Software

Financial Performance:

• Revenue: $199.5 million (+11% YoY)
• Gross Margin: 74%
• Key Growth Drivers: The Company's ability to expand within its customer base is demonstrated by the increasing average ACV from its commercial customers with an ACV of over $1.0 million, which grew to $3.9 million in 2025 from $3.3 million in 2024. High gross dollar retention rate for commercial customers was 96% in both 2025 and 2024, and net dollar retention rate was 100% in 2025. The transition of customers from on-premise to hosted software arrangements is also a key driver.

Product Portfolio:

• Target Identification and Validation: WaterMap, SiteMap, GlideEM, PrimeX, Phenix/OPLS4.
• Hit Discovery: FEP+, Glide, GlideWS, Shape, DeepAutoQSAR, IFD-MD.
• Hit to Lead and Lead Optimization: FEP+, DeepAutoQSAR, AutoDesigner, RetroSynth (released Q1 2026).
• Throughout Drug Discovery Process: LiveDesign (including LiveDesign Biologics and LiveDesign Machine Learning), Maestro.
• New Initiatives: Predictive toxicology solution (beta available, commercial launch expected 2026).

Market Dynamics: Schrödinger, Inc. is the leading provider of computational software solutions for drug discovery to the biopharmaceutical industry, with all top 20 pharmaceutical companies licensing its solutions in 2025. Its software is also used by over 1,750 academic institutions. The Company is expanding into materials science applications (aerospace, energy, semiconductors, electronic displays, chemicals), where computational methods are gaining recognition.

Sub-segment Breakdown:

• On-premise software: $101.4 million (primarily impacted by timing and size of multi-year contracts with upfront revenue recognition).
• Hosted software: $45.1 million (+28% YoY), driven by customer transitions from on-premise, increased spending from existing hosted customers, and new hosted software subscriptions.
• Software maintenance: $27.3 million (+17% YoY), due to increased spend from existing customers and longer renewal periods.
• Professional services: $9.6 million (-2% YoY), remaining consistent due to the progress and completion of technology and modeling service projects.
• Software contribution: $16.0 million (+99% YoY), primarily from agreements with the Bill & Melinda Gates Foundation and an extension with Gates Ventures, LLC.

Drug Discovery

Financial Performance:

• Revenue: $56.4 million (+107% YoY)
• Gross Profit: $(5.9) million
• Key Growth Drivers: The significant increase in revenue was primarily due to services initiated under the Novartis Pharma AG collaboration in November 2024 and the progress of other new and existing collaborations. As of December 31, 2025, Schrödinger, Inc. had 16 collaborative programs eligible for future royalties, up from 13 in 2024.

Product Portfolio:

• Collaborative Programs: As of December 31, 2025, Schrödinger, Inc. had 20 active collaborative drug discovery programs spanning therapeutic areas such as oncology, antifungal diseases, fibrosis, inflammatory bowel disease, metabolic disease, autoimmune disease, immuno-oncology, cardiopulmonary disease, CNS diseases, and tuberculosis.
• Proprietary Programs:
  • SGR-1505 (MALT1 inhibitor): In Phase 1 clinical trial for relapsed or refractory B-cell malignancies. Granted Orphan Drug Designation for mantle cell lymphoma (August 2023) and Waldenström macroglobulinemia (October 2025), and Fast Track Designation for Waldenström macroglobulinemia (June 2025). Initial clinical data reported in June and December 2025 showed SGR-1505 was generally well-tolerated with preliminary clinical activity, including objective responses in patients with chronic lymphocytic leukemia and Waldenström macroglobulinemia.
  • SGR-3515 (Wee1/Myt1 inhibitor): In Phase 1 clinical trial for advanced solid tumors, with dosing initiated in July 2024 following IND clearance in April 2024. Initial data anticipated in the second quarter of 2026. Preclinical studies demonstrated improved selectivity and potency compared to competitor Wee1 inhibitors.
  • SGR-2921 (CDC7 inhibitor): Clinical development program discontinued in August 2025 due to safety concerns in its Phase 1 trial.
  • Other Proprietary Programs: Includes SGR-4174 (SOS1 inhibitor), SGR-5573 (EGFR C797S inhibitor), SGR-6016 (NLRP3 inhibitor), and a LRRK2 program, all in discovery or IND-enabling stages. The Company plans to seek strategic partnerships for these programs.

Market Dynamics: The biopharmaceutical industry is highly competitive, with Schrödinger, Inc. facing competition from major pharmaceutical companies, biotechnology firms, technology companies, academic institutions, and government agencies. Specific competitors for SGR-1505 include AbbVie Inc., HotSpot Therapeutics, Inc., and Recursion Pharmaceuticals, Inc. For SGR-3515, competitors include Zentalis Pharmaceuticals, Debiopharm International SA, IMPACT Therapeutics, Inc., Shouyao Holdings Co. Ltd., BioCity Biopharma, Aprea Therapeutics, Inc., and Acrivon Therapeutics, Inc.

Sub-segment Breakdown:

• Drug discovery services: $54.8 million (+118% YoY).
• Drug discovery contribution: $1.6 million (-21% YoY).

Capital Allocation Strategy

Shareholder Returns:

• Dividend Payments: Schrödinger, Inc. has never declared or paid cash dividends on its common or limited common stock and intends to retain all future earnings to fund business development and expansion.

Balance Sheet Position:

• Cash and Equivalents: $230.5 million
• Total Debt: $109.2 million (comprising current and long-term operating lease liabilities)
• Net Cash Position: $121.3 million
• Debt Maturity Profile: Operating lease liabilities total $160.2 million in future minimum lease payments, with a present value of $109.3 million. The current portion of lease liabilities is $16.4 million.

Cash Flow Generation:

• Operating Cash Flow: $13.9 million
• Free Cash Flow: $12.5 million (Operating Cash Flow less Capital Expenditures)

Operational Excellence

Production & Service Model: Schrödinger, Inc. operates a physics-based computational platform that tightly integrates physics-based methods with machine learning to accelerate molecule discovery. The platform is capable of evaluating billions of molecules per day. For drug product manufacturing, the Company relies entirely on third-party contract manufacturers for raw materials, drug substance, and finished drug product for preclinical and clinical development, with no plans for in-house manufacturing. Software solutions are delivered via on-premise licenses or cloud-based hosted subscriptions. A strict firewall policy is maintained to ensure confidentiality and segregation of intellectual property between software customers and drug discovery collaborators.

Supply Chain Architecture: Key Suppliers & Partners:

• Third-party contract manufacturers: For raw materials, drug substance, and finished drug product for preclinical and clinical development.
• Third-party hosting services: For cloud-based infrastructure supporting hosted software solutions.
• Contract Research Organizations (CROs): For conducting preclinical studies and clinical trials.
• Third-party cloud provider: A three-year agreement was entered into in December 2025 with a minimum payment obligation of $82.0 million for compute power.

Facility Network:

• Manufacturing: Relies on third-party facilities.
• Research & Development: Principal office facilities are located in New York, New York (136,047 sq ft, lease expires Dec 2037), Portland, Oregon (35,000 sq ft, lease expires Sep 2026), and Hyderabad, India (48,987 sq ft, lease expires Apr 2028). A dedicated, exclusive integrated drug discovery facility was established in Hyderabad, India in December 2022, with a minimum payment obligation of $21.8 million over five years after first occupancy.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Schrödinger, Inc. commercializes its software solutions globally through its direct software sales organization, with operations in the United States, Europe, Japan, India, and South Korea.
• Channel Partners: Utilizes sales distributors in other key markets, including China.
• Drug Discovery Partnerships: Plans to enter into agreements with biopharmaceutical companies to efficiently advance and commercialize internally discovered development candidates.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: All top 20 pharmaceutical companies (by 2024 revenue) licensed Schrödinger, Inc.'s solutions in 2025.
• Strategic Partnerships: Collaborations include Novartis Pharma AG, Eli Lilly and Company, Otsuka Pharmaceutical Co., Ltd., Bristol-Myers Squibb Company, Ajax Therapeutics, Inc., Bright Angel Therapeutics Inc., Structure Therapeutics Inc., Gates Ventures, LLC, Bill & Melinda Gates Foundation, and Copernic Catalysts, Inc.
• Customer Concentration: In 2025, one customer accounted for 17% of total revenues. One customer accounted for 10% of total accounts receivable, and three customers accounted for 21%, 12%, and 10% of total contract assets.

Geographic Revenue Distribution:

• United States: 60.0% of total revenue
• APAC: 10.2% of total revenue
• EMEA: 29.4% of total revenue
• Rest of World: 0.6% of total revenue

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The market for molecular discovery and design software is global, rapidly evolving, and highly competitive, characterized by complex, lengthy, and capital-intensive traditional drug discovery efforts prone to high failure rates. The industry is increasingly recognizing the potential of computational methods, driven by advancements in massive computing power, sophisticated algorithms, and high-resolution protein structures.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Software: BIOVIA (a brand of Dassault Systèmes SE), Chemical Computing Group (US) Inc., Cresset Biomolecular Discovery Limited, Cadence Design Systems, Inc., Optibrium Limited, Cyrus Biotechnology, Inc., Molsoft LLC, Insilico Medicine, Inc., Iktos, XtalPi Inc., AbCellera, Inductive Bio, Inc., Chemaxon, Revvity, Inc., Simulations Plus, Inc., Materials Design, Inc., Certara USA, Inc., and Dotmatics, Inc. Academic consortia (e.g., AMBER, CHARMm, GROMACS, GROMOS, OpenMM, OpenFF) also develop physics-based simulation programs.
• Drug Discovery: Major pharmaceutical companies, specialty biopharmaceutical companies, technology companies, academic institutions, and government agencies.
  • SGR-1505 (MALT1 inhibitor): Competitors include AbbVie Inc., HotSpot Therapeutics, Inc., and Recursion Pharmaceuticals, Inc., as well as other therapeutics like bi-specifics and CAR-Ts.
  • SGR-3515 (Wee1/Myt1 inhibitor): Competitors include Zentalis Pharmaceuticals, Debiopharm International SA, IMPACT Therapeutics, Inc., Shouyao Holdings Co. Ltd., BioCity Biopharma, Aprea Therapeutics, Inc., and Acrivon Therapeutics, Inc.

Emerging Competitive Threats: New entrants, disruptive technologies, and alternative solutions, particularly from companies leveraging artificial intelligence (AI) and other computational approaches for drug discovery. Internal drug discovery efforts by biopharmaceutical companies also pose competition.

Competitive Response Strategy: Schrödinger, Inc. aims to maintain its industry-leading position by continuously improving its computational platform and demonstrating success in its drug discovery efforts. The Company leverages synergies between its software and drug discovery businesses and employs a firewall policy to ensure the confidentiality and segregation of customer intellectual property.

Risk Assessment Framework

Strategic & Market Risks

• Operating Losses: Schrödinger, Inc. has a history of significant operating losses, with a net loss of $103.3 million in 2025, and expects to incur losses for several more years as it invests in proprietary drug discovery programs and platform enhancements.
• Revenue Insufficiency: The Company's ability to achieve profitability depends on increasing software sales, growing drug discovery collaboration revenue, and successfully developing and commercializing drug products, which are subject to significant uncertainties.
• Quarterly and Annual Fluctuations: Operating results can fluctuate significantly due to factors such as customer renewal rates, timing of sales, operating expenses, changes in fair value of equity investments, and the timing of milestone achievements from collaborations.
• Customer Retention: There is a risk that existing customers may not renew licenses, purchase fewer solutions, or negotiate lower prices, impacting future software revenues.
• Industry Dependence: A significant portion of software sales are to the life sciences industry, making the Company vulnerable to adverse factors affecting this highly regulated and competitive sector. Adoption of computational methods in the materials science industry is still in early stages and may not materialize as expected.
• Competition: Intense competition in both software and drug discovery markets, including from companies leveraging AI, could adversely affect business and operating results.
• R&D Investment Return: Investments in enhancing the computational platform may not yield expected returns or may develop slower than anticipated, impacting revenue and operating results.
• International Operations: Doing business internationally exposes the Company to regulatory, economic, and political risks, including data privacy laws, staffing challenges, longer sales cycles, weaker intellectual property protection, and adverse tax consequences.
• Geopolitical Developments: Geopolitical events, such as the war between Russia and Ukraine, could impact CRO operations. U.S. tariffs and trade restrictions, particularly with China, and legislation like the BIOSECURE Act, could increase costs, disrupt supply chains, and limit collaborations with certain entities.

Operational & Execution Risks

• Supply Chain Vulnerabilities: Reliance on third-party CROs for molecule synthesis and third-party contract manufacturers for raw materials and drug products introduces risks of non-performance, capacity limitations, regulatory non-compliance, and raw material shortages.
• Cloud Infrastructure Reliance: Dependence on third-party cloud providers for hosted software solutions creates risks of service disruptions, capacity limitations, security breaches, and potential delays or increased costs if service agreements are terminated.
• Talent Acquisition and Retention: Future success depends on the ability to attract, retain, and motivate qualified personnel, including executives, scientists, and software engineers, in a highly competitive talent market.
• Management of Growth: Pursuing multiple business strategies (software, collaborative drug discovery, proprietary drug discovery) simultaneously places increased demands on limited resources and management attention, potentially disrupting operations.

Financial & Regulatory Risks

• Need for Additional Capital: Schrödinger, Inc. will likely require additional capital to fund operations, and such financing may not be available on acceptable terms or could result in dilution to stockholders or relinquishment of rights to technologies.
• Accounting Estimates: Significant judgments and estimates in critical accounting policies, particularly revenue recognition, could lead to adverse effects on results of operations if assumptions prove incorrect or financial reporting standards change.
• Receivables Collection: Inability to collect amounts due from customers could adversely affect operating results.
• Tax Law Changes: Changes in U.S. and international tax laws (e.g., Inflation Reduction Act, One Big Beautiful Bill Act) or their interpretation could adversely affect the Company's business and financial condition, including its effective tax rate and ability to utilize net operating losses (NOLs) and tax credits.
• Regulatory Approval Process: The drug regulatory approval process is expensive, time-consuming, and uncertain. Failure to complete preclinical studies and clinical trials, obtain regulatory approvals, or comply with post-approval requirements could materially harm the business.
• Foreign Regulatory Approvals: Failure to obtain marketing approval in foreign jurisdictions would prevent product commercialization in those markets, impairing revenue generation.
• Expedited Pathways: While the Company may seek expedited designations (e.g., Fast Track, Breakthrough Therapy, Priority Review, PRIME), there is no guarantee of receiving them or that they will lead to faster development or approval.
• Orphan Drug Exclusivity: Obtaining and maintaining orphan drug exclusivity is uncertain and may not prevent competition.
• Healthcare Compliance: Compliance with anti-kickback, fraud and abuse, false claims, transparency, and privacy laws (e.g., HIPAA, GDPR, CCPA, EU Data Act) is complex and costly, with potential for substantial penalties for non-compliance.
• Anti-Corruption and Trade Control Laws: Failure to comply with anti-corruption laws (e.g., FCPA, Bribery Act) and trade control laws could result in civil or criminal penalties and adversely affect business.
• Intellectual Property Risks: Inability to obtain, maintain, enforce, and protect patent protection for technology and product candidates, or challenges to existing intellectual property rights, could allow competitors to commercialize similar products. Reliance on trade secrets also carries risks of disclosure or misappropriation.

Innovation & Technology Leadership

Research & Development Focus: Schrödinger, Inc.'s R&D is centered on advancing its physics-based computational platform. Key areas include:

• Core Technology: Continuously introducing new capabilities and refining software to maintain its industry-leading position in physics-based computational drug discovery.
• Predictive Toxicology: Developing a computational solution to predict toxicology risk early in drug discovery, aiming to improve drug candidate properties and reduce development failure risk associated with off-target binding.
• Biologics and Materials Science: Expanding platform capabilities to biologics discovery and applying it to materials science applications in aerospace, energy, semiconductors, electronic displays, and chemicals.
• Computational Capabilities: Focus on faster lead discovery (e.g., FEP+, Glide), accurate property prediction, optimizing protein structures (e.g., PrimeX), large-scale molecule exploration (e.g., AutoDesigner), large-scale molecule evaluation (e.g., Active Learning FEP+), and integrated data management and visualization (e.g., LiveDesign).

Innovation Pipeline:

• Predictive Toxicology Solution: Beta version is currently available to customers, with a commercial launch expected in 2026.
• RetroSynth: A machine learning-based retrosynthetic analysis method, newly developed and released in the first quarter of 2026.

Intellectual Property Portfolio: Schrödinger, Inc. protects its technology through patents, trade secrets, copyrights, and trademarks.

• Patents: Owns or holds exclusive license rights to approximately 40 patents and patent applications related to its computational platform, including 14 issued or allowed U.S. patents and 17 issued or allowed non-U.S. patents, with expected expiry between 2026 and 2038. For its proprietary drug discovery business, the Company wholly-owns approximately 15 pending U.S. patent applications and approximately 140 pending non-U.S. patent applications.
• Copyrights: Holds approximately 68 copyright registrations covering its proprietary software code.
• Trademarks: Owns numerous trademarks, including "Schrödinger" and "LiveDesign," registered in the United States and foreign jurisdictions.
• Trade Secrets: Relies on unpatented trade secrets and confidential know-how.

Technology Partnerships: Schrödinger, Inc. engages in strategic alliances and research collaborations, including licensing agreements with Columbia University for foundational technologies (e.g., PS-GVB, Fast Multipole RESPA, Protein Folding, PLOP, Water Site Analysis). It also collaborates with entities like Gates Ventures, LLC and the Bill & Melinda Gates Foundation for specific R&D initiatives.

Leadership & Governance

Executive Leadership Team

Board Composition: The Board of Directors includes Michael Lynton (Chairman), Jeffrey Chodakewitz, M.D., Richard Friesner, Ph.D., Gary Ginsberg, Rosana Kapeller-Libermann, M.D., Ph.D., Bridget van Kralingen, Arun Oberoi, Gary Sender, and Nancy Thornberry. Executive officers, directors, and principal stockholders collectively held approximately 49.8% of common stock and all limited common stock as of February 18, 2026, giving them significant influence over matters submitted to stockholders.

Human Capital Strategy

Workforce Composition: As of February 3, 2026, Schrödinger, Inc. had 850 full-time employees, including 363 with Ph.D. degrees. 587 employees are located in the United States and 263 internationally. The workforce diversity includes 32% self-identifying as female, 0.6% as non-binary, and 5.4% undisclosed gender. The U.S. workforce is 54.9% White, 29.3% Asian, 4.1% two or more races, 3.9% Black or African American, 3.4% Hispanic or Latino, 0.2% American Indian or Alaskan Native, 0.2% Native Hawaiian or Other Pacific Islander, and 4.1% undisclosed.

Talent Management:

• Acquisition & Retention: The Company focuses on attracting a broad candidate pipeline through a standardized interviewing model, leveraging employee networks, academic relationships, and industry events. The employee retention rate for 2025 was 87.7%.
• Employee Value Proposition: Offers competitive compensation (salaries, bonuses, 401(k) with employer match, equity programs) and comprehensive health and welfare benefits, including mental health, family care, and reproductive health benefits for U.S. employees. Compensation practices are routinely reviewed for equal opportunity and non-discrimination.
• Diversity & Development: Promotes an inclusive workplace and offers cross-departmental rotations, leadership training, mentoring programs, and online learning.
• Culture & Engagement: Fosters engagement through internal communication channels, an annual performance review process, and a hybrid work schedule allowing three days of remote work per week.

Environmental & Social Impact: Schrödinger, Inc. is committed to Corporate Sustainability, having completed a "double materiality assessment" in 2022 to identify key sustainability topics. Social impact initiatives include educational outreach in STEM, an annual paid volunteer day, a matching gift program, and a social impact platform for local volunteer opportunities.

Business Cyclicality & Seasonality

Demand Patterns: Software products and services revenue typically exhibits seasonality, with the first and fourth quarters generally being the largest due to the timing of customer renewals for on-premise software arrangements, where revenue is recognized upfront. Hosted software revenue is less seasonal as it is recognized ratably over the contract term. Drug discovery revenues have not shown seasonality.

Regulatory Environment & Compliance

Regulatory Framework: Schrödinger, Inc. operates under extensive regulation by the U.S. Food and Drug Administration (FDA) and comparable foreign regulatory authorities, covering drug research, development, testing, manufacturing, and commercialization. Key regulations include the Federal Food, Drug and Cosmetic Act (FDCA), the Clinical Trials Regulation (EU) No 536/2014, and various healthcare fraud and abuse laws (e.g., federal Anti-Kickback Statute, False Claims Act, HIPAA). The Company is also subject to global privacy and data security requirements, including the General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), the California Privacy Rights Act (CPRA), the Washington My Health My Data Act, and the EU Data Act. Anti-corruption laws (e.g., U.S. Foreign Corrupt Practices Act, U.K. Bribery Act 2010) and trade control laws (e.g., export controls, economic sanctions, BIOSECURE Act) also govern its international operations.

Legal Proceedings: Schrödinger, Inc. is not currently subject to any material legal proceedings.

Tax Strategy & Considerations

Tax Profile: Schrödinger, Inc. is subject to income taxes in the United States and various foreign jurisdictions (e.g., Germany, United Kingdom, Japan, India, South Korea). As of December 31, 2025, the Company had federal net operating losses (NOLs) of approximately $208.5 million (indefinite carryforward, limited to 80% of taxable income) and state NOLs of approximately $119.3 million (expiring between 2025 and 2055). It also held federal orphan drug credits and R&D tax credit carryforwards of approximately $44.0 million and state tax credit carryforwards of approximately $4.7 million (expiring between 2033 and 2045). A full valuation allowance is maintained on U.S. federal and state deferred tax assets.

Tax Reform Impact: The Inflation Reduction Act (IRA) and the One Big Beautiful Bill Act (OBBBA) enacted in 2022 and 2025, respectively, introduce new tax provisions, including a 1% excise tax on certain stock repurchases, changes to Medicare drug price negotiations and inflation rebates, and modifications to business interest deductions, R&D expensing, bonus depreciation, and the international tax framework. The Company is evaluating the impact of the OBBBA.

Insurance & Risk Transfer

Risk Management Framework: Schrödinger, Inc. maintains cybersecurity insurance coverage and clinical trial/product liability insurance in countries where it conducts clinical trials. The Company has processes for assessing, identifying, and managing cybersecurity risks, including physical, procedural, and technical safeguards, response plans, and regular system tests.