Centessa Pharmaceuticals (Orexia) Ltd.

Life sciences software developer and drug discovery outfit Schrödinger, during its “platform day,” outlined its programs and path forward two months after bringing on board long-time biotech analyst Geoffrey Porges, who told Endpoints News on his first day that the company’s story had been “over-simplified.” As part of telling its story on Thursday, which included slides of Schrödinger cats, the New York-based company disclosed another partner, adding to the dozen or so collaborations in the works at Schrödinger. Eli Lilly is the latest to sign on the dotted line in a small molecule discovery and optimization deal that will see the Indianapolis Big Pharma dish out up to $425 million in milestones. Details of the upfront payment were kept under the hood. Royalties are also on the line, and Lilly will lead everything once the tie-up enters the preclinical stage. The deal comes to light less than two full months after Porges joined as CFO, after a storied time at SVB Securities. On his first day, Porges told Endpoints that the timing was optimal to bring a “lot more visibility” to the 32-year-old, 800-employee company. That was the apparent mission of Thursday’s two-hour hybrid presentation, in which CEO Ramy Farid offered up his comments on the hype of artificial intelligence and noted half the company’s employees are dedicated to R&D and working toward finding that “one magical molecule” for its biopharma partners. “You now always hear [machine learning] being referred to as AI because it just sounds cooler to call it AI,” Farid said. “It’s just machine learning. In computational chemistry, when people say AI, they mean machine learning.” The list of companies attempting to disrupt drug discovery is approaching a full postseason roster at this point: Exscientia, Atomwise, Recursion Pharmaceuticals, insitro, XtalPi, Deep Genomics, Insilico, CytoReason and BenevolentAI, among others. For its own in-house work, Schrödinger will enter the clinic this quarter with a Phase I study of its MALT1 inhibitor, SGR-1505, in patients with relapsed/refractory B-cell lymphoma. The company also said Thursday that it expects to ask for an IND for its CDC7 inhibitor, SGR-2921, in the first half of next year. And a Wee1 inhibitor development candidate will be selected this quarter. The goal is to synthesize and test hundreds of molecules in about 1.5 years to 3 years, compared to other molecule design processes that Schrödinger claims can take about 4 to 6 years. That work is part of a laundry list of collaborators: Nimbus Therapeutics and ShouTi (both of which Schrödinger co-founded), Agios, Nimbus Therapeutics, Morphic Therapeutic, Structure Therapeutics, Sanofi, Bright Angel Therapeutics, Petra Pharma, Ajax Therapeutics, Orexia, Takeda, Zai Lab, Bristol Myers Squibb and now Eli Lilly.

~ Announced positive topline data from proof-of-concept study of SerpinPC in severe hemophilia A and B subjects not on prophylaxis, demonstrating 88% reduction in median Annualized Bleeding Rate (“ABR”) for all bleeds and 94% reduction in median ABR for spontaneous joint bleeds in highest dose tested ~ ~ Announced proof-of-mechanism data from first three PiMZ subjects dosed in Phase 1 Part B study evaluating ZF874 for the treatment of Alpha-1 Antitrypsin Deficiency (“AATD”) ~ ~ Announced collaboration between Orexia Therapeutics and Schrödinger to discover novel orexin receptor agonists ~ ~ Successful entry into a $300 million financing facility with Oberland Capital to enable further scale-up of development activities and pursuit of strategic business development opportunities ~ ~ Centessa leadership team strengthened through appointment of David Grainger, PhD, a leading biotech entrepreneur, as Chief Innovation Officer ~ ~ Programs across Centessa portfolio continue to progress, with multiple INDs/CTAs expected in 2022 ~ BOSTON and LONDON, Nov. 15, 2021 (GLOBE NEWSWIRE) -- Centessa Pharmaceuticals plc (Nasdaq: CNTA), a clinical-stage company (“Centessa” or “Company”) leveraging its innovative asset-centric business model to discover, develop and ultimately deliver impactful medicines to patients, today reported financial results for the quarter ended September 30, 2021, and provided a review of recent accomplishments and anticipated upcoming milestones. “This has been a very productive quarter, as we continued to build our team and shared the first two data updates since the formation of Centessa earlier this year. We announced positive topline data from our proof-of-concept study evaluating SerpinPC in severe hemophilia subjects and seek to move this program into registrational studies in 2022. More recently, in our Phase 1 Part B study evaluating ZF874 for the treatment of AATD, we reported encouraging proof-of-mechanism data from three initial PiMZ subjects and plan to provide an update in 2022 once we have data on PiZZ subjects at multiple doses. In addition to these exciting early results, we are continuing to progress programs across our entire portfolio,” said Saurabh Saha, MD, PhD, Chief Executive Officer of Centessa. Dr. Saha continued, “Our recent $300 million financing facility with Oberland Capital will provide additional financial flexibility to help further advance our portfolio and better enable the Company to pursue strategic business development opportunities.” Recent Business Highlights Announced Positive Topline Data from Proof-of-Concept Study of SerpinPC in Severe Hemophilia A and B Subjects Not on Prophylaxis: In September, the Company, together with subsidiary ApcinteX Limited (“ApcinteX”), announced positive topline results from the Phase 2a part of AP-0101, the six-month repeat dose portion of the ongoing first-in-human proof-of-concept study evaluating SerpinPC in severe hemophilia A and B subjects. In the highest dose cohort, SerpinPC reduced the self-reported all bleeds Annualized Bleeding Rate (“ABR”) by 88% during the last 12 weeks of treatment (pre-specified primary assessment period) as compared to the all bleeds ABR prospectively measured during the pre-exposure observation period. In this cohort, five out of eight subjects had zero or one bleed during the 12-week pre-specified primary assessment period and self-reported spontaneous joint bleeds ABR was reduced by 94%. SerpinPC was well-tolerated with no sustained elevations in D-dimer. Demonstrated Proof-of-Mechanism in First Three PiMZ Subjects Dosed in Part B of Phase 1 Study Evaluating ZF874: In November, the Company, together with subsidiary Z Factor Limited (“Z Factor”), announced proof-of-mechanism data from the first three PiMZ subjects dosed in the ongoing repeat dose Phase 1 Part B study of ZF874 in subjects carrying at least one Z-mutated alpha-1-antitrypsin allele (PiXZ). These are the first clinical data that suggest a pharmacological chaperone may be able to sufficiently increase functional Z-A1AT to levels greater than 11 micromolar in individuals with the PiZZ genotype, levels that have been the basis for approval of the existing A1AT augmentation therapies. Because one subject showed a delayed, reversible increase in ALT and AST, the Company will be exploring lower doses and different dosing regimens. The Company is taking steps to increase enrollment by adding sites in the United Kingdom and intends to expand the study to the European Union. Secured $300 Million Financing Facility with Oberland Capital Management LLC: In October, the Company entered into a $300 million financing facility (“Oberland Agreement”). Under the terms of the agreement, Oberland Capital Management LLC (“Oberland Capital”) will purchase up to $300 million of 6-year, interest-only, senior secured notes from the Company, including $75 million funded in October, a total of $125 million available within 24 months at the option of the Company, and $100 million available to fund M&A, in-licensing, or other strategic transactions, at the option of the Company and Oberland Capital. The Company’s pro forma cash position as of September 30, 2021, following receipt of the net proceeds from the first tranche of notes in October, was $653.4 million. Centessa Subsidiary, Orexia Therapeutics, Initiated Collaboration with Schrödinger to Discover Novel Orexin Receptor Agonists: In October, Orexia entered into an exclusive collaboration with Schrödinger focused on the discovery of novel therapeutics targeting the orexin-2 receptor (“OX2R”), which is known to play a role in a broad spectrum of sleep disorders including narcolepsy. The collaboration provides Orexia with substantial access to Schrödinger’s entire computational platform as well as Schrödinger’s extensive expertise in ultra-large-scale deployment of its technology. Leadership Team Strengthened by Appointment of Chief Innovation Officer: In October, the Company announced the appointment of David Grainger, PhD, as Chief Innovation Officer. Dr. Grainger will be a member of the Company’s executive leadership team and will be responsible for the overall management of the scientific and research activities. Upcoming Milestones ApcinteX’s SerpinPC, an activated protein C inhibitor for Hemophilia: During 2022, the Company expects to launch a global full development plan aimed at one or more registrations to maximize the broad potential for SerpinPC in the hemophilia space. The Company also expects to provide an update in 2022 on the ongoing Phase 2a open-label extension study. Palladio Biosciences’ lixivaptan, a vasopressin V2 receptor antagonist for Autosomal Dominant Polycystic Kidney Disease (“ADPKD”): By the end of 2021, the Company expects to report initial safety data from the ongoing open-label ALERT Study of subjects who previously discontinued JYNARQUE® (tolvaptan) due to liver toxicity. The Company expects to dose the first subject in the registrational Phase 3 ACTION Study by 1Q 2022. Z Factor’s ZF874, a Z-A1AT folding corrector for AATD: During 2022, the Company expects to report on additional PiMZ as well as PiZZ subjects from the expanded Phase 1 Part B. The Company anticipates starting a global Phase 2 study in 2Q 2022, with 6-month dosing to commence in 2H 2022 once a dose and regimen are established and chronic animal toxicology is completed. Pega-One’s imgatuzumab, a non-fucosylated anti-epidermal growth factor receptor (“EGFR”) monoclonal antibody (“mAb”) for Advanced Cutaneous Squamous Cell Carcinoma (“CSCC”): The Company expects to initiate an open-label, single arm, Phase 2 trial of imgatuzumab in advanced CSCC by the end of 2021 and dose the first subject in 1Q 2022. Capella Bioscience’s CBS001, an anti-LIGHT mAb for Idiopathic Pulmonary Fibrosis (“IPF”): In 1H 2022, the Company expects to submit a Clinical Trial Authorisation (“CTA”) application with the UK Medicines and Healthcare products Regulatory Agency (“MHRA”) for CBS001 and commence a Phase 1 study shortly thereafter. Capella Bioscience’s CBS004, an anti-BDCA2 mAb for Systemic & Cutaneous Lupus Erythematosus (“SLE/CLE”) and Systemic Sclerosis (“SSc”): In 2H 2022, the Company expects to submit an Investigational New Drug (“IND”) application with the U.S. Food and Drug Administration (“FDA”) for CBS004 and commence a Phase 1 study shortly thereafter. Orexia Therapeutics’ oral orexin receptor agonist for Narcolepsy Type 1 (“NT1”), and other neurological disorders characterized by excessive daytime sleepiness: The Company is on track to select a candidate for its oral program and commence IND enabling activities in 2022. Janpix Limited’s dual degrader of Signal Transducer and Activator of Transcription proteins 3 and 5 (“STAT3” and “STAT5”) for Acute Myeloid Leukemia: By the end of 2021, the Company expects to select a candidate for the STAT3/5 program. PearlRiver Bio’s small molecule kinase inhibitors for EGFR mutations in Non-Small Cell Lung Cancer (“NSCLC”): The Company is progressing an EGFR-C797S mutation inhibitor for the treatment of NSCLC and expects to report on ongoing candidate selection in 2022. The Company will not select a candidate for its exon20 mutation program in 2021 and is presently reviewing this program. Third Quarter 2021 Financial Results Cash Position: Cash and cash equivalents were $578.8 million as of September 30, 2021, compared to $613.8 million as of June 30, 2021, a reduction of $35 million. On a pro forma basis as of September 30, 2021, cash and cash equivalents were $653.4 million, inclusive of the net proceeds of $74.6 million from the first tranche received under the Oberland Agreement on October 4, 2021. Based on the current, non-risk-adjusted operating plan, the Company expects the cash and cash equivalents as of September 30, 2021, plus the net proceeds of the first tranche, supplemented by the additional funds available under the Oberland Agreement, if drawn, to fund its operations into mid-2024. Research & Development (“R&D”) Expenses: R&D expenses for the Company for the three months ended September 30, 2021, were $25.9 million, compared to $1.9 million for the Centessa Predecessor Group (comprised of Z Factor Limited, LockBody Therapeutics Ltd, and Morphogen-IX Limited, three of the Centessa Subsidiaries acquired in January 2021) for the three months ended September 30, 2020. The $23.9 million increase is primarily attributable to the growth in the portfolio of product candidates under development following the acquisition of the Centessa Subsidiaries in January 2021, as well as increased spending in the Centessa Predecessor Group. General & Administrative (“G&A”) Expenses: G&A expenses for the Company for the three months ended September 30, 2021, were $12.5 million, compared to $0.2 million for the Centessa Predecessor Group during the three months ended September 30, 2020. The $12.2 million increase is primarily attributable to public company costs, the operating costs of Centessa Pharmaceuticals plc and Centessa Pharmaceutical Inc., including professional fees and personnel costs, and the increase in operating costs resulting from the acquired Centessa subsidiaries. In addition, the increase in personnel related expenses includes an increase in headcount and an increase in share-based compensation expense of $2.6 million which is primarily attributable to the equity awards issued at the time of the acquisition and the subsequent issuances of awards through September 30, 2021. Net Loss: Net Loss attributable to common stockholders for the quarter ended September 30, 2021, was $40.2 million, or $0.45 per share, compared to a net loss of $2.1 million for the Centessa Predecessor Group for the quarter ended September 30, 2020. About Centessa Pharmaceuticals Centessa Pharmaceuticals plc aims to bring impactful new medicines to patients by combining the strengths of an asset-centric model with the benefits of scale and diversification typical of larger R&D organizations. The asset-centric model refers to a highly specialized, singular-focused company that is led by a team of well-recognized subject matter experts. Centessa’s asset-centric companies’ programs range from discovery-stage to late-stage development and include diverse therapeutic areas such as oncology, hematology, immunology/inflammation, neuroscience, hepatology, pulmonology and nephrology. For more information, visit . Forward Looking Statements This press release contains forward-looking statements. These statements may be identified by words such as “aims,” “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “plans,” “possible,” “potential,” “seeks,” “will,” and variations of these words or similar expressions that are intended to identify forward-looking statements. Any such statements in this press release that are not statements of historical fact may be deemed to be forward-looking statements including statements related to the Company’s ability to deliver impactful medicines to patients; the ability of our key executives to drive execution of the Company’s portfolio of programs; our asset-centric business model and the intended advantages and benefits thereof; research and clinical development plans; the scope, progress, results and costs of developing our product candidates or any other future product candidates; our collaborations and the intended benefits thereof; strategy; regulatory matters, including the timing and likelihood of success of obtaining approvals to initiate or continue clinical trials or market any products; market size and opportunity; our ability to complete certain milestones; the availability of funding to operate our business and pursue our objectives; and our cash position and runway. Any forward-looking statements in this press release are based on our current expectations, estimates and projections only as of the date of this release and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those set forth in or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, risks related to our ability to protect and maintain our intellectual property position; business, regulatory, economic and competitive risks, uncertainties, contingencies and assumptions about the Company; risks inherent in developing products and technologies; future results from our ongoing and planned clinical trials; our ability to obtain adequate financing, including through our financing facility with Oberland, to fund our planned clinical trials and other expenses; trends in the industry; the legal and regulatory framework for the industry, including the receipt and maintenance of clearances to conduct or continue clinical testing; future expenditures risks related to our asset-centric corporate model; the risk that any one or more of our product candidates will not be successfully developed and commercialized; the risk that the results of preclinical studies or clinical studies will not be predictive of future results in connection with future studies; and risks related to the COVID-19 pandemic including the effects of the Delta and any other variants. These and other risks concerning our programs and operations are described in additional detail in our reports that we the SEC. We explicitly disclaim any obligation to update any forward-looking statements except to the extent required by law. Contacts: Investors: Jennifer Porcelli, Head of Investor Relations Centessa Pharmaceuticals Jennifer.Porcelli@centessa.com Media: Dan Budwick, 1AB dan@1abmedia.com Centessa Pharmaceuticals plc (Successor) and Centessa Predecessor Group (Predecessor) Consolidated and Combined Statements of Operations and Comprehensive Loss (unaudited) (amounts in thousands except share and per share data) Successor Predecessor Three months ended September 30, 2021 Period from January 30, 2021 through September 30, 2021 Period from January 1, 2021 through January 29, 2021 Three months ended September 30, 2020 Nine months ended September 30, 2020 Operating expenses: Research and development 25,850 54,126 600 1,923 6,604 General and administrative 12,464 29,900 121 193 831 Change in fair value of contingent value rights — 11,312 — — — Acquired in-process research and development — 220,454 — — — Loss from operations (38,314 ) (315,792 ) (721 ) (2,116 ) (7,435 ) Interest income (expense), net 65 100 (9 ) (22 ) (56 ) Amortization of debt discount — — (37 ) (78 ) (220 ) Other income (expense), net (1,906 ) (4,605 ) — 6 (5 ) Gain on extinguishment of debt — — — 72 339 Net loss (40,155 ) (320,297 ) (767 ) (2,138 ) (7,377 ) Other comprehensive loss: Foreign currency translation adjustment (487 ) 2,828 45 372 (359 ) Total comprehensive loss $ (40,642 ) $ (317,469 ) $ (722 ) $ (1,766 ) $ (7,736 ) Net loss per ordinary share - basic and diluted $ (0.45 ) $ (4.60 ) Weighted average ordinary shares outstanding - basic and diluted 89,899,454 69,597,648 Centessa Pharmaceuticals plc (Successor) and Centessa Predecessor Group (Predecessor) Condensed Consolidated and Combined Balance Sheets (unaudited) (amounts in thousands except share and per share data) Successor Predecessor September 30, 2021 December 31, 2020 Total Assets Cash and cash equivalents $ 578,815 $ 7,227 Other assets 33,392 4,490 Total assets $ 612,207 $ 11,717 Total Liabilities Liabilities $ 29,144 $ 8,619 Contingent value rights 33,930 — Total liabilities 63,074 8,619 Total combined deficit and shareholders' equity 549,133 3,098 Total liabilities, combined deficit and shareholders' equity $ 612,207 $ 11,717

Nov. 10, 2021 21:01 UTC Third Quarter Total Revenue of $29.9 Million, Up 16 Percent Year-Over-Year; Software Revenue of $24.3 Million Recent Collaboration with Centessa Pharmaceuticals Subsidiary, Orexia Therapeutics, Highlights Continued Large-Scale Adoption of Platform by Biotechnology Companies Development Candidate Selected for CDC7 Inhibitor Program; New Preclinical Data Demonstrating Potential of MALT1 Inhibitors to be Presented at ASH 2021; Internal Pipeline Expanded to Five Programs Company Maintains Full Year 2021 Financial Outlook for Software Revenue and Updates Outlook for Drug Discovery Revenue NEW YORK--(BUSINESS WIRE)-- Schrödinger (Nasdaq: SDGR), whose physics-based software platform is transforming the way therapeutics and materials are discovered, today announced financial results for the third quarter ended September 30, 2021, and provided an update on the company. “We are very pleased with the progress we have made across the business so far this year. The level of engagement with senior R&D leaders across pharma and the growth we are seeing in new software customers suggests a shift in the drug discovery paradigm and a push to incorporate advanced computational approaches into projects at all stages,” stated Ramy Farid, Ph.D., chief executive officer at Schrödinger. “As we approach year-end, we are continuing to focus on key strategic priorities, including advancing our internal pipeline. We are on track to submit an IND to the FDA for our MALT1 inhibitor program in the first half of next year, and we look forward to presenting additional preclinical data for this program at the American Society of Hematology Annual Meeting next month. We also recently selected a development candidate and initiated IND-enabling studies for our CDC7 inhibitor program, and we added a new oncology target, our fifth internal program, to our pipeline.” Recent Business Highlights Collaborations Highlight Opportunities and Progress Across the Business Entered collaboration with Centessa Pharmaceuticals Subsidiary, Orexia Therapeutics, focused on novel orexin receptor agonists: In October, Schrödinger and Centesa Pharmaceuticals Subsidiary, Orexia Therapeutics, announced a collaboration focused on the discovery of novel therapeutics targeting the orexin-2 receptor, which is known to play a role in a broad spectrum of sleep disorders, including narcolepsy. The collaboration provides Orexia with substantial access to Schrödinger’s entire computational platform as well as Schrödinger’s extensive expertise in ultra-large-scale deployment of its technology. Under the terms of the agreement, Orexia is responsible for preclinical research activities, clinical development and commercialization of future product candidates discovered under the collaboration. Schrödinger received an upfront software access payment and may become eligible to receive certain preclinical, development, regulatory and commercial milestone payments, as well as low single digit royalties on global net sales. Formed strategic collaboration with MD Anderson to accelerate development of WEE1 program: In October, Schrödinger and The University of Texas MD Anderson Cancer Center announced a two-year strategic research collaboration focused on accelerating and optimizing the development of Schrödinger’s WEE1 inhibitor program. The goal of the collaboration is to accelerate and optimize the clinical development path for Schrödinger’s WEE1 program through molecular biomarker-driven tumor type prioritization and patient stratification and to validate biomarkers to predict response or resistance to a WEE1 inhibitor. The joint team will seek to prioritize clinical studies of a WEE1 inhibitor as a single agent in selected cancer indications and in combinations for defined clinical subpopulations. Completion of $100 million financing by strategic partner ShouTi: In October, Schrödinger’s partner, ShoutTi Inc., announced a $100 million series B financing to advance the company’s discovery platform, leveraging Schrödinger’s computational platform and expertise, and ShouTi’s structural biology and drug discovery expertise to design orally available medicines with properties that aim to overcome current limitations of biologic and peptide drugs. Schrödinger is a co-founder of ShouTi, which is advancing a pipeline focused on chronic diseases with high medical need, including cardiovascular, metabolic and pulmonary conditions. Provided update on collaboration with Bristol Myers Squibb: Schrödinger today announced that the companies have prioritized an undisclosed precision oncology target that will replace HIF-2 alpha. Additionally, Schrödinger and Bristol Myers Squibb recently expanded their collaboration with a new agreement to discover, develop and commercialize bifunctional degraders. Internal Programs Expanding and Advancing New preclinical data from multiple MALT1 inhibitors to be presented at ASH: Last week, Schrödinger announced that new preclinical data from its MALT1 program will be presented at the ASH 2021 Annual Meeting, which is being held December 11 - 14 virtually and in person in Atlanta, GA. The poster presentation, “Characterization of Potent Paracaspase MALT1 Inhibitors for Hematological Malignancies” (Abstract #1187), is scheduled to take place on Saturday, December 11, from 5:30 p.m. - 7:30 p.m. ET. MALT1 is considered a potential therapeutic target for several non-Hodgkin’s B-cell lymphomas as well as chronic lymphocytic leukemia. Schrödinger expects to submit an investigational new drug (IND) application to the U.S. Food and Drug Administration for its MALT1 program in the first half of 2022. Development candidate selected for CDC7 program: Schrödinger today announced that it selected a development candidate and has initiated IND-enabling studies for its CDC7 inhibitor program. CDC7 is thought to be linked to cancer cells’ proliferative capacity and ability to bypass normal DNA damage responses. Targeting proteins that play important roles in DNA replication and replication stress, such as CDC7, is gaining momentum as a therapeutic approach for cancer. Internal pipeline expanded to five programs: Schrödinger continued to advance its discovery efforts and today announced that the company further expanded its internal pipeline with the addition of a fifth program, which is an undisclosed oncology target. Third Quarter 2021 Financial Results Total revenue was $29.9 million for the third quarter of 2021, a 16 percent increase compared to the third quarter of 2020. Software revenue was $24.3 million for the third quarter of 2021, compared to $22.9 million for the third quarter of 2020. The six percent growth observed year-over-year was primarily due to increased sales from existing customers and the addition of new customers, partially offset by multi-year contracts that were executed in the third quarter of 2020, as well as the completion of a research project that was active in the third quarter of 2020. Drug discovery revenue was $5.6 million for the third quarter of 2021, compared to $2.9 million in the third quarter of 2020. Third quarter 2021 drug discovery revenue included the recognition of $4.4 million of revenue from the company’s collaboration with Bristol Myers Squibb. Gross profit was $11.1 million in the third quarter of 2021, compared to $15.3 million in the third quarter in 2020. Software gross margin was 73 percent in the third quarter of 2021, compared to 81 percent for the same period in the prior year, reflecting planned investments to drive and support large-scale adoption of Schrödinger’s platform as well as increased royalty expenses in the quarter. Operating expenses for the third quarter of 2021 were $45.8 million, compared to $30.7 million in the third quarter of 2020, driven by expenses required to scale the company’s business, advance its internal drug discovery programs and continue to build a public company infrastructure. Other expense, which included changes in fair value of equity investments and interest income, was $0.3 million in the third quarter of 2021 compared to income of $18.7 million for the third quarter of 2020 due to adjustments to the fair value of the company’s equity investments. Net loss, after adjusting for non-controlling interest, was $35.0 million for the third quarter of 2021, compared to net income of $3.9 million for the third quarter of 2020, driven by adjustments to the fair value of the company’s equity investments as well as planned investments to advance the company’s growth strategy. Cash, cash equivalents, restricted cash and marketable securities as of September 30, 2021, were $600.2 million, compared to $616.6 million as of June 30, 2021. Full-Year 2021 Financial Outlook As of November 10, 2021, Schrödinger expects total revenue to range from $124 million to $134 million for the fiscal year ending December 31, 2021. The company is maintaining its full-year software revenue expectation of $102 million to $110 million. The company is adjusting its full-year drug discovery revenue expectation to a range of $22 million to $24 million, updated from a previous expectation of $22 million to $32 million, primarily due to the timing of anticipated milestones from collaborators. Schrödinger continues to aggressively fund R&D to advance its technology and drug discovery pipeline. The company continues to expect operating expense growth to be higher than the 42 percent annual growth rate reported in 2020 and expects software gross margin to be lower than the 81 percent reported in 2020. Webcast and Conference Call Information Schrödinger will host a conference call to discuss its third quarter financial results on Wednesday, November 10, 2021, at 4:30 p.m. ET. The conference call can be accessed live by dialing (833) 727-9520 (domestic) or +1 (830) 213-7697 (international) and referring to conference ID 2484045. The webcast can also be accessed under “News & Events” in the investors section of Schrödinger’s website, . The archived webcast will be available on Schrödinger’s website for approximately 90 days following the event. About Schrödinger Schrödinger is transforming the way therapeutics and materials are discovered. Schrödinger has pioneered a physics-based software platform that enables discovery of high-quality, novel molecules for drug development and materials applications more rapidly and at lower cost compared to traditional methods. The software platform is used by biopharmaceutical and industrial companies, academic institutions, and government laboratories around the world. Schrödinger’s multidisciplinary drug discovery team also leverages the software platform to advance collaborative programs and its own pipeline of novel therapeutics to address unmet medical needs. Founded in 1990, Schrödinger has over 500 employees and is engaged with customers and collaborators in more than 70 countries. To learn more visit and follow us on LinkedIn and Twitter. Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 including, but not limited to those regarding Schrödinger’s expectations about the speed and capacity of its computational platform, the company’s financial outlook for the fiscal year ending December 31, 2021, the company’s plans to continue to invest in research and its strategic plans to accelerate the growth of its software business and advance its collaborative and internal drug discovery programs, the potential to accelerate and optimize the company’s WEE1 program through its research collaboration with MD Anderson, the clinical potential and favorable properties of the company’s CDC7, MALT1 and WEE1 inhibitors, the timing of potential IND submissions for its internal drug discovery programs, the ability to realize potential milestones, royalties or other payments under its collaborations, including with BMS and Orexia Therapeutics, as well as the company’s expectations related to the use of its cash, cash equivalents and marketable securities. Statements including words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and statements in the future tense are forward-looking statements. These forward-looking statements reflect Schrödinger’s current views about its plans, intentions, expectations, strategies and prospects, which are based on the information currently available to the company and on assumptions the company has made. Actual results may differ materially from those described in these forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and important factors that are beyond Schrödinger’s control, including the demand for its software solutions, the ability to further develop its computational platform, the reliance upon third-party providers of cloud-based infrastructure to host its software solutions, the reliance upon its third-party drug discovery and research collaborators, the uncertainties inherent in drug development and commercialization, such as the conduct of research activities and the timing of and its ability to initiate and complete preclinical studies and clinical trials, whether results from preclinical studies will be predictive of the results of later preclinical studies and clinical trials, uncertainties associated with the regulatory review of IND submissions, clinical trials and applications for marketing approvals, the ability to retain and hire key personnel and the direct and indirect impacts of the ongoing COVID-19 pandemic on its business and other risks detailed under the caption “Risk Factors” and elsewhere in the company’s Securities and Exchange Commission filings and reports, including its Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed with the Securities and Exchange Commission on November 10, 2021, as well as future filings and reports by Schrödinger. Any forward-looking statements contained in this press release speak only as of the date hereof. Except as required by law, the company undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information, future events, changes in expectations or otherwise. Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except for share and per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenues: Software products and services $ 24,280 $ 22,861 $ 74,672 $ 67,573 Drug discovery 5,570 2,936 17,089 7,490 Total revenues 29,850 25,797 91,761 75,063 Cost of revenues: Software products and services 6,611 4,334 18,158 12,197 Drug discovery 12,124 6,191 34,344 18,386 Total cost of revenues 18,735 10,525 52,502 30,583 Gross profit 11,115 15,272 39,259 44,480 Operating expenses: Research and development 23,219 17,019 65,759 47,376 Sales and marketing 5,556 3,969 16,175 13,120 General and administrative 17,014 9,729 46,253 28,316 Total operating expenses 45,789 30,717 128,187 88,812 Loss from operations (34,674 ) (15,445 ) (88,928 ) (44,332 ) Other (expense) income: (Loss) gain on equity investments — — (1,781 ) 4,156 Change in fair value (627 ) 18,233 19,279 23,513 Interest income 286 463 1,063 1,732 Total other (expense) income (341 ) 18,696 18,561 29,401 (Loss) income before income taxes (35,015 ) 3,251 (70,367 ) (14,931 ) Income tax (benefit) expense (4 ) (35 ) 137 120 Net (loss) income (35,011 ) 3,286 (70,504 ) (15,051 ) Net loss attributable to noncontrolling interest (4 ) (566 ) (824 ) (1,727 ) Net (loss) income attributable to Schrödinger common and limited common stockholders $ (35,007 ) $ 3,852 $ (69,680 ) $ (13,324 ) Net (loss) income per share attributable to Schrödinger common and limited common stockholders, basic: $ (0.49 ) $ 0.06 $ (0.99 ) $ (0.23 ) Weighted average shares used to compute net (loss) income per share attributable to Schrödinger common and limited common stockholders, basic: 70,784,184 66,339,570 70,481,901 56,802,567 Net (loss) income per share attributable to Schrödinger common and limited common stockholders, diluted: $ (0.49 ) $ 0.05 $ (0.99 ) $ (0.23 ) Weighted average shares used to compute net (loss) income per share attributable to Schrödinger common and limited common stockholders, diluted: 70,784,184 72,693,173 70,481,901 56,802,567 Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except for share and per share amounts) Assets September 30, 2021 December 31, 2020 Current assets: Cash and cash equivalents $ 160,879 $ 202,296 Restricted cash 3,000 500 Marketable securities 436,307 440,395 Accounts receivable, net of allowance for doubtful accounts of $108 and $60 11,352 31,423 Unbilled and other receivables, net for allowance for unbilled receivables of $20 and $0 4,978 3,955 Prepaid expenses 5,509 4,409 Total current assets 622,025 682,978 Property and equipment, net 9,074 5,140 Equity investments 51,087 45,664 Right of use assets 76,459 10,129 Other assets 3,972 2,352 Total assets $ 762,617 $ 746,263 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 8,228 $ 8,398 Accrued payroll, taxes, and benefits 14,010 12,000 Deferred revenue 43,874 45,403 Lease liabilities 1,978 4,543 Other accrued liabilities 4,826 2,861 Total current liabilities 72,916 73,205 Deferred revenue, long-term 32,444 41,164 Lease liabilities, long-term 77,135 7,221 Other liabilities, long-term 300 654 Total liabilities 182,795 122,244 Commitments and contingencies Stockholders' equity: Preferred stock, $0.01 par value. Authorized 10,000,000 shares; zero shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively — — Common stock, $0.01 par value. Authorized 500,000,000 shares; 61,703,441 and 60,713,534 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively 617 607 Limited common stock, $0.01 par value. Authorized 100,000,000 shares; 9,164,193 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively 92 92 Additional paid-in capital 778,292 752,558 Accumulated deficit (199,239 ) (129,559 ) Accumulated other comprehensive income 44 317 Total stockholders’ equity of Schrödinger stockholders 579,806 624,015 Noncontrolling interest 16 4 Total stockholders’ equity 579,822 624,019 Total liabilities and stockholders’ equity $ 762,617 $ 746,263 Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended September 30, 2021 2020 Cash flows from operating activities: Net loss $ (70,504 ) $ (15,051 ) Adjustments to reconcile net loss to net cash used in operating activities: Loss (gain) on equity investments 1,781 (4,156 ) Noncash revenue from equity investments (59 ) (342 ) Fair value adjustments (19,279 ) (23,513 ) Depreciation 2,195 2,648 Stock-based compensation 19,034 7,542 Noncash research and development expenses 811 1,694 Noncash investment accretion 4,736 359 Loss on disposal of property and equipment 140 — Decrease (increase) in assets: Accounts receivable, net 20,071 6,386 Unbilled and other receivables (1,358 ) 2,580 Reduction in the carrying amount of right of use assets 4,724 3,957 Prepaid expenses and other assets (2,720 ) 290 (Decrease) increase in liabilities: Accounts payable (229 ) 1,254 Accrued payroll, taxes, and benefits 2,010 668 Deferred revenue (10,190 ) (5,258 ) Lease liabilities (3,705 ) (3,997 ) Other accrued liabilities 1,611 (1,922 ) Net cash used in operating activities (50,931 ) (26,861 ) Cash flows from investing activities: Purchases of property and equipment (6,210 ) (1,652 ) Purchases of equity investments (3,700 ) (2,869 ) Distribution from equity investment 375 4,582 Proceeds from sale of equity investments 15,735 — Purchases of marketable securities (340,509 ) (446,816 ) Proceeds from maturity of marketable securities 339,588 118,272 Net cash provided by (used in) investing activities 5,279 (328,483 ) Cash flows from financing activities: Issuances of common stock upon initial public offering, net — 211,491 Issuances of common stock upon follow-on public offering, net — 325,610 Issuances of common stock upon stock option exercises 6,710 2,747 Contribution by noncontrolling interest 25 — Net cash provided by financing activities 6,735 539,848 Net (decrease) increase in cash and cash equivalents and restricted cash (38,917 ) 184,504 Cash and cash equivalents and restricted cash, beginning of period 202,796 26,486 Cash and cash equivalents and restricted cash, end of period $ 163,879 $ 210,990 Supplemental disclosure of cash flow and noncash information Cash paid for income taxes $ 236 $ 225 Supplemental disclosure of non-cash investing and financing activities Accrued deferred offering costs — 10 Purchases of property and equipment in accounts payable 59 24 Acquisitions of right of use assets in exchange for lease obligations 71,054 1,778 Reclassification of deferred financing costs to additional paid in capital — 1,858