Why did I invest in $SDGR? (Thread)
Business model:
Software: 1,300+ customers - enables rapid discovery of new molecules for drug development & materials
Drug discover: >25 collab programs AND a wholly-owned pipeline
Equity in other biz
Business model:
Software: 1,300+ customers - enables rapid discovery of new molecules for drug development & materials
Drug discover: >25 collab programs AND a wholly-owned pipeline
Equity in other biz
Software biz:
Use software to create new compounds
237 BILLION compounds explored in software in 1h 2020
Uses AI to drive faster, cheaper, higher quality molecules/drugs
35% rev growth in 1h 2020
82% gross margin
Top 20 pharma cos use software, average of 15 years
Use software to create new compounds
237 BILLION compounds explored in software in 1h 2020
Uses AI to drive faster, cheaper, higher quality molecules/drugs
35% rev growth in 1h 2020
82% gross margin
Top 20 pharma cos use software, average of 15 years
History of success w/ equity
Co-founded Nimbus in 2009
Spun off, yet retained equity
In 2016, Nimbus sold a drug to Gilead Sciences for $1.2 billion
Co-founded Nimbus in 2009
Spun off, yet retained equity
In 2016, Nimbus sold a drug to Gilead Sciences for $1.2 billion
Financial:
Software profits fund R&D programs
Net loss only $17 MM 1H 2020, mostly due to huge growth in R&D spending
FCF -$16 MM in 1H 2020
~$631 MM in cash -- TONS of liquidity
Software profits fund R&D programs
Net loss only $17 MM 1H 2020, mostly due to huge growth in R&D spending
FCF -$16 MM in 1H 2020
~$631 MM in cash -- TONS of liquidity
Valuation:
Winner since IPO (+70%)
But down ~50% from July high
Valuation still high (39x sales), but high-quality companies deserve premiums
Winner since IPO (+70%)
But down ~50% from July high
Valuation still high (39x sales), but high-quality companies deserve premiums
Risks:
Valuation still too high
Pipeline falls apart
Software growth slows to a crawl
Valuation still too high
Pipeline falls apart
Software growth slows to a crawl
I like the one-two-three punch here
Software biz is a high-quality asset that should continue to grow and pump out profits
Drug discovery & equity business provides TONS of optionality
Going to be a bumpy ride, but I bet this stock is higher in 2030 than it is today
Software biz is a high-quality asset that should continue to grow and pump out profits
Drug discovery & equity business provides TONS of optionality
Going to be a bumpy ride, but I bet this stock is higher in 2030 than it is today
Score on my checklist:
Financials: 8/17
Moat: 20/20
Potential: 17/18
Customers: 7/10
Revenue: 8/10
Mgmt/Culture: 10/14
Stock: 3/11
Gauntlet: 0
Total Score: 73 (investable)
85 possible in time
Financials: 8/17
Moat: 20/20
Potential: 17/18
Customers: 7/10
Revenue: 8/10
Mgmt/Culture: 10/14
Stock: 3/11
Gauntlet: 0
Total Score: 73 (investable)
85 possible in time
Recent presentation: https://ir.schrodinger.com/static-files/afed9256-e98b-403f-bb38-e88393f46336