Novartis is paying $150 million for a closer look at Schrödinger’s catalog of programs. The Big Pharma will work with Schrödinger to advance some of the computing-enabled R&D shop’s discovery programs and identify candidates against additional targets.
Schrödinger made its name in the 1990s as a developer of R&D software before moving deeper into drug development, first through projects such as the spinout Nimbus Therapeutics and later by building out its own capabilities. The jury remains out on the success of the expansion—investors have sent the stock down 44% this year—but Novartis sees promise in some of the assets Schrödinger has identified.
In return for $150 million upfront, Schrödinger has entered into a multiyear, multi-target collaboration and license agreement with Novartis. The partners will jointly advance several of Schrödinger’s existing, undisclosed non-cancer discovery programs and identify drug candidates against targets in Novartis’ core therapeutic areas.
“The decision to partner these programs with Novartis reflects our view that their deep therapeutic area and clinical expertise will amplify and accelerate the opportunity to move these programs through development after candidate selection and potentially to commercialization,” Karen Akinsanya, Ph.D., president of R&D, therapeutics at Schrödinger, said on a conference call with investors Tuesday.
The success of the programs will determine the size of the deal. Schrödinger is in line to receive up to $892 million in R&D and regulatory milestones plus $1.38 billion in commercial payouts and royalties on net sales for each product commercialized by Novartis.
Cancer programs account for most of Schrödinger’s publicly disclosed pipeline. Beyond cancer, the drug developer has disclosed discovery-stage immunology and neurology assets that target NLRP3 and LRRK2, respectively. Bristol Myers Squibb, Novartis and Roche bought into the NLRP3 space from 2017 to 2020. LRRK2 is the target of Biogen and Denali Therapeutics’ late-phase Parkinson’s disease asset BIIB122.
Schrödinger has licensed a selection of its undisclosed discovery-stage programs to Novartis. Neither party has disclosed details of the programs covered by the deal. Novartis and Schrödinger will work together in the discovery stage before the Big Pharma takes charge for clinical development onward.
The partners disclosed the research collaboration alongside a software deal. Novartis has increased its access to Schrödinger’s software, positioning it to use the full suite of drug discovery technologies across its research sites. Schrödinger CEO Ramy Farid, Ph.D., told investors the company is “seeing increased demand for these combination drug discovery software arrangements.”