Schrodinger (SDGR) is a name I have wanted to write the past two weeks following 4/11 action that bought 10,000 January $55 far OTM calls, a position up 40%. SDGR has been a 2025 winner with shares +37% and setting back up with a bull flag just below the 2025 highs. SDGR’s monthly shows a long bottoming pattern and above $29 would be a significant development. SDGR does have an elevated short float at 12.8%.

Schrödinger develops physics-based computational platform that enables discovery of novel molecules for drug development and materials applications. The company operates in two segments, Software and Drug Discovery. SDGR is a potential beneficiary of recent news of banning animal testing. SDGR is advancing its platform through initiatives in toxicity prediction and biologics design. Schrodinger said it supports the FDA’s plan to reduce, refine or potentially replace current animal testing requirements with new approaches designed to improve drug safety and accelerate the evaluation process, while reducing animal experimentation.

SDGR has a market cap of $1.93B and trades 6.7X EV/Sales with revenues seen growing 21.7% in FY25 and 18.55% in FY26 and EV/Sales (NTM) at the 32^nd percentile of its historical range. Schrodinger is guiding for 10-15% software revenue growth and 45-50% growth in drug discovery revenue in 2025. SDGR is gaining operational leverage with less than 5% OpEx growth.

Large pharma companies have significant room to increase their usage and spend on Schrodinger’s software, as their current spend is only around 0.1-0.15% of R&D budgets. Smaller biotech companies are also scaling up their usage of Schrodinger’s software as it improves efficiency and reduces R&D costs. Schrodinger has over 8 active proprietary drug discovery programs in the clinic and discovery stage. Schrödinger has proprietary drug discovery programs, with three clinical-stage programs expected to report data in 2025. SGR-1505 data is expected in Q2.