Earnings Call Transcript - SDGR Q3 2022

Operator, Operator

Everyone, thank you for standing by. Welcome to Schrödinger Conference Call to review Third Quarter 2022 Financial Results. My name is Chris, and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that this call is being recorded at the company’s request. Now, I would like to introduce your host for today’s conference, Ms. Jaren Madden, Senior Vice President of Investor Relations and Corporate Affairs. Please go ahead.

Jaren Madden, Senior Vice President of Investor Relations and Corporate Affairs

Thank you, and good afternoon, everyone. Welcome to today’s call, during which we will provide an update on the company and review our third quarter 2022 financial results. Earlier today, we issued a press release summarizing our financial results and progress across the company, which is available on our website at www.schrodinger.com. Here with me on our call today are Ramy Farid, Chief Executive Officer; Geoff Porges, Chief Financial Officer; and Karen Akinsanya, President of R&D, Therapeutics. Following our prepared remarks, we’ll open the call for Q&A. I’d like to remind you that during today’s call, management will make statements related to our business that are forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements related to our outlook for the full year 2022 and for the fourth quarter ending December 31, 2022, our strategic plans to accelerate the growth of our software business and advance our collaborative and proprietary drug discovery programs, the timing of potential IND submissions and the initiation of clinical trials for our proprietary drug discovery programs, the clinical potential and favorable properties of our compounds, our expectations related to the use of our cash resources as well as our future operating expenses. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies, and prospects, which are based on the information currently available to us and on assumptions we have made. Actual results may differ materially from what we project today due to a number of important factors, including the considerations described in the Risk Factors section and elsewhere in the filings we make with the SEC including our Form 10-Q for the period ended September 30, 2022. These forward-looking statements represent our views only as of today, and we caution you that we may not update them in the future, whether as a result of new information, future events, or otherwise. With that, I’d like to turn the call over to Ramy.

Ramy Farid, CEO

Thanks, Jaren, and thank you everyone for joining us today. We have developed a computational platform that is transforming the way therapeutics and materials are discovered. Our platform has enabled us to create a balanced business model with each component of our business providing a distinct risk-reward profile. We licensed our software to biopharma and materials companies as well as government and academic institutions around the world. Software licensing is continuing to provide a growing source of revenue that enables continued investment and innovation. Additionally, we work on collaborative projects that are contributing to our inflecting drug discovery revenue. And we have an expanding portfolio of 18 proprietary drug discovery programs with first-in-class or best-in-class potential. Today, we reported total revenue for the third quarter of $37 million, a 24% increase over the prior year. The strong growth was driven primarily by approximately $12 million in drug discovery revenue. Third quarter software revenue was $24.7 million, which was in line with our expectations. As we look out to the remainder of the year, we have tightened our 2022 financial guidance and are pleased to remain within the original total revenue range even in a challenging economic environment. In a moment, Geoff will review our third quarter financial results and provide more detail on our fourth quarter and full year 2022 financial guidance. As you’ll hear shortly from Karen, we are also continuing to make progress across our pipeline of collaborative projects and proprietary programs. Today, we announced that our Phase 1 study of our MALT1 inhibitor, SGR-1505, is open for patient enrollment. We also reported that in December, we will present new preclinical data for our CDC7 inhibitor SGR-2921 at the ASH Annual Meeting. We are also continuing to expand our drug discovery portfolio and recently announced a partnership with Lilly for the discovery of small molecule compounds for an undisclosed target. Under the agreement, we received an upfront payment and are eligible to receive up to $425 million in discovery, development, and commercial milestone payments as well as royalties on net sales. We are pleased with the progress we have made so far this year, particularly in a challenging macroeconomic environment. The fundamentals of our business are strong and we have a solid cash position, having ended the third quarter with approximately $479 million. We are continuing to focus on executing across all aspects of our business to generate value as we advance our vision of transforming drug discovery and materials design. I will now turn the call over to Geoff to review our third quarter financial results and financial guidance.

Geoff Porges, CFO

Thank you, Ramy. And hello, everyone. It’s an honor to be here with the team today for my first financial results call as Schrödinger’s CFO. As I hope you heard at Platform Day, we have a deep and broad computational platform that is creating value through technology licensing, collaborations, and the development of our proprietary programs. We delivered a strong third quarter, driven by better-than-expected drug discovery revenue. The increasing contribution from drug discovery reflects the positive returns we are seeing from the investments we have made in that business over the last four years. The underlying trends in the software business are strong, and the reported growth reflects the effect of significant multi-year contract revenue recognized in Q3 2021. Adjusting for those large pre-purchases in the prior year, software revenue growth in Q3 would have been consistent with the growth reported in Q1 and Q2 this year. Total revenue was $37 million for the quarter, up 24% compared to the third quarter of 2021. Software revenue was $24.7 million, in line with our expectations and similar to the $24.3 million reported for the third quarter of last year. Drug discovery revenue was $12.3 million for the third quarter of 2022, compared to $5.6 million in the third quarter of 2021. Drug discovery revenue for the quarter included $9.9 million in revenue recognized from our ongoing collaboration with Bristol-Myers Squibb as well as revenue from milestones related to other collaborative and proprietary programs. During the quarter, the rights to one of our collaboration programs reverted to us, after BMS selected not to proceed with further development. And this resulted in increased revenue recognition due to accelerated completion of our obligations related to the program during the period. Gross profit was $17.2 million in the third quarter, compared to $11.1 million for the third quarter of 2021, representing a 55% increase year-over-year. Software gross margin was 72% in the third quarter of 2022, which is similar to the third quarter last year and consistent with our expectations. Operating expenses were $63.4 million compared to $45.8 million for the same quarter last year. The increased expenses reflect growth in headcount, continued investment in our platform, and the progress of our proprietary and collaborative programs. We recorded a net loss of $39.9 million for the third quarter of 2022 compared to a net loss of $35 million for the same period in the prior year. We ended the quarter with cash, cash equivalents, marketable securities, and restricted cash balances of approximately $479 million, compared to approximately $513 million on June 30, 2022. I’ll now turn to our financial guidance for 2022. With one quarter remaining in the year, we are updating our full year financial guidance. We have narrowed our range for total revenue guidance for the year. We now expect total revenue for 2022 to be in the range of $167 million to $175 million, compared to our prior range of $161 million to $181 million. The midpoint of our range is $171 million, which is the same midpoint as our prior guidance. A new range corresponds to 21% to 27% growth over 2021. We now expect software revenue to range from $122 million to $127 million, compared to $126 million to $136 million previously. The reduced range is based on several factors that have emerged in the last three months and having a continuing effect in Q4. These factors include a modest impact from foreign currency, lower than anticipated adoption and scaling up by smaller biotech companies impacted by the capital markets environment, and uncertainty about the timing of increases in adoption of our technology among our largest customers. Those increases typically occur in Q4 and our new guidance reflects remaining uncertainty about our customers’ year-end purchase decisions. The implied Q4 revenue range of $34 million to $39 million reflects the potential for significant contracts to still be completed in Q4, which are excluded from the lower end of the guidance range. We are increasing the range of our expected drug discovery revenue for 2022 to $45 million to $48 million, compared to our prior expectation of $35 million to $45 million. Greater-than-anticipated drug discovery revenue for the year is driven by BMS’s strategic decision not to advance one collaboration program and by meeting milestones in our other drug discovery collaborations and partner programs. The remaining uncertainty for the year relates to the timing of completion and revenue recognition for certain other outstanding collaboration projects. Finally, we now expect that operating expense growth for the year will be approximately 40%, compared to our prior expectation of just under 42% growth. The lower growth in expenses reflects our latest expectations for the timing of hiring and other expense drivers. We continue to expect our software gross margins to be in the mid-70s. We are very encouraged that in a challenging macroeconomic environment, our revenue continues to grow strongly. We are committed to delivering continued growth in software licensing revenue, and to building increasing value in our collaborations and proprietary programs. Our balance sheet is strong, and our technology platform is becoming more and more validated and differentiated. With technology licenses in place across the biopharmaceutical industry, partnered programs, and collaborations with some of the largest and most innovative companies in the industry, and 18 proprietary programs advancing through development, we are very confident that we will deliver continued growth and increasing value in the coming quarters. I’ll now turn the call over to Karen for an update on our drug discovery programs.

Karen Akinsanya, President of R&D, Therapeutics

Thank you, Geoff. And good afternoon, everyone. We are continuing to make important progress across our portfolio. Within our collaborative pipeline, there are 9 programs currently in the clinic, and 12 projects are advancing through the discovery phases. Additionally, over the last five years, we have continued to increase the number of proprietary programs our therapeutics group is working on. Today, our proprietary portfolio includes 18 programs, some of which are partnered and some of which are wholly owned. As we discussed at Platform Day, cumulative technical success rates we and our collaborators are achieving across the growing number of completed and ongoing programs signals meaningful improvements relative to published industry averages. We believe this is a very promising trend that highlights the power of our computational platform. As programs complete discovery and move into the clinic, we are able to initiate new programs. As you heard from Ramy, we recently entered into a new relationship with Lilly to advance the discovery of small molecules for an undisclosed target. Lilly will be responsible for disease model studies, completion of preclinical and clinical development, as well as commercialization of the products. Notably, the program handoff to Lilly occurs earlier than in our collaborations with BMS and Takeda. In addition to an upfront payment, we are eligible to receive up to $425 million in discovery, development, and commercial milestone payments, and royalties on future sales in all geographies. This new program is the 15th for which we are eligible to receive royalties on commercial sales. As Geoff mentioned, BMS made a strategic decision to deprioritize one of our partnered programs. Given the progress we have made on this genetically validated target, we have elected to continue to invest in the program internally. We expect to be able to share more information about this and other proprietary programs in 2023. We are also exploring an alternative target of mutual interest with BMS. Turning to our wholly-owned pipeline, today, I will review our three most advanced programs. MALT1 has emerged as a potential therapeutic target for the treatment of B-cell malignancies, including relapsed or resistant ABC-DLBCL and mantle cell lymphoma, with initial clinical signs already described by others in CLL and SLL. While our current focus is on B-cell malignancies, there is emerging literature suggesting that MALT1 inhibition could also have potential in solid tumors and autoimmune disease. Today, we announced that the Phase 1 study of our MALT1 inhibitor, SGR-1505 is open to patient enrollment. This dose escalation trial will evaluate the safety, pharmacokinetics, pharmacodynamics, and early signals of antitumor activity of SGR-1505 as monotherapy. Once the recommended dose is determined, an expansion cohort is planned to evaluate SGR-1505 in combination with other therapies, such as BTK and BCL-2 inhibitors. This is the first clinical study emerging from our proprietary pipeline and marks an important milestone for our company. Moving to our Wee1 program, clinical data from other companies’ Wee1 programs has provided evidence of clinical activity in several forms of cancer with high unmet need, including proof of concept in uterine and ovarian cancers. Data from other Wee1 programs have also underscored the importance of identifying highly selective molecules with optimized properties that can help avoid drug-drug interactions and off-target effects that have been observed with Wee1 inhibitors. We have already identified compounds from multiple lead series that are potent, selective, and demonstrate antitumor activity with desirable ADME pharmacokinetic and pharmacodynamic properties. We are continuing preclinical studies and now expect to select the development candidate in the first half of 2023 and submit an IND in the first half of 2024. We believe taking additional time to characterize and benchmark our molecules will afford us the opportunity to advance a potential best-in-class Wee1 inhibitor for use in combinations. Now, I will turn to our CDC7 program, a target in the DNA damage repair pathway. Today, we announced that we will present new preclinical data for our CDC7 inhibitor SGR-2921 at the American Society of Hematology or ASH Annual Meeting next month. In the abstracts published today, we report that SGR-2921 demonstrated strong antitumor activity in vitro in AML cell models and in vivo in AML xenograft models. SGR-2921 also shows strong antitumor activity in AML cell lines resistant to FLT3 inhibitors, venetoclax, and other standard-of-care agents, suggesting that CDC7 inhibition is a potential therapeutic strategy for treating patients with relapsed or refractory AML. We look forward to presenting the full poster on December 11th. We are also making progress towards our IND submission for this program and continue to expect to submit an IND to the FDA in the first half of 2023. Subject to regulatory clearance, we expect to initiate a Phase 1 study in the second half of 2023. In summary, our diverse portfolio of discovery and development programs is advancing. Activities to expand our wholly-owned programs in oncology and immunology are progressing. We are pleased with the value we have already generated from our portfolio and are excited about the value creation opportunities ahead. We look forward to updating you on our R&D progress over the coming months. I will now turn it back over to Ramy.

Ramy Farid, CEO

Thanks, Karen. We are really pleased with our third quarter results and the progress we are making this year. We have a strong balanced business model based on a highly validated software platform, and we remain focused on the key objectives that we believe will generate value and position us for continued success. At this time, we’d be happy to take your questions. Operator?

Operator, Operator

Thank you. Our first question will come from Do Kim of Piper Sandler. Your line is open.

Do Kim, Analyst

Hi. Thanks for taking my question and congrats on the progress. First on guidance. Geoff, I was wondering if you could quantify the impact to the software guidance from each of those components you talked about, the FX, small biotech customers, and the larger customers. Did one of those groups influence more than the other? And you said that the impact from FX was small, how small was it?

Geoff Porges, CFO

Thank you for the question, Do. You are correct that those are the three categories I mentioned, so let me provide some additional details on each. First, regarding foreign exchange, our business primarily operates in U.S. dollars, and our contracts are priced in U.S. dollars. This means we are somewhat protected from direct exchange rate fluctuations. While there is a minor impact related to our receivables and cash held in other currencies, it’s not significant. However, there is an impact that might not have been fully anticipated; since our contracts are in U.S. dollars and our customers generally have fixed budgets in local currencies, they are reaching their budget limits earlier in the year, which results in us earning less revenue in U.S. dollars than expected in some instances. Additionally, because of the rising value of software in local currencies, there are fewer chances for revenue increases above what we expected, particularly affecting the 40% of our revenue that comes from outside the U.S. The second factor is the unpredictability in the biopharma capital markets. We have noticed some customers reducing their software purchases as smaller biopharma companies consolidate or prioritize one or two clinical programs to conserve cash, resulting in less investment in new discovery. We are experiencing some impact from this trend. The more significant underlying issue, however, is the lack of new companies emerging in the capital markets that would typically contribute to our software growth this year, as conditions have not been favorable to new and emerging firms. This means fewer new companies that appeared in 2020 and 2021 have emerged this year. Lastly, I mentioned our large customers. Generally, towards the end of the year, we see increased adoption from our largest customers. We still believe there are chances for those increases, but there is now more uncertainty regarding the timing and scale of those increases. This uncertainty is reflected in both our guidance range and the adjustments we made to our overall guidance. To answer your direct question, the three factors have likely had roughly equal impacts on the change in guidance. I hope that addresses your inquiry, Do.

Do Kim, Analyst

Yes. Thanks for all the details, Geoff. And a question for Karen. On the MALT1 trial, you’re ready to start enrolling patients. Can you talk about how many clinical sites you plan to activate, and if you have other geographic locations, you said the U.S. that you plan to open up clinical sites for?

Karen Akinsanya, President of R&D, Therapeutics

Yes, we have been working very hard on initiating this study. As you know, this is an important goal for us this year. And we’re pleased with the progress. We are reaching out broadly to sites in the U.S. As you know, lymphoma is a very active space right now. We have a handful of sites that we’re working with very actively. And we continue to evaluate the opportunity to consider sites, obviously, broadly across the U.S., but also globally. We haven’t taken that off the table at this point. And so, that’s something we continue to discuss and monitor as this trial continues to move forward.

Operator, Operator

Our next question will come from David Lebowitz of Citi.

David Lebowitz, Analyst

I guess moving on to the guidance for the drug discovery business, which got moved slightly above the prior guidance, could you just elaborate more on where that might have come from this year? And how this increase might or might not affect the previously provided number of $100 million for 2023? Thank you.

Ramy Farid, CEO

I’ll just briefly address your question about the $100 million. As you may recall, we set that as a strategic goal at the beginning of 2022. We still believe we can reach that target in drug discovery revenue. In February, we will provide formal guidance on that figure. However, I believe Geoff was going to respond to the first part of your question.

Geoff Porges, CFO

Sure. Hi, David. So, you’re right. We’ve raised the revenue guidance for the year for drug discovery. Part of the raise came from the recognition of the revenue from one of the BMS programs, the program that we alluded to, that was returned to us and that we’re continuing to invest in internally, but it also came from a number of other collaborations where we’ve successfully advanced programs to the point where we think it’s reasonable to recognize some of that revenue that have previously been held in the deferred account. And so, that’s flowed through as recognized revenue or we expect to or in some cases has. Clearly we are above the lower end of that guidance after three quarters of the year. And so, we’re inevitably going to be in the range and we think it’s reasonable to expect that we’ll be above the top end of the range now, given what we see.

Operator, Operator

Our next question will come from Michael Yee of Jefferies.

Unidentified Analyst, Analyst

Hi. This is Yi Chen from Mike. Two questions on our end, the first, just digging in a little deeper on drug discovery. So, you’ve raised guidance. Just wondering if there’s any revenue from 2023 drug discovery pulled forward that plays a part into the raised guidance for the remainder of this year. If you could, just some more color on that that would be great. And second in question on the BMS discontinuation, if you could just provide some more color as to why they chose to discontinue that collaboration? Thank you.

Ramy Farid, CEO

And Geoff, do you want to answer the first part, and then we can hand over to Karen?

Geoff Porges, CFO

Sure. As I alluded to in the previous answer, the revenue is a composite of revenue that we recognize across multiple programs and collaborations. So, we’ve advanced the revenue recognition on one of the programs, as I alluded to, in the BMS collaboration, but the target for next year includes a host of different programs and opportunities. So, as Ramy alluded to, we still see that as achievable. I wouldn’t say it was revenue that was pulled forward, because we don’t actually count on that revenue until we see it as being highly achievable. So, the fact that it has occurred and we recognized it during this period doesn’t necessarily mean that we were assuming that it was going to occur in its entirety next year. Our forecasts are actually probability-weighted basket of different slices. So, nothing is assumed at 100% probability until we recognize it.

Ramy Farid, CEO

And then, Karen on BMS’s decision?

Karen Akinsanya, President of R&D, Therapeutics

Yes, certainly. Well, first of all, let’s just say that the BMS collaboration is going really well. And as you know, we added the degrader effort in ‘21. The joint steering committee jointly looked at the progress on the discovery phase of this program. We also looked forward at the clinical phase. And while we both agree that we’ve made exceptional progress on advancing compounds during discovery, BMS made the strategic decision that they no longer expect to invest in development in this neuroscience program. I want to emphasize though that we remain really excited about this program and the molecule we’ve identified for this target is genetically validated, and those initial signs of translation in the clinic by others. And so, we plan to continue investing in the target and the program. And as we mentioned earlier, we look forward to sharing more about it in 2023, along with the update on the rest of our portfolio. I want to also say that we continue to look for opportunities on the horizon. We jointly do that. And so, we are continuing to discuss the potential for a new program with BMS.

Operator, Operator

Our next question will come from Gary Nachman of BMO Capital Markets. Your line is open.

Gary Nachman, Analyst

Hi. Good afternoon. Geoff, just following up on the three effects to the software revenue. So, how much of that is a near-term issue versus something that could be more protracted well into next year? And I don’t understand exactly how you are thinking about the low end of the guidance at this point. So, how much conservatism is in there for the larger customers? And Ramy, just maybe your broader comments on economic challenges or the academic environment. How that’s impacting the software business? Just talk more about those dynamics, and how that’s being weaved into the situation that you are seeing?

Geoff Porges, CFO

Ramy, do you want me to jump in? And I’ll address the first part of Gary’s question.

Ramy Farid, CEO

Yes. Please, Geoff. Thank you.

Geoff Porges, CFO

I appreciate your question, Gary. I'm considering what aspects are likely to continue versus what might be temporary. I don't believe that the currency effects I've mentioned will present the same challenges next year as they have in the latter half of this year, especially given the impact of exchange rates and the disruptions they caused. I expect we will adjust those contracts, and our international customers are likely to be in a much stronger position for growth next year. Regarding our larger clients, my discussions with our account managers suggest it's more about timing than certainty; it's a matter of when opportunities will arise and their potential size. However, we need to acknowledge that we're nearing the year's end, so I can't commit to finalizing those transactions just yet. This is reflected in our remaining guidance. Additionally, concerning the capital markets in biotech, if either of us could predict what will happen there, we might be in the wrong roles. Most believe that the current challenges in raising funds in biotech will extend well into next year. Therefore, I don't anticipate many new small biotech companies with ambitious drug discovery goals and substantial capital emerging in the next few months. We foresee this trend continuing into next year. I hope this provides some clarity.

Ramy Farid, CEO

And then, with regard to the academic environment, I’m sorry, can you just clarify what you were referring to? Is that what you said, you said academic?

Gary Nachman, Analyst

Yes. I thought you had like comments in the prepared remarks just about the economic challenges, and I thought I heard you say in the academic environment in general. Maybe I misheard that. But just in terms of how that’s impacting the overall software business, like in terms of your academic customer. I mean, everything that Geoff is describing feels like it’s more in just a corporate level, but you do have customers in the academic environment. So, I’m assuming they have budgets as well and that’s leading...

Ramy Farid, CEO

Yes, that's correct. Although we didn't specifically mention the academic environment, it's still a relevant question, and I'm happy to discuss it. We truly value the academic segment of our business, which, while a smaller part compared to the commercial side, plays a crucial role in nurturing the future scientists who drive the market. From our analysis so far, we aren't observing a significant impact from funding in that area; it continues to grow at rates consistent with what we've seen historically. More universities are placing greater emphasis on computation and training, and we contribute to that by offering online courses and curriculum to professors eager to teach computation. The success of our platform has increased the demand for learning computation, and those students often become customers for companies afterward. Everything is progressing well in that respect.

Gary Nachman, Analyst

Okay. That’s helpful. And then…

Ramy Farid, CEO

That was good.

Gary Nachman, Analyst

Yes, I don’t know. I heard it. It’s been a long day. But anyway, thank you for that. And then one other question, which I know you did not address, but I do think is important. So, how do you think the Inflation Reduction Act will impact your business over time? How will biopharma companies reevaluate their drug discovery strategies, especially with small molecule development, we know some of the potential challenges there. So, do you think this will help you or hurt you? How are you guys thinking about it?

Ramy Farid, CEO

Yes. Here’s how we’re thinking about it. It’s an important question and of course, it’s on a lot of people’s minds. The trend we’ve been seeing for a while, a shift from small molecules to biologics in pharma that started a number of years ago, is certainly continuing. It’s likely that the Inflation Reduction Act is contributing to that. The exciting thing is that this trend began before this act. We have been focused on advancing our physics-based platform to address biologics and protein therapeutics. Remember, the platform is completely agnostic to modality; physics is physics. The physics involved in predicting the potency of a small molecule to a protein is the same as predicting the potency of a large molecule to a protein. This is an area we’ve been working on, and we have already demonstrated through several important projects, including our collaboration with AstraZeneca, that our platform can be used very efficiently in the design of biologics. So, we are continuing to engage more in conversations about our customers using our platform to advance their own programs or even potential partnerships, building on what we started a number of years ago. Remember, it was two and a half years ago when we began our collaboration with AstraZeneca. We are continuing to invest in advancing the computational platform to address a broader range of challenges in the design of biologics.

Karen Akinsanya, President of R&D, Therapeutics

Yes. And maybe we can just add that, obviously, with a greater emphasis on speed to get to a development candidate and to develop molecules, obviously a small molecule platform has an important impact on the speed of programs. And we think that will be important for companies as they approach targets that can’t be addressed biologically. So, we hope to help in some way.

Ramy Farid, CEO

Thanks, Karen. That’s a really important point. Yes.

Operator, Operator

Our next question will come from Vikram Purohit of Morgan Stanley.

Vikram Purohit, Analyst

So just one quick one from our side. On the MALT1 program, now that you have sites open for enrollment, I just wanted to see if you could share some color about what you expect the initial pace of enrollment to be here. And what types of patient profiles and tumor types you’re looking to enroll initially and you think will be quick to enroll? And then looking forward to at what point do you think it’s reasonable to expect some timeline for the data to be possible to communicate?

Karen Akinsanya, President of R&D, Therapeutics

Yes. So, in terms of the design and the patients that we’re enrolling in this trial, this is a relapsed resistant lymphoma trial; it does enroll all comers with that profile. The focus of this trial is really a dose escalation to determine safety, tolerability, to gather data on pharmacokinetics and pharmacodynamics. We will though be collecting scan information from patients which will allow us to determine if there are any initial signs of activity. And so, while our focus is obviously on the safety and tolerability, we remain open to assessing any signs of activity as the trial proceeds. In terms of timing, we obviously have just begun our enrollment here. And we’re obviously moving as quickly as we can. We don’t necessarily, at this point, have specific timelines we can share with you when we’ll be able to disclose data. Obviously, as we make progress, we’ll be updating you on that and sharing information as and when we are in a good position to do so. As the dose escalation trial proceeds, obviously, that can take some months while you’re studying patient populations, as opposed to healthy volunteers, as you might know.

Vikram Purohit, Analyst

Understood. And then a quick follow-up then, maybe a catch-all question on business development then. Looking to 2023, what’s your appetite for partnerships? And if there is appetite, what forms of partnerships could be interesting to you?

Karen Akinsanya, President of R&D, Therapeutics

Well, I can start. As you know, we’ve been really focused on improving the opportunities we have in the business development space over the last 5 to 10 years. That essentially has taken two sort of different forms. The first is the de novo collaborations. As you know, we have a lot of equity relationships that were established around a decade ago. We’ve moved forward now into these de novo collaborations where we are collaborating with companies, like Lilly and BMS to discover molecules that they will then develop. Last year, you saw us do the Zai Lab deal where we have co-development, co-commercialization opt-in rights. And so, all of those types of conversations continue. We, though, will also be focusing obviously a lot more as time moves on, on the partnering and collaborations around our wholly-owned assets. And that will obviously be a new set of business development relationships for us, where again, we will be looking to, in some cases, retain rights to programs. But in other cases, as we’ve said before, where it makes sense for a partner to accelerate the access to patients, the access to combination agents, we may well be like out-licensing those products over time. But no line of sight to that right now. We are really excited about the move into the clinic for our assets and gathering data but we’ll be obviously sharing more as there is more to share over the next years or so.

Vikram Purohit, Analyst

Okay, understood. Thank you.

Operator, Operator

One moment. I am showing no further questions at this time. This will conclude today’s call. You may all now disconnect and have a pleasant day.