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Item 8. Financial Statements and Supplementary Data

2026-02-25 compared with 2025-02-26 · 243 added, 255 removed, 770 unchanged (39% of the section changed)

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2025 and 2024

4 unchanged sentences

Notes to Consolidated Financial Statements

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Report of Independent Registered Public Accounting Firm

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Schrödinger, Inc.:

Opinion on the Consolidated Financial Statements

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Schrödinger, Inc.

and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S.

We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and

directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Identification of performance obligations in complex or unusual revenue arrangements

As discussed in Notes 3(a) and 3(b) to the consolidated financial statements, the Company reported on-premise software revenue of $104,020 thousand, hosted software revenue of $35,253 thousand, software contribution revenue of $8,016 thousand, and drug discovery services revenue of $25,143 thousand for the year ended December 31, 2024.

Identification of performance obligations in material software revenue arrangements

As discussed in Note 3(a) to the consolidated financial statements, the Company reported on-premise software revenue of $101,448 thousand and hosted software revenue of $45,123 thousand for the year ended December 31, 2025.

As discussed in Note 3(d), the Company’s contracts with customers often include promises to transfer multiple products and services.

At contract inception, the Company assesses the products and services promised within each contract to determine distinct performance obligations that should be accounted for separately.

We identified the determination of distinct performance obligations in complex or unusual revenue arrangements as a critical audit matter.

There was subjective auditor judgment in evaluating whether promised products and services in

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complex or unusual revenue arrangements are separate performance obligations or inputs into a combined performance obligation.

We identified the determination of distinct performance obligations in material software revenue arrangements as a critical audit matter.

There was subjective auditor judgment in evaluating whether promised products and services in material software revenue arrangements are separate performance obligations or inputs into a combined performance obligation.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the revenue process, including controls related to the determination of distinct performance obligations.

For a selection of complex or unusual revenue arrangements, we evaluated whether the performance obligations identified by the Company were capable of being distinct in the context of the contract by obtaining an understanding of the Company’s product and service offerings, obtaining and inspecting contracts, and evaluating the application of the revenue recognition accounting guidance for the selected contract.

For material software revenue arrangements, we evaluated whether the performance obligations identified by the Company were capable of being distinct in the context of the contract by obtaining an understanding of the Company’s product and service offerings, obtaining and inspecting contracts, and evaluating the application of the revenue recognition accounting guidance for the selected contract.

We have served as the Company’s auditor since 2010.

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February 25, 2026

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

SCHRÖDINGER, INC.

Opinion on Internal Control Over Financial Reporting

We have audited Schrödinger, Inc.

and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements), and our report dated February 26, 2025 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Portland, Oregon

February 26, 2025

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SCHRÖDINGER, INC.

AND SUBSIDIARIES

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See accompanying notes to consolidated financial statements.

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SCHRÖDINGER, INC.

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Loss from operations ( 166,896 ) ( 209,296 ) ( 177,448 )

Other income (expense)

Other income:

Gain on equity investments — — 147,213

Change in fair value 5,683 53,461 ( 18,084 )

Change in fair value of equity investments 48,174 5,683 53,461

Other income 16,396 17,902 19,693

Total other income (expense) 23,585 220,367 ( 2,306 )

Total other income 64,570 23,585 220,367

(Loss) income before income taxes ( 102,326 ) ( 185,711 ) 42,919

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See accompanying notes to consolidated financial statements.

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SCHRÖDINGER, INC.

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See accompanying notes to consolidated financial statements.

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SCHRÖDINGER, INC.

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(in thousands, except for share amounts)

Common stock Limited common stock Additional

Common stock Limited common

stock Additional

paid-in Accumulated Accumulated

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62,163,739 $ 622 9,164,193 $ 92 $ 828,700 $ ( 379,138 ) $ ( 2,382 ) $ 447,894

Change in unrealized loss on marketable securities — — — — — — ( 1,731 ) ( 1,731 )

Unrealized gain on marketable securities — — — — — — 2,663 2,663

Issuances of common stock upon stock option exercises 800,336 8 — — 9,432 — — 9,440

Issuance of common stock upon vesting of RSUs and PRSUs 13,241 — — — — — — —

Stock-based compensation — — — — 47,841 — — $ 47,841

Net loss — — — — — ( 149,186 ) — ( 149,186 )

Net income — — — — — 40,720 — 40,720

Balance at December 31, 2023

62,977,316 630 9,164,193 92 885,973 ( 338,418 ) 281 548,558

Reclassification of non-controlling interest — — — — — — — —

Change in unrealized gain on marketable securities — — — — — — 2,663 2,663

Unrealized loss on marketable securities — — — — — — ( 61 ) ( 61 )

Issuances of common stock upon stock option exercises 169,820 2 — — 1,486 — — 1,488

Issuance of common stock upon vesting of RSUs 13,241 — — — — — — —

Issuance of common stock upon vesting of RSUs and PRSUs 240,188 2 — — — — — 2

Issuance of common stock in ATM offering, net 323,085 3 — — 8,675 — — 8,678

Stock-based compensation — — — — 49,903 — — 49,903

Net income — — — — — 40,720 — 40,720

Net loss — — — — — ( 187,123 ) — ( 187,123 )

Balance at December 31, 2024

63,710,409 637 9,164,193 92 946,037 ( 525,541 ) 220 421,445

Change in unrealized loss on marketable securities — — — — — — ( 61 ) ( 61 )

Unrealized loss on marketable securities — — — — — — ( 113 ) ( 113 )

Issuances of common stock upon stock option exercises 303,770 3 — — 2,986 — — 2,989

Issuance of common stock upon vesting of RSUs and PRSUs 501,201 5 — — ( 5 ) — — —

Issuance of common stock in ATM offering, net 323,085 3 — — 8,675 — — 8,678

Stock-based compensation — — — — 42,997 — — 42,997

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See accompanying notes to consolidated financial statements.

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SCHRÖDINGER, INC.

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Net (loss) income $ ( 103,265 ) $ ( 187,123 ) $ 40,720

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Gain on equity investments — — ( 147,213 )

Changes in fair value ( 5,683 ) ( 53,461 ) 18,084

Changes in fair value of equity investments ( 48,174 ) ( 5,683 ) ( 53,461 )

Depreciation and amortization 6,022 6,159 5,552

Stock-based compensation 42,997 49,903 47,841

Noncash investment (accretion) amortization ( 7,592 ) ( 7,761 ) 629

Noncash investment accretion ( 1,867 ) ( 7,592 ) ( 7,761 )

Loss on disposal of property and equipment 20 8 142

(Increase) decrease in assets, net of acquisition:

Decrease (increase) in assets:

Accounts receivable, net 152,651 ( 169,700 ) ( 10,039 )

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Prepaid expenses and other assets ( 2,445 ) ( 3,482 ) ( 8,462 )

(Decrease) increase in liabilities, net of acquisition:

Increase (decrease) in liabilities:

Accounts payable 908 ( 6,119 ) 7,321

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Other accrued liabilities 91 ( 1,942 ) 5,917

Net cash used in operating activities ( 157,368 ) ( 136,733 ) ( 119,683 )

Net cash provided by (used in) operating activities 13,899 ( 157,368 ) ( 136,733 )

Cash flows from investing activities:

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Distribution from equity investment — — 147,213

Proceeds from disposition and sale of equity investments 48,798 — —

Acquisition, net of acquired cash — — ( 6,427 )

Proceeds from sale and disposition of equity investments 17,735 48,798 —

Purchases of marketable securities ( 312,959 ) ( 251,339 ) ( 320,624 )

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Cash flows from financing activities:

Issuances of common stock upon stock option exercises 1,490 9,440 2,110

Proceeds from issuances of common stock upon stock option exercises 2,989 1,490 9,440

Proceeds from issuance of common stock in ATM offering — 8,868 —

Payment of offering costs — ( 177 ) ( 373 )

Issuance of common stock in ATM offering 8,868 — —

Principal payments on finance leases ( 58 ) ( 58 ) ( 19 )

Net cash provided by financing activities 2,931 10,123 9,048

Net increase (decrease) in cash and cash equivalents and restricted cash 1,591 65,349 ( 27,550 )

Net increase in cash and cash equivalents and restricted cash 74,728 1,591 65,349

Cash and cash equivalents and restricted cash, beginning of year 162,657 161,066 95,717

Cash and cash equivalents and restricted cash, end of year $ 237,385 $ 162,657 $ 161,066

Supplemental disclosure of cash flow and noncash information

Cash paid for income taxes $ 1,080 $ 2,828 $ 787

Supplemental disclosure of non-cash investing and financing activities

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Acquisition of right of use assets - operating leases, contingency resolution — 2,848 514

Acquisition of right of use assets - operating leases — 15,085 34,763

Acquisition of lease liabilities - operating leases — 15,085 34,430

Acquisition of right of use assets in exchange for lease liabilities - operating leases — — 15,085

Acquisition of right of use assets in exchange for lease liabilities - finance leases — — 279

See accompanying notes to consolidated financial statements.

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SCHRÖDINGER, INC.

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In addition, the Company uses its computational platform to discover novel molecules for its pipeline of proprietary drug discovery programs, which the Company is advancing through preclinical and clinical development.

Liquidity, Capital Resources and Funding Requirements

The Company has funded its operations to date principally from the sale of equity securities, and to a lesser extent, from sales of software solutions and from upfront payments, research funding and milestone payments from drug discovery collaborations, and from distributions on account of, or proceeds from the sale of, the Company's equity stakes in its collaborators.

The Company's operating cash flows are impacted by the magnitude and timing of our software sales and by the magnitude and timing of its drug discovery milestone achievements and research funding fees.

On February 28, 2024, the Company filed a universal shelf registration statement on Form S-3 which allows for the offering and selling of an indeterminate number of shares of common stock, preferred stock, depositary shares or warrants, or an indeterminate principal amount of debt securities, from time to time pursuant to one or more offerings at prices and terms to be determined at the time of the sale.

As of December 31, 2025, the Company had cash, cash equivalents, restricted cash, and marketable securities of $ 402.3 million.

(2) Significant Accounting Policies

(a) Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No.

2023-07, Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This standard is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024, with early adoption permitted.

The Company adopted this new standard for the year ended December 31, 2024 with no material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) — Improvements to Income Tax Disclosures , which requires public business entities to disclose specific categories in the tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

This standard is effective for annual periods beginning after December 15, 2024, and interim periods within annual periods beginning after December 15, 2025, on a prospective basis, with early adoption permitted.

The Company has not yet adopted ASU 2023-09 and is still evaluating the impact of the adoption on its consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement — Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) — Disaggregation of Income Statement Expenses .

which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses.

(a) Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No.

2024-03, Income Statement — Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) — Disaggregation of Income Statement Expenses, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses.

This standard is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027, on a prospective basis, with early adoption and retrospective application permitted.

The Company has not yet adopted ASU 2024-03 and is still evaluating the impact of the adoption on its consolidated financial statements.

In July 2025, the FASB issued ASU No.

2025-05, Financial Instruments—Credit Losses (Topic 326) — Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides a practical expedient for estimating expected credit losses.

The amendments are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those annual periods, on a prospective basis, with early adoption permitted.

The Company has not yet adopted ASU 2025-05 and is still evaluating the impact of the adoption on its consolidated financial statements.

In September 2025, the FASB issued ASU No.

2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) — Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract , which refines the scope of the guidance on derivatives by adding a new scope exception for certain non-exchange-traded contracts that have an underlying based on operations or activities specific to one of the parties to the contract, and clarifies the interaction between the guidance on revenue from

contracts with customers and the guidance on derivatives and equity investments for share-based noncash consideration from a customer for the transfer of goods or services.

The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual periods, with early adoption permitted.

The Company has not yet adopted ASU 2025-07 and is still evaluating the impact of the adoption on its consolidated financial statements.

(b) Basis of Presentation and Use of Estimates

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All intercompany balances and transactions have been eliminated in consolidation.

The functional currency

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for foreign entities is the United States dollar.

The functional currency for foreign entities is the United States dollar.

The Company accounts for investments over which it has significant influence, but not a controlling financial interest, using the equity method.

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however, the Company primarily places its cash with high-credit quality financial institutions.

Restricted cash primarily consists of letters of credit held with the Company’s financial institution related to facility leases and is classified as current in the Company’s balance sheets based on the maturity of the underlying letters of credit.

The Company also has restricted cash related to a certificate of deposit held as collateral for its credit card facility.

Additionally, funds received from certain grants are restricted as to their use and are therefore classified as restricted cash.

Restricted cash consists of letters of credit held with the Company’s financial institution related to facility leases, certificates of deposit held as collateral for its credit card facility, and funds received from certain grants which are restricted to their use.

These items are classified as current in the Company’s balance sheets based on their maturity or the term of the grant.

(e) Accounts Receivable

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Property and equipment are stated at cost.

The Company did not capitalize any interest during 2024 and 2023.

The Company did not capitalize any interest for the years ended December 31, 2025, 2024, and 2023.

Maintenance and repairs are expensed as incurred.

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If the qualitative assessment determines it is more likely than not the fair value is less than the carrying amount, the Company would further evaluate for potential impairment.

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qualitative assessment indicated that it was more likely than not the Company's reporting unit’s fair value exceeded its carrying value.

This qualitative assessment indicated that it was more likely than not the Company's reporting unit’s fair value exceeded its carrying value.

No impairment of goodwill was recognized for the years ended December 31, 2025, 2024, and 2023.

14 unchanged sentences

The determination of a customer’s ability to pay requires judgment, and failure to collect from a customer can adversely affect revenue, cash flows, and results of operations.

As of December 31, 2024, one customer accounted for 68 % of total accounts receivable.

As of December 31, 2023, two customers accounted for 15 % and 11 % of total accounts receivable, respectively.

As of December 31, 2025 and 2024, one customer accounted for 10 % and 68 % of total accounts receivable, respectively.

As of December 31, 2025, three customers accounted for 21 %, 12 %, and 10 % of total contract assets, respectively.

As of December 31, 2023, two customers accounted for 42 % and 22 % of total contract assets, respectively.

For the year ended December 31, 2024, one customer accounted for 10 % of total revenues.

As of December 31, 2024, three customers accounted for 33 %, 23 %, and 16 % of total contract assets, respectively.

For the years ended December 31, 2025 and 2024, one customer accounted for 17 % and 10 % of total

revenues, respectively.

For the year ended December 31, 2023, two customers accounted for 26 % and 11 % of total revenues, respectively.

For the year ended December 31, 2022, one customer accounted for 16 % of total revenues.

(l) Royalties

5 unchanged sentences

Historically, the Company has not capitalized any software development costs because the software development process was essentially completed concurrent with the establishment of technological feasibility.

(n) Research and Development and Advertising

Research and development and advertising costs are expensed as incurred.

The Company did not incur any significant advertising costs in 2024, 2023, and 2022.

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(n) Research and Development

Research and development costs are expensed as incurred.

Research and development expense consists of drug discovery and development program costs and costs incurred for continuous development of the technology and science that supports the Company's computational platform.

(o) Stock‑Based Compensation

The Company calculates stock‑based compensation expense utilizing fair value–based methodologies and recognizes expense over the vesting period of such awards.

The Company calculates stock‑based compensation expense utilizing fair value–based methodologies and recognizes expense over the vesting period of such awards on a straight-line basis.

For performance-based restricted stock units, the Company records stock-based compensation expense with a cumulative catch-up at the time when performance conditions are considered probable of achievement, and on a straight-line basis over the remaining period for which the performance criteria are expected to be completed.

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Deferred tax assets are reduced by a valuation allowance when it is estimated to become more likely than not that a portion of the deferred tax assets will not be realized.

Accordingly, the Company currently maintains a full valuation allowance against existing net deferred tax assets.

Accordingly, the Company currently maintains a full valuation allowance against U.S.

federal and state net deferred tax assets.

The Company recognizes the benefit of a tax position in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

3 unchanged sentences

(s) Equity Investments

In the normal course of business, the Company has entered, and may continue to enter, into collaboration agreements with companies to perform drug design services for such companies in exchange for equity ownership stakes in such companies.

In the normal course of business, the Company has entered, and may continue to enter, into collaboration agreements with companies to perform drug and materials design services for such companies in exchange for equity ownership stakes in such companies.

If it is determined that the Company has control over the investee, the investee is consolidated in the financial statements.

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The outstanding equity of the Company consists of common stock and limited common stock.

Under the Company’s certificate of incorporation, the rights of the holders of common stock and limited common stock are identical, except with respect to voting and conversion.

Holders of limited common stock are precluded from voting such shares in

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any election of directors or on the removal of directors.

Limited common stock may be converted into common stock at any time at the option of the stockholder.

The Company considers all limited common stock to be participating securities as the holders are entitled to the same dividend rights as holders of common stock and therefore net income (loss) attributable to common and limited common stockholders is identical for both classes.

Undistributed earnings allocated to the participating securities are subtracted from net income in determining net income (loss) attributable to common and limited common stockholders.

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The Company enters into contracts that can include various combinations of licenses, products and services, most of which are distinct and are accounted for as separate performance obligations.

For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price ("SSP") basis.

Revenue is recognized net of any sale and value-added taxes collected from customers and subsequently remitted to governmental authorities.

For contracts with multiple performance

obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price ("SSP") basis.

Revenue is recognized net of any sales and value-added taxes collected from customers and subsequently remitted to governmental authorities.

The Company's software business derives revenue from five sources:

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Hosted software revenue consists primarily of fees to provide the Company's customers with hosted licenses, which allows these customers to access the Company's cloud-based software solution on their own hardware without taking control of the licenses, and is recognized ratably over the term of the arrangement, which is typically one year , though in recent years, the Company has entered into a small number of large multi-year hosted software license agreements.

When a customer enters into a hosted arrangement for which revenue is recognized over time,

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the amount paid upfront that is not recognized in the current period is included in deferred revenue in the Company's statement of financial position until the period in which it is recognized.

When a customer enters into a hosted arrangement for which revenue is recognized over time, the amount paid upfront that is not recognized in the current period is included in deferred revenue in the Company's statement of financial position until the period in which it is recognized.

Software maintenance .

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Software contribution revenue.

Software contribution revenue consists of funds received under non-reciprocal agreements with Gates Ventures, LLC and the Bill & Melinda Gates Foundation.

The agreement with Gates Ventures, LLC was originally entered into in June 2020 and further ext ended through August 2026.

The agreement is an unconditional non-exchange contribution without restrictions.

Revenue is recognized annually, w hen invoiced, in accordance with ASC Topic 958, Not-for-Profit Entities ("Topic 958"), as the agreement is not an exchange transaction.

The agreement with Gates Ventures, LLC initially covered the period from June 23, 2020 through June 22, 2023 for total consideration of up to $ 3,000 .

The agreement was then extended through August 13, 2026 and provides for total additional consideration of up to $ 6,000 .

Software contribution revenue consists of funds received under non-reciprocal agreements, as amended, with Gates Ventures, LLC and the Bill & Melinda Gates Foundation.

The agreement s are an unconditional non-exchange contribution without restrictions.

Revenue is recognized annually, w hen invoiced or as costs are incurred and conditions are met, in accordance with ASC Topic 958, Not-for-Profit Entities ("Topic 958"), as the agreements are not an exchange transaction.

The agreement, as amended, with Gates Ventures, LLC was originally entered into in June 2020 and further extended through August 13, 2026 and provides for total consideration of up to $ 9,000 .

Revenue is recognized annually, when invoiced, in accordance with Topic 958.

The Company recognized revenue of $ 2,200 , $ 2,000 , and $ 1,800 related to these agreements during the years ended December 31, 2025, 2024, and 2023, respectively.

As of December 31, 2024, the Company had no deferred revenue balance related to this agreement.

As of both December 31, 2025 and 2024, the Company had no deferred revenue balance related to this agreement.

As of December 31, 2025 and 2024, the Company had no accounts receivable related to this agreement.

In July 2024, the Company entered into a one-year agreement with the Bill & Melinda Gates Foundation to fund the initiative to accelerate the expansion of the Company's computational platform to predict toxicity associated with binding to off-target proteins.

In November 2024, the Company and the Bill & Melinda Gates Foundation entered into an amendment to the agreement to expand the original term of the agreement to April 30, 2026 and provide supplemental funds on terms similar to the original agreement.

Revenue is recognized as conditions are met and on a cost reimbursement basis in accordance with Topic 958.

The Company recognized revenue of $ 6,016 related to these agreements during the year ended December 31, 2024.

As of December 31, 2024, the Company had a $ 8,484 deferred revenue balance related to these agreements.

As of December 31, 2024, the Company had no accounts receivable related to these agreements.

The agreement, as amended, with the Bill & Melinda Gates Foundation was originally entered into in July 2024, and further extended through April 2026, to fund the initiative to accelerate the expansion of the Company's computational platform to predict toxicity associated with binding to off-target proteins.

Revenue is recognized as costs are incurred and conditions are met in accordance with Topic 958.

The Company recognized revenue of $ 13,788 and $ 6,016 related to these agreements during the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, the Company had deferred revenue balances of zero and $ 8,484 related to these agreements, respectively.

As of both December 31, 2025 and 2024, the Company had no accounts receivable related to these agreements.

The following table presents the revenue recognized from the sources of software products and services revenue:

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Research services revenue is generally recognized over time, typically by measuring the progress toward complete satisfaction of the relevant performance obligation using an appropriate input method based on the services promised to the customer, such as costs incurred and hours expended.

This method of recognizing revenue requires the Company to make estimates of the work required to complete the performance obligation in order to determine the progress towards

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This method of recognizing revenue requires the Company to make estimates of the work required to complete the performance obligation in order to determine the progress towards completion.

Payments for research services are generally due upfront at the start of a contract or periodically through the contract term.

In addition, the Company is generally entitled to receive variable consideration as certain milestones are achieved.

The Company estimates the amount of variable consideration using the most likely amount method.

The Company estimates the amount of variable consideration using the most likely amount method at contract inception and at the end of each reporting period.

The Company evaluates milestones on a case-by-case basis, including whether there are factors outside the Company’s control that could result in a significant reversal of revenue, and the likelihood and magnitude of a potential reversal.

If achievement of a milestone is not considered probable or the event is outside of the Company's control, the Company constrains (reduces) variable consideration to exclude the milestone payment until it is deemed probable of being achieved or the event occurs.

If achievement of a milestone is not considered probable or the event is outside of the Company's control, the Company constrains variable consideration to exclude the milestone payment until it is deemed probable of achievement and that a significant reversal in revenue would not occur.

Upon removal of the constraint on variable consideration, revenue may be recognized at a point in time or over time by applying the allocation guidance of ASC Topic 606, Revenue from Contracts with Customers ("Topic 606").

As of December 31, 2024, there were no milestones not yet achieved that were determined to be probable of achievement.

As of December 31, 2023 and 2022, milestones not yet achieved that were determined to be probable of achievement totaled $ 350 and $ 4,000 , respectively, and $ 350 and $ 3,939 of those milestones were recognized as revenue for the years ended December 31, 2023, and 2022, respectively.

As of December 31, 2025, 2024, and 2023, milestones not yet achieved that were determined to be probable of achievement totaled $ 1,000 , zero , and $ 350 , respectively, and $ 647 , zero , and $ 350 of those milestones were recognized as revenue for the years ended December 31, 2025, 2024, and 2023, respectively.

Drug discovery contribution revenue .

Drug discovery contribution revenue consists of funds received under an agreement with the Bill & Melinda Gates Foundation on a cost reimbursement basis, to perform services aimed at accelerating drug discovery in women's health.

The initial agreement began in November 2021 and expired in September 2023.

In September 2023, the Company entered into a new agreement with the Bill & Melinda Gates Foundation to perform services aimed at accelerating drug discovery in women's health that expires in October 2025.

Revenue is recognized as costs are incurred in accordance with Topic 958 .

Drug discovery contribution revenue primarily consists of funds received under agreements with the Bill & Melinda Gates Foundation on a cost reimbursement basis, to perform services aimed at accelerating drug discovery in women's health.

The agreement began in November 2021 and the Company currently performs services aimed at accelerating drug discovery in women's health under an agreement with the Bill & Melinda Gates Foundation that extends through March 2026.

Revenue is recognized as costs are incurred and conditions are met in accordance with Topic 958 .

As of December 31, 2025 and 2024, the Company had deferred revenue balances related to these agreements of $ 72 and $ 949 , respectively.

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Total drug discovery revenue $ 56,369 $ 27,174 $ 57,542

Bristol Myers-Squibb.

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Once a development candidate meeting specified criteria for a target under the agreement has been identified by the Company, BMS will be solely responsible for the further development, manufacturing and commercialization of such development candidate at its own cost and expense.

The Company is solely responsible for the development of any programs that have been returned by BMS.

The Company, at its discretion, can further advance the development of any programs that have been returned by BMS.

Under the terms of the agreement, as amended, BMS paid the Company an initial upfront payment of $ 55.0 million in November 2020, an additional upfront payment in December 2022, and a program fee in December 2024.

As of December 31, 2024 the Company is eligible to receive up to $ 482.0 million in total milestone payments related to the one remaining neurology target currently subject to the collaboration, consisting of up to $ 257.0 million in the aggregate for the achievement of certain specified research, development, and regulatory milestones and $ 225.0 million in the aggregate for

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the achievement of certain specified commercial milestones.

As of December 31, 2025, the Company is eligible to receive up to $ 482.0 million in total milestone payments related to the one remaining neurology target currently subject to the collaboration, consisting of up to $ 257.0 million in the aggregate for the achievement of certain specified research, development, and regulatory milestones and $ 225.0 million in the aggregate for the achievement of certain specified commercial milestones.

As of December 31, 2025, the Company has recognized $ 32.0 million in revenue related to milestones under this agreement.

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The Company determined that the transaction price at the onset of the agreement was $ 55.0 million.

Additional consideration to be paid to the Company upon the achievement of future milestone payments was excluded from the transaction price as they represent milestone payments that were not considered probable as of the inception date such that there is not a significant risk of revenue reversal.

The Company has allocated the transaction price of $ 55.0 million to each performance obligation based on the SSP of each performance obligation at inception.

Additional consideration to be paid to the Company upon the achievement of future milestone payments was excluded from the transaction price as it represents milestone payments that were not considered probable as of the inception date such that there is not a significant risk of revenue reversal.

The Company has allocated the transaction price of $ 55.0 million to each performance obligation based on the relative SSP of each performance obligation at inception.

The Company determined the estimated SSP at contract inception of the research activities based on internal estimates of the costs to perform the services, inclusive of a reasonable profit margin.

Significant inputs used to determine the total costs to perform the research activities included the length of time required, the internal hours expected to be incurred on the services and the number and costs of various studies that will be performed to complete the research plan.

Revenue associated with the research activities is recognized on a proportional performance basis over the period of service for research activities, using input-based measurements of total costs of research incurred to estimate the proportion performed.

Progress towards completion is remeasured at the end of each reporting period.

During the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 2.8 million, $ 10.8 million, and $ 43.2 million, respectively, of revenue associated with the agreement based on the research activities performed and milestones achieved.

As of December 31, 2025 and 2024, there was $ 3.2 million and $ 5.9 million, respectively, of deferred revenue related to the agreement, which was classified as either current or non-current in the consolidated balance sheet based on the period the services are expected to be performed.

As of December 31, 2024 and 2023, the Company had no outstanding receivables for this collaboration.

As of both December 31, 2025 and 2024, the Company had no outstanding receivables for this collaboration.

On November 11, 2024, the Company entered into a research collaboration and license agreement with Novartis Pharma AG ("Novartis"), pursuant to which the Company and Novartis agreed to collaborate on the discovery, research and preclinical development of small molecule compounds for targets in certain specified therapeutic areas.

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Under the terms of the research collaboration and license agreement, once a development candidate has been identified, Novartis will be solely responsible for the further development, manufacturing and commercialization of such development candidate.

Novartis agreed to pay the Company an initial upfront payment of $ 150.0 million under the terms of the research collaboration and license agreement, and the Company will be eligible to eligible to receive up to $ 2.272 billion in total milestone payments across the initial programs.

Novartis agreed to pay the Company an initial upfront payment of $ 150.0 million under the terms of the research collaboration and license agreement, and the Company is eligible to receive up to $ 2.272 billion in total milestone payments across the initial programs.

Such milestones consist of up to $ 892.0 million in discovery and development milestones and up to $ 1.38 billion in commercial milestones.

The Company is also entitled to a tiered percentage royalty ranging from mid-single-digits to low double-digits on products commercialized by Novartis under the

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agreement, subject to certain specified reductions.

As of December 31, 2024, no revenue has been recognized related to milestones under this agreement.

The Company is also entitled to a tiered percentage royalty ranging from mid-single-digits to low double-digits on products commercialized by Novartis under the agreement, subject to certain specified reductions.

For the years ended December 31, 2025 and 2024, no revenue has been recognized related to milestones under this agreement.

The Company assessed the research collaboration and license agreement in accordance with Topic 606 and concluded that Novartis is a customer based on the agreement structure.

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Software licenses and services provided under the agreement are considered distinct and are accounted for as separate performance obligations in accordance with Topic 606.

The Company has allocated the transaction price for the agreements to each performance obligation based on the SSP of each performance obligation at inception.

The Company determined the estimated SSP at contract inception of the research activities based on internal estimates of the costs to perform the services, inclusive of a reasonable profit margin.

The Company has allocated the transaction price for the agreements to each performance obligation based on the relative SSP of each performance obligation at inception.

The Company determined the estimated SSP of the research activities at contract inception based on internal estimates of the costs to perform the services, inclusive of a reasonable profit margin.

Progress towards completion is remeasured at the end of each reporting period.

During the year ended December 31, 2024, the Company recognized $ 0.6 million of revenue associated with the research collaboration and license agreement.

As of December 31, 2024, there was $ 116.7 million of deferred revenue, net of contract assets, related to the agreements, which was classified as either current or non-current in the condensed consolidated balance sheet based on the period the services are expected to be performed.

As of December 31, 2024, the Company had $ 150.0 million outstanding receivables for this collaboration.

During the years ended December 31, 2025 and 2024, the Company recognized $ 30.0 million and $ 0.6 million of revenue, respectively, associated with the research collaboration and license agreement.

As of December 31, 2025 and 2024, the Company had $ 100.5 million and $ 116.7 million of deferred revenue, net of contract assets, respectively, related to the agreements, which was classified as either current or non-current in the consolidated balance sheets based on the period the services are expected to be performed.

As of December 31, 2025 and 2024, the Company had zero and $ 150.0 million outstanding receivables for this collaboration, respectively.

(d) Significant Judgments

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Determining whether licenses and services are distinct performance obligations that should be accounted for separately, or are not distinct and therefore should be accounted for together, requires significant judgment.

In some arrangements, such as most of the Company's term-based software license arrangements, may include multiple software licenses, a right to updates or upgrades to the licensed software products, and technical support.

The Company has concluded that such promised licenses and services are separate distinct performance obligations.

Some arrangements, such as most of the Company's term-based software license arrangements, may include multiple software licenses, a right to updates or upgrades to the licensed software products, and technical support.

The Company has concluded that such

promised licenses and services are separate distinct performance obligations.

In other arrangements, including collaboration services arrangements, the licenses and certain services may not be distinct from each other.

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Judgment is required to determine the SSP for each distinct performance obligation.

The Company rarely licenses or sells products on a standalone basis, so the Company is required to estimate the range of SSPs for each performance obligation.

In instances where the SSP is not directly observable because the Company does not sell the license, product, or service separately, the Company determines the SSP using information that includes historical discounting practices,

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market conditions, cost-plus analysis, and other observable inputs.

The Company rarely licenses or sells products on a standalone basis, so the Company is required to estimate the SSP for each performance obligation.

The Company typically has more than one SSP for individual software license performance obligations due to the stratification of those items by volume of sales, classes of customers and other relevant circumstances.

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The Company expects to recognize as revenue approximately 59 % of its December 31, 2025 deferred revenue balance in the next 12 months and the remainder thereafter.

Additionally, contracted but unsatisfied performance obligations that had not yet been billed to the customer or included in deferred revenue were $ 59,519 as of December 31, 2024.

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Additionally, contracted but unsatisfied performance obligations that had not yet been billed to the customer or included in deferred revenue were $ 43,053 and $ 59,519 as of December 31, 2025 and 2024, respectively.

Payment terms and conditions vary by contract type, although terms typically require payment within 30 to 60 days.

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Leasehold improvements 3,648 3,693

Furniture and fixtures 6,876 6,230

Lab equipment 10,686 10,375

Furniture and fixtures 6,960 6,876

Right of use asset - finance leases 579 579

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$ 19,456 $ 24,196

Depreciation expense for 2024, 2023, and 2022 was $ 6,159 , $ 4,965 , and $ 3,831 , respectively, and is included within cost of revenues and research and development, sales and marketing, and general and administrative expenses within the consolidated statements of operations.

Depreciation expense for 2025, 2024, and 2023 was $ 6,022 , $ 6,159 , and $ 4,965 , respectively, and is included within cost of revenues, research and development, sales and marketing, and general and administrative expenses within the consolidated statements of operations.

(5) Fair Value Measurements

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Total $ 304,026 $ 164,947 $ — $ 468,973

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The following table presents information about the Company’s assets measured at fair value as of December 31, 2024:

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Total $ 198,859 $ 204,798 $ — $ 403,657

The fair value of the Company’s investment in Nimbus Therapeutics, LLC (“Nimbus”), classified as Level 3 in the fair value hierarchy, was recorded as an equity method investment under Topic 323 using the hypothetical liquidated book value method (“HLBV method”) through June 30, 2023, as further described in Note 11, Equity Investments.

Significant unobservable inputs used to determine Nimbus’ fair value under the HLBV method were the entity's annual financial statements and the Company’s liquidation preference.

Following the dilution of the Company's investment in Nimbus during the year ended December 31, 2023, the fair value of the Company's investment was recorded under Topic 321 as a non-marketable equity security as the Company no longer exercises significant influence over Nimbus.

This change in accounting method resulted in an unrealized gain of $ 1,928 and subsequent removal from the Level 3 fair value hierarchy table during the year ended December 31, 2024.

Unrealized gains and losses arising from changes in fair value of the Company’s equity investments are classified within change in fair value in the consolidated statements of operations.

Unrealized gains and losses arising from changes in fair value of the Company’s equity investments are classified within change in fair value of equity investments in the consolidated statements of operations.

Realized gains arising from distributions receivable from the Company's equity investments are classified within gain on equity investments in the consolidated statements of operations.

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As of December 31, 2025, the remaining weighted average lease term for operating and finance leases was 10 years.

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During the year ended December 31, 2024, operating lease right of use assets increased by $ 2,952 due to contingency resolutions associated with office leases.

Variable and short-term lease costs for the Company's operating and finance leases were immaterial for the year ended December 31, 2025.

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From time to time, the Company may become involved in routine litigation arising in the ordinary course of business.

While the results of such litigation cannot be predicted with certainty, management believes that the final outcome of such matters is not likely to have a material adverse effect on the Company’s financial position or results of operations or cash flows.

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(7) Income Taxes

Income tax expense (benefit) is comprised of the following:

In December 2023, the FASB issued ASU No.

2023-09 Income Taxes (Topic 740) — Improvements to Income Tax Disclosure .

In 2025, the Company adopted the standard on a prospective basis.

Accordingly, the income tax disclosure for the year ended December 31, 2025, is presented in the revised format prescribed by the ASU, while the comparative periods for the years ending December 31, 2024 and 2023 continue to be presented under the previous disclosure requirements.

Income tax expense is comprised of the following:

Year Ended December 31,

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Deferred income tax benefit ( 614 ) ( 253 ) —

Total income tax expense (benefit)

Federal $ 188 $ ( 202 ) $ 727

State 128 352 509

Foreign 623 1,262 963

Income tax expense $ 939 $ 1,412 $ 2,199

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Year Ended December 31,

2024 2023 2022

Income taxes (benefit) at statutory federal rate $ ( 21,489 ) 21.0 %

State and local taxes, net of federal income tax effect (1)

Foreign tax effects

Other ( 391 ) 0.4

Effect of cross-border tax laws

Other 151 ( 0.1 )

General Business Credits ( 12,744 ) 12.4

Changes in valuation allowance 30,813 ( 30.1 )

Nontaxable or nondeductible items

Equity compensation 2,356 ( 2.3 )

Section 162(m) officer's compensation 1,272 ( 1.2 )

Other 543 ( 0.5 )

Changes in unrecognized tax benefits 4,992 ( 4.9 )

Transfer Pricing ( 3,457 ) 3.3

Other, net ( 1,060 ) 1.1

Effective income tax rate $ 939 ( 0.9 ) %

(1) The states that contribute to the majority (greater than 50%) of the tax effect in this category include California and Massachusetts for 2025.

Year Ended December 31,

Statutory federal income tax rate 21.0 % 21.0 %

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Return-to-provision adjustments ( 1.5 ) ( 3.3 )

Research and development credit 4.8 ( 14.1 ) 3.1

Tax contingencies, net of reversals ( 0.5 ) 1.4 ( 0.3 )

General Business Credits 4.8 ( 14.1 )

Changes in unrecognized tax benefits ( 0.5 ) 1.4

Change in valuation allowance ( 22.2 ) ( 4.4 )

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Effective income tax rate ( 0.8 ) % 5.1 %

Income tax expense for the year ended December 31, 2024 represents the Company's income tax obligations in certain states and taxes in foreign jurisdictions in which it conducts business.

Income tax expense for the years ended December 31, 2023 represents the Company's federal and certain state income tax obligations and taxes in foreign jurisdictions for which it conducts business.

Income tax expense for the year ended December 31, 2022 represents the Company's income tax obligations in certain states and taxes in foreign jurisdictions in which it conducts business.

Income tax expense for the years ended December 31, 2025 and 2024 represents the Company's income tax obligations in certain states and taxes in foreign jurisdictions in which it conducts business.

Income tax expense for the year ended December 31, 2023 represents the Company's federal and certain state income tax obligations and taxes in foreign jurisdictions in which it conducts business.

As of December 31, 2025, the Company has a full valuation allowance on U.S.

federal and state deferred tax assets.

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The total change in valuation allowance for the year ended December 31, 2024 was $ 41,195 , which was primarily due to temporary differences for capitalized research and development expenses and share based compensation, partially offset by adjustments to equity method investments.

The total change in valuation allowance for the year ended December 31, 2025 was $ 34,701 , which was primarily due to temporary differences for capitalized research and development expenses and share based compensation, partially offset by adjustments to equity method investments and the generation of NOL and tax credit carryforwards.

The amounts of cash income taxes paid by (refunded to) the Company are as follows:

Year ended December 31,

Federal $ 186

State and local

Other ( 173 )

Germany - Federal 168

Germany - Manheim 138

Germany - Other 37

Total cash taxes paid for income taxes (net of refunds received) $ ( 6 )

Total cash paid for income taxes was $ 1,080 and $ 2,828 during the years ended December 31, 2024 and 2023, respectively, as previously reported.

Tax effects of temporary differences that give rise to significant portions of deferred income tax assets and deferred income tax liabilities were as follows:

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Utilization of post-2017 federal NOL carryforwards is limited to 80% of taxable income generated in a given year and carry forward indefinitely.

As of December 31, 2024, the Company had federal orphan drug credits and federal research and development tax credit carryforwards of $ 31,294 and state research and development tax credit carryforwards of $ 2,736 .

As of December 31, 2025, the Company had federal orphan drug credits and federal research and development tax credit carryforwards of $ 44,037 and various state tax credit carryforwards of $ 4,673 .

The federal and state carryforwards, with the exception of $ 2,777 indefinite state credits will expire between 2033 and 2045, if not utilized.

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The determination of a hypothetical unrecognized deferred tax liability as of December 31, 2025 is not practicable because of the complexity and variety of assumptions necessary to compute the tax.

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The Company classifies interest and penalties related to unrecognized tax benefits within income tax expense in the consolidated statement of operations.

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$ 8,687 $ 3,648 $ 2,742

The Company does not anticipate any significant increases or decreases in its uncertain tax positions within the next 12 months.

The Company and its subsidiaries file U.S.

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The Company is not currently under Internal Revenue Service or state examination.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law enacting significant changes to U.S.

tax and related laws.

Some of the provisions of the new tax law affecting corporations include but are not limited to expensing of domestic research expenses, increasing the limit of the business interest expense deduction to thirty percent of EBITDA, and permitting one hundred percent bonus depreciation on eligible property acquired after January 19, 2025.

The impact of the tax law changes from the OBBBA is included in the Company's financial statements for the fiscal year ended December 31, 2025.

There has been no material change to the Company's effective income tax rate or its net deferred federal income tax assets as a result of the OBBBA as the Company maintains a full valuation allowance for all U.S.

deferred tax assets.

(8) Stockholders’ Equity

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In February 2024, the Company entered into an amended and restated sales agreement with Leerink Partners LLC ("Leerink Partners"), as sales agent, with respect to an at-the-market offering program (the "ATM") under which the Company could offer and sell, from time to time pursuant to its Registration Statement on Form S-3, shares of common stock, having an aggregate offering price of up to $ 250,000 , through Leerink Partners.

The amended and restated sales agreement amends and restates the original sales agreement that the Company entered into with Leerink Partners with respect to the ATM in May 2023, which is no longer in effect.

During the year ended December 31, 2024, 323,085 shares of common stock were sold under the ATM for total net proceeds of $ 8,691 and gross proceeds of $ 8,868 , before deducting sales agent commissions.

As of December 31, 2024, the Company had $ 241,132 of common stock remaining available for sale under the ATM.

The amended and restated sales agreement amends and restates the original sales agreement that the Company entered into with Leerink Partners with respect to the ATM in May 2023.

During the year ended December 31, 2025, no shares of common stock were sold under the ATM.

During the year ended December 31, 2024, 323,085 shares of common stock were sold under the ATM for total

net proceeds of $ 8,691 and gross proceeds of $ 8,868 , before deducting sales agent commissions.

As of both December 31, 2025 and 2024, the Company had $ 241,132 of common stock remaining available for sale under the ATM.

(b) Limited Common Stock

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Limited common stockholders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares.

The rights, preferences and privileges of holders of the limited

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common stock are subject to and may be adversely affected by the right of the holders of shares of any series of preferred stock that the Company may designate and issue in the future.

The rights, preferences and privileges of holders of the limited common stock are subject to and may be adversely affected by the right of the holders of shares of any series of preferred stock that the Company may designate and issue in the future.

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The fair value of RSUs granted by the Company was calculated based upon the Company's closing stock price on the date of the grant, and the stock-based compensation expense is recognized over the vesting period.

RSUs generally vest

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over four years with 25 % of the grants vesting at the end of the first year and the remaining vesting annually over the following three years.

RSUs generally vest over four years with 25 % of the grants vesting at the end of the first year and the remaining vesting annually over the following three years.

Restricted stock unit activity was as follows:

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The fair value of RSUs vested during the years ended December 31, 2025, 2024, and 2023 was $ 10,927 , $ 5,822 , and $ 355 , respectively.

No RSUs vested during year ended December 31, 2022.

Performance-Based Restricted Stock Units

In March 2024 and February 2023, the Company awarded performance-based restricted stock units ("PRSUs") under the 2022 Plan.

In March 2025, March 2024, and February 2023, the Company awarded performance-based restricted stock units ("PRSUs") under the 2022 Plan.

Each PRSU represents a contingent right to receive one share of common stock upon the achievement of specified performance goals.

1 unchanged sentence

At the point when performance conditions are considered probable of achievement, the Company records stock-based compensation expense with a cumulative catch-up expense in the period first recognized and on a straight-line basis over the remaining period for which the performance criteria are expected to be completed.

In March 2024, the Company awarded to all executive officers PRSUs for a maximum of 180,000 shares (based on 150 % achievement of the applicable performance conditions outlined in the awards), with a target award of 120,000 PRSUs (based on 100 % achievement of the applicable performance conditions), and a threshold award of 60,000 PRSUs (based on 50 % achievement of the applicable performance conditions).

All such PRSUs were considered granted under ASC 718, Compensation—Stock Compensation ("Topic 718") in March 2024.

Such PRSUs are scheduled to vest, if at all, upon the certification by the Company's compensation committee of the achievement of the applicable performance conditions following the filing of the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2026.

In February 2023, the Company awarded to certain executive officers PRSUs for a maximum of 62,693 shares (based on 150 % achievement of the applicable performance conditions outlined in the awards), with a target award of 41,795 PRSUs (based on 100 % achievement of the applicable performance conditions), and a threshold award of 20,898 PRSUs (based on 50 % achievement of the applicable performance conditions).

All such PRSUs were considered granted under Topic 718 in February 2023.

In March 2025, the Company awarded to all executive officers PRSUs for a maximum of 173,438 shares (based on 150 % achievement of the applicable performance conditions outlined in the awards), with a target award of 115,625 PRSUs (based on 100 % achievement of the applicable performance conditions), and a threshold award of 57,813 PRSUs (based on 50 % achievement of the applicable performance conditions) (the "2025 PRSUs").

The 2025 PRSUs were considered granted under ASC 718, Compensation—Stock Compensation ("Topic 718") in March 2025.

PRSUs were forfeited in June 2025, representing the number of shares that would have vested at the maximum level for the applicable milestones.

The remaining 2025 PRSUs are scheduled to vest, if at all, upon the certification by the Company's compensation committee of the achievement of the applicable performance conditions following the filing of the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2027.

The 2024 PRSUs were considered granted under Topic 718 in March 2024.

22,500 2024 PRSUs were forfeited in June 2025, representing the number of shares that would have vested at the maximum level for the applicable milestones.

The remaining 2024 PRSUs are scheduled to vest, if at all, upon the certification by the Company's compensation committee of the achievement of the applicable performance conditions following the filing of the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2026.

The 2023 PRSUs were considered granted under Topic 718 in February 2023.

13,215 2023 PRSUs were forfeited in June 2025, representing the number of shares that would have vested at the maximum level for the applicable milestones.

The remaining 2023 PRSUs are scheduled to vest, if at all, upon the certification by the Company's compensation committee of the achievement of the applicable performance conditions following the filing of the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2025.

In August 2022, the Company awarded 90,000 PRSUs to an executive officer of which 30,150 PRSUs were considered granted under Topic 718 at the time the PRSUs were awarded.

In March 2024 and 2023, of the 90,000 PRSUs awarded in August 2022, an additional 14,850 and 45,000 PRSUs were considered granted under Topic 718, respectively.

During the year ended December 31, 2024, the Company's compensation committee determined the achievement of the awards set to vest upon the certification by the Company's compensation committee following the filing of the Company's

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Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Of the 36,000 PRSUs that were eligible to vest, the Company's compensation committee determined that the applicable performance conditions had been met for 9,000 of the PRSUs, which vested during the year ended December 31, 2024, and that the applicable performance conditions had not been met for 27,000 PRSUs, which were forfeited during the year ended December 31, 2024.

The remaining 54,000 PRSUs are scheduled to vest, if at all, upon the certification by the Company's compensation committee of the achievement of the applicable performance conditions following the filing of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and following the filing of the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2025.

In March 2025 and 2024, the Company's compensation committee determined the achievement of the awards set to vest upon the certification by the Company's compensation committee following the filing of the Company's Annual Report on Form 10-K for the fiscal years ended December 31, 2024 and 2023, respectively.

Of the 36,000 PRSUs that were eligible to vest following the filing of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, the Company's compensation committee determined that the applicable performance conditions had been met for 14,850 of the PRSUs, which vested in March 2025, and that the applicable performance conditions had not been met for 12,150 PRSUs, which were forfeited in March 2025.

The Company's compensation committee also determined that the applicable performance conditions for the remaining 27,000 PRSUs that were eligible to vest following the filing of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 could not be met and these awards were forfeited in March 2025.

Of the 36,000 PRSUs that were eligible to vest following the filing of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, the Company's compensation committee determined that the applicable performance conditions had been met for 9,000 of the PRSUs, which vested in March 2024, and that the applicable performance conditions had not been met for 27,000 PRSUs, which were forfeited in March 2024.

Performance-based restricted stock unit activity was as follows:

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Forfeited (1)

( 48,460 ) 24.68

Balance, December 31, 2025

241,110 23.36

(1) Represents the number of shares forfeited at the target level.

The weighted average grant date fair value for each PRSU granted during the years ended December 31, 2025, 2024, and 2023 was $ 21.24 , $ 26.08 , and $ 22.48 , respectively.

During the year ended December 31, 2025, 14,850 PRSUs vested.

The fair value of PRSUs vested during the year ended December 31, 2024 was $ 241 .

No PRSUs vested during the years ended 2023 and 2022.

The fair value of PRSUs vested during the years ended December 31, 2025, 2024, and 2023 was $ 331 , $ 241 and zero , respectively.

Stock Options

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The maximum contractual term of options granted under the Plans is typically 10 years, options generally vest over four years with 25 % of the shares underlying the option vesting at the end of the first year and the remaining vesting monthly over the following three years.

In March 2024 and February 2023, the Company granted the chief executive officer premium priced options to purchase 87,271 and 65,525 shares of common stock, respectively, with exercise prices equal to 110 % of the closing price of the Company's common stock on the date of grant.

In March 2025, March 2024, and February 2023, the Company granted the chief executive officer premium priced options to purchase 90,000 , 87,271 and 65,525 shares of common stock, respectively, with exercise prices equal to 110 % of the closing price of the Company's common stock on the date of grant.

During the years ended December 31, 2025, 2024, and 2023, 303,770 , 169,820 , and 800,336 options under the Plans were exercised for total proceeds of $ 2,989 , $ 1,488 , and $ 9,440 , respectively.

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The expected terms of options granted to employees during the years ended December 31, 2025, 2024, and 2023 were calculated using an average of historical exercises.

Estimated volatility for 2025 incorporated a calculated volatility derived from a 50/50 blended approach using the Company's own historical closing prices of its shares of common stock for the expected term of the option with the historical closing prices of shares of common stock of similar entities whose share prices were publicly available for the expected term of the option.

Estimated volatility for 2024 and 2023 incorporated a calculated volatility derived from the historical closing prices of shares of common stock of similar entities whose share prices were publicly available for the expected term of the option.

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as such, the Company does not estimate forfeitures at the time of grant.

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Following are the weighted average valuation assumptions used for option awards during the periods presented:

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The fair value of shares vested during the years ended December 31, 2025, 2024, and 2023 was $ 25,889 , $ 39,422 , and $ 46,877 , respectively.

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(10) Net (Loss) Income per Share Attributable to Common and Limited Common Stockholders

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$ ( 1.41 ) $ ( 2.57 ) $ 0.54

Since the Company was in a loss position for the years ended December 31, 2024 and 2022, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares and limited common shares outstanding would have been anti-dilutive.

For periods in which the Company reports net losses, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares and limited common shares outstanding would have been anti-dilutive.

For the year ended December 31, 2023, in order to calculate diluted net income per share, the weighted average shares used to compute net income is adjusted by the effect of dilutive securities, including awards under the Plans.

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2025 2024 2023

Shares subject to outstanding common stock options and unvested RSUs 13,603,701 6,351,996 11,013,177

Shares subject to outstanding common stock options 11,970,052 11,921,153 6,305,741

Shares subject to outstanding unvested RSUs and PRSUs 2,514,153 1,682,548 46,255

Total shares subject to outstanding common stock options and unvested RSUs and PRSUs 14,484,205 13,603,701 6,351,996

The table above includes PRSUs for which performance-based vesting conditions are considered probable as of that date.

(11) Equity Investments

The Company previously provided collaboration services for Nimbus Therapeutics, LLC ("Nimbus") under the terms of a master services agreement executed on May 18, 2010, as amended.

Collaboration agreements are separate from the transaction that resulted in equity ownership and related fees are paid in cash to the Company.

Nimbus was previously recorded as an equity method investment under the HLBV method, as the entity is a limited liability company and the Company was determined to have significant influence due to the Company's collaboration with Nimbus on a number of drug discovery targets, as well as the Company's level of ownership in Nimbus.

During the period ended September 30, 2023, the Company's equity ownership in Nimbus was diluted to the point that the Company no longer has significant influence over the entity.

As the Company no longer has significant influence over Nimbus, after June 30, 2023, the equity investment in Nimbus is valued as a non-marketable equity security.

As of December 31, 2024 and 2023, the carrying value of the Nimbus investment was $ 2,436 and $ 1,928 , respectively.

The Company has no significant influence over Nimbus and accounts for its investment in Nimbus Therapeutics, LLC ("Nimbus") as a non-marketable security.

As of both December 31, 2025 and 2024, the carrying value of the Nimbus investment was $ 2,436 .

The Company has no obligation to fund Nimbus' losses in excess of its investment.

During the year ended

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December 31, 2024, the Company reported an unrealized gain of $ 508 on the Nimbus investment.

No gain or loss was recorded on the Nimbus investment during the year ended December 31, 2025.

During the year ended December 31, 2024, the Company reported an unrealized gain of $ 508 on the Nimbus investment.

During the year ended December 31, 2023, the Company reported a realized gain of $ 147,213 on the Nimbus investment, which reflected the total cash distribution the Company received from Nimbus on account of Takeda's acquisition of Nimbus Lakshmi, Inc., a wholly-owned subsidiary of Nimbus, and its tyrosine kinase 2 inhibitor NDI-034858, as well as an unrealized gain of $ 1,928 on the Nimbus investment due to the change in accounting method.

The Company reported no gains or losses on the Nimbus investment during the year ended December 2022.

On August 15, 2024, the Company disposed of its equity stake in Morphic Holding, Inc.

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During the years ended December 31, 2024 and 2023, the Company reported a mark-to-market gain of $ 23,474 and $ 1,778 , respectively, on the Morphic investment.

During the year ended December 31, 2022, the Company reported a mark-to-market loss of $ 17,226 on the Morphic investment.

As of December 31, 2024 and 2023, the carrying value of the Company's investment in Morphic was zero and $ 24,114 , respectively.

As of both December 31, 2025 and 2024, the carrying value of the Company's investment in Morphic was zero .

In May 2021, the Company purchased 631,377 shares of Series B preferred stock of Ajax Therapeutics, Inc.

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The Company has concluded that its equity investment in Ajax should be valued as a non-marketable equity security as the Company does not exercise significant influence over Ajax.

No gain or loss was recorded on the Ajax investment during the year ended December 31, 2025.

During the year ended December 31, 2024, the Company recorded an impairment loss of $ 202 on the Ajax investment.

No gain or loss was recorded on the Ajax investment during the years ended December 31, 2023 and 2022.

As of December 31, 2024 and 2023, the carrying value of the Company's investment in Ajax was $ 4,498 and $ 1,700 , respectively.

No gain or loss was recorded on the Ajax investment during the year ended December 31, 2023.

As of both December 31, 2025 and 2024, the carrying value of the Company's investment in Ajax was $ 4,498 .

(d) Structure Therapeutics

In July 2021, the Company purchased 494,035 shares of Series B preferred stock of Structure Therapeutics for $ 2,000 in cash.

In July 2021, the Company purchased 494,035 shares of Series B preferred stock of Structure Therapeutics Inc.

("Structure Therapeutics") for $ 2,000 in cash.

In April 2022, the Company purchased an additional 148,210 shares of Series B preferred stock for $ 600 in cash.

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The Company accounts for its investment in Structure Therapeutics at fair value based on the closing price of Structure Therapeutics' ADSs as of the reporting date.

During the year ended December 31, 2024, the Company recorded a mark-to-market loss of $ 18,096 on the Structure Therapeutics investment.

During the year ended December 31, 2025, the Company sold a portion of its equity stake in Structure Therapeutics for aggregate consideration of $ 17,735 .

The Company recorded a mark-to-market gain of $ 7,519 on the portion of the investment sold during the year ended December 31, 2025.

The Company recorded a mark-to-market gain of $ 40,655 on the portion of the investment held as of December 31, 2025.

During the year ended December 31, 2024, the Company recorded a mark-to-market loss of $ 18,096 on the investment.

During the year ended December 31, 2023, the Company recorded a mark-to-market gain of $ 49,755 on the investment.

During the year ended December 31, 2022, the Company recorded a loss of $ 858 on the Structure Therapeutics investment under the hypothetical liquidation book value method.

As of December 31, 2025 and 2024, the carrying value of the Company's investment in Structure Therapeutics was $ 66,641 and $ 36,202 , respectively.

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Matching contributions during 2025, 2024, and 2023 were $ 4,424 , $ 4,478 , and $ 4,135 , respectively.

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(13) Related Party Transactions

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As of December 31, 2025 and 2024, restricted cash on hand related to the arrangement was $ 72 and $ 1,021 , respectively.

For the year ended December 31, 2024, the Company recognized $ 6,016 in software contribution revenue related to funds received under agreements with the Bill & Melinda Gates Foundation to fund the initiative to accelerate the expansion of the Company's computational platform to predict toxicity associated with binding to off-target proteins.

As of December 31, 2024, restricted cash on hand related to the arrangement was $ 8,606 .

For the years ended December 31, 2025 and 2024, the Company recognized $ 13,788 and $ 6,016 in software contribution revenue, respectively, related to funds received under agreements with the Bill & Melinda Gates Foundation to fund the initiative to accelerate the expansion of the Company's computational platform to predict toxicity associated with binding to off-target proteins.

As of December 31, 2025 and 2024, restricted cash on hand related to the arrangement was zero and $ 8,606 , respectively.

As of December 31, 2025 and 2024, the Company had no receivables due from the Bill & Melinda Gates Foundation related to any of these agreements.

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Gates III, who may be deemed to be the beneficial owner of more than 5 % of the Company’s voting securities.

The Company received $ 1,000 in contribution revenue in connection with its entry into an agreement with Gates Ventures, LLC annually from June 2020 to June 2022.

In August 2023, the Company renewed the agreement with Gates Ventures, LLC and recognized $ 1,800 in contribution revenue upon extension of the agreement and $ 2,000 in contribution revenue upon the first anniversary of the extension.

The agreement with Gates Ventures, LLC currently extends through August 13, 2026 and provides for total consideration of up to $ 9,000 .

For the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 2,200 , $ 2,000 , and $ 1,800 in contribution revenue, respectively, related to these agreements.

As of December 31, 2025 and 2024, the Company had no receivables due from Gates Ventures, LLC.

During the year ended December 31, 2025, the Company entered into certain license agreements with the Trustees of Columbia University ("Columbia University"), separate from the licenses discussed in Part I, Item 1.

"Business—License Agreements with Columbia University" in this Annual Report.

Richard Friesner, the William P.

Schweitzer Professor of Chemistry at Columbia University and the principal investigator of the Friesner Research Group, a research laboratory within the Department of Chemistry at Columbia University, was the inventor of certain of the technologies licensed to the Company pursuant to certain of the Company's license agreements with Columbia University and is one of the Company's co-founders and a member of the Company's board of directors.

Revenue recognized for these additional licenses for the year ended December 31, 2025 was $ 88 .

As of December 31, 2025, the Company had $ 100 outstanding receivables due from Columbia University related to these licenses.

(14) Segment Reporting

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Certain cost items are not allocated to the Company’s reportable segments.

These cost items primarily consist of non-drug discovery program related compensation and general operational expenses associated with the Company’s research and development, sales and marketing, and general and administrative.

These costs are incurred by both segments and due to the integrated nature of the Company’s Software and Drug Discovery segments, any allocation methodology would be subjective and may not provide meaningful analysis.

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Additionally, the Company reports assets on a consolidated basis and does not allocate assets to its reportable segments for purposes of assessing segment performance or allocating resources.

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Presented below is financial information with respect to the Company’s reportable segments for the years presented:

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Gain on equity investments — — 147,213

Change in fair value 5,683 53,461 ( 18,084 )

Change in fair value of equity investments 48,174 5,683 53,461

Other income 16,396 17,902 19,693

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$ 255,869 $ 207,539 $ 216,666

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(15) Subsequent Events

During January 2026, the Company sold a portion of its equity stake in Structure Therapeutics for aggregate consideration of $ 20,979 .

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data