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Item 9A. Controls and Procedures

2021-03-04 compared with 2020-03-16 · 42 added, 898 removed, 131 unchanged (88% of the section changed)

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Management’s Annual Report on Internal Control Over Financial Reporting and Attestation Report of Registered Public Accounting Firm

This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period under the rules of the SEC for newly public companies.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

Our internal control over financial reporting is a process designed under the supervision of our principal executive and principal financial officer to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Management assessed our internal control over financial reporting as of December 31, 2020.

Management based its assessment on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).

Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2020.

This Annual Report does not include an attestation report of our independent registered public accounting firm due to an exemption established by the JOBS Act for “emerging growth companies”.

Changes in Internal Control Over Financial Reporting

During the year ended December 31, 2018, a material weakness in internal control over financial reporting was identified relating to our controls to review equity method investee financial information at a level of precision that would identify material misstatements in our financial statements, which was due to a deficiency in the design of entity-level controls.

During the year ended December 31.

2019,we implemented measures designed to improve our internal control over financial reporting to remediate this material weakness, including increasing communication with our equity investee companies to ensure timely receipt of relevant financial information, instructing our material investees to provide quarterly U.S.

GAAP financial statements, and implementing completeness and accuracy controls surrounding the financial data received from investees.

Based upon the remediation actions taken and completed during 2019, and our testing and evaluation of the newly implemented control activities and our internal control over financial reporting, we have concluded that the material weakness has been remediated as of December 31, 2019.

Except with respect to the changes in connection with our implementation of the remediation plan discussed above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) that occurred during the fourth quarter of 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) under the Exchange Act) that occurred during the fourth quarter of 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

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These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by

management override of the controls.

The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate.

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Directors, Executive Officers and Corporate Governance.

The following sets forth certain information regarding our executive officers and directors as of December 31, 2019:

Executive Officers

Ramy Farid, Ph.D.

Chief Executive Officer and President, Director

Robert Abel, Ph.D.

Executive Vice President, Science

Karen Akinsanya, Ph.D.

Executive Vice President, Chief Biomedical Scientist, Head of Discovery R&D

Shane Brauner

Senior Vice President and Chief Information Officer

Jennifer Daniel

Senior Vice President and Chief Human Resources Officer

Executive Vice President and Chief Business Officer

Joel Lebowitz

Executive Vice President and Chief Financial Officer

Kenneth “Patrick” Lorton

Senior Vice President and Chief Technology Officer

Executive Vice President and Chief Legal Officer

Executive Vice President and Managing Director

Non-Employee Directors

Michael Lynton(1)(3)

Chairman of the Board of Directors

Friesner, Ph.D.

Rosana Kapeller-Libermann, M.D., Ph.D.(1)(2)

Gary Sender(1)(2)

Nancy Thornberry(3)

Wright, M.D.(2)

Member of the Audit Committee.

Member of the Compensation Committee.

Member of the Nominating and Corporate Governance Committee.

Executive Officers

Ramy Farid, Ph.D.

has served as our president since January 2008, our chief executive officer since January 2017 and as a member of our board of directors since December 2012.

Farid has been with our company for over 17 years and has served as senior vice president from January 2005 to December 2007, vice president, scientific development and product management from January 2003 to December 2004 and product manager from January 2002 to December 2002.

Farid serves on the board of directors of multiple biotechnology companies co-founded by us, and previously served on the board of directors of Morphic Holding, Inc., a biotechnology company.

Prior to joining our company, Dr.

Farid was an assistant professor in the Chemistry Department at Rutgers University.

Farid received a B.S.

in Chemistry from the University of Rochester and a Ph.D.

from the California Institute of Technology, and he was a National Institutes of Health postdoctoral fellow in the Department of Biochemistry and Biophysics at the University of Pennsylvania.

We believe that Dr.

Farid’s extensive knowledge of our company and current role as our president and chief executive officer qualifies him to serve on our board of directors.

Robert Abel, Ph.D.

has served as our executive vice president, science, since January 2020.

Abel has been with our company for over 10 years and previously served as our senior vice president, science, from April 2017 to December 2019, vice president, scientific development from January 2014 to April 2017, director of structure-based science from January 2011 to December 2013, senior principal scientist and product manager from January 2010 to December 2010 and senior scientist from March 2009 to December 2009.

Abel received a B.S.

in Chemistry from the University of Florida and a Ph.D.

in Chemical Physics from Columbia University.

In graduate school, Dr.

Abel was a National Science Foundation Graduate Research Fellow and a Department of Homeland Security Research Fellow, and worked from May 2005 to August 2005 at Los Alamos National Laboratory under the auspices of the DHS Research Fellowship.

Karen Akinsanya, Ph.D.

has served as our executive vice president, chief biomedical scientist, head of discovery R&D since January 2020 and previously served as our senior vice president and chief biomedical scientist from April 2018 to December 2019.

Akinsanya spent 12 years at Merck & Co., Inc., or Merck, a pharmaceutical company, where she held a variety of positions across Merck Research Labs, including associate vice president, early scientific assessment lead, business development & licensing from December 2013 to July 2017, collaboration lead and executive director, cardiovascular research from January 2010 to December 2013, and associate director, clinical pharmacology from October 2005 to December 2009.

Prior to Merck, Dr.

Akinsanya held a number of roles in drug discovery at Ferring Pharmaceuticals in the United Kingdom and the United States from 1997 to 2005.

Akinsanya founded Envision Science Group LLC, or Envision, a translational science consulting company, where she currently serves as president.

Akinsanya provided consulting services on behalf of Envision to companies in the pharmaceutical industry between July 2017 and April 2018.

Akinsanya received a B.Sc.

in Biochemistry from Queen Mary College, University of London, a Ph.D.

in Endocrine Physiology from the Imperial College and completed postdoctoral studies at the Ludwig Institute for Cancer Research, University College, London.

Shane Brauner has served as our chief information officer since January 2019.

Brauner has been with our company for over 10 years and previously served as our senior vice president, information systems from January 2017 to January 2019, vice president, information technology and operations from January 2015 to January 2017, executive director, information technology and operations from January 2014 to January 2015, senior director, information technology from January 2012 to January 2014, director, information technology from January 2010 to January 2012 and manager, information technology from February 2009 to January 2010.

Prior to joining our company, Mr.

Brauner served as a consultant, managing global grid computing support at Pfizer, Inc., or Pfizer, from June 2007 to October 2008.

Brauner received a B.S.

in Computer Science from the University of Houston.

Jennifer Daniel has served as our senior vice president and chief human resources officer since February 2017 and as our vice president of human resources from January 2002 to June 2009.

Prior to rejoining our company in February 2017, Ms.

Daniel served as senior vice president, human resources at Outbrain Inc., an advertising technology company, from December 2011 to February 2017.

Prior to that, Ms.

Daniel served as senior vice president, strategic growth, at Juno Online Services, an internet service provider company, from June 1996 to October 2001.

Daniel received a B.A.

in International Relations from American University and an M.L.A, Environmental Studies from the University of Pennsylvania.

Cony D’Cruz has served as our executive vice president and chief business officer since January 2016.

Previously, Mr.

D’Cruz served as our senior vice president of business development from April 2013 to December 2015.

Prior to joining our company, Mr.

D’Cruz served as president of Proteros US, Inc., or Proteros, a biotechnology company, from 2010 to March 2013.

Prior to joining Proteros, Mr.

D’Cruz served as senior vice president, North America, at Evotec SE, or Evotec, a biotechnology company, from 2001 to 2010.

D’Cruz received a B.Sc.

in Applied Biology from the University of London and an M.B.A from The Open University, Milton Keynes United Kingdom.

Joel Lebowitz has served as our executive vice president and chief financial officer since November 2018.

Lebowitz previously spent 26 years at Merck, a pharmaceutical company, where he served as global finance lead, project management from September 2013 to December 2014, executive director, pipeline valuation and portfolio analysis from October 2011 to March 2014 and executive director, corporate planning and management reporting from 2005 to 2011.

From January 2015 to October 2018, Mr.

Lebowitz was retired.

Lebowitz received a B.A.

in Applied Mathematics and Economics from Brown University and an M.B.A.

in Finance and International Business from Columbia Graduate School of Business.

Patrick Lorton has served as our senior vice president and chief technology officer since April 2017.

Lorton has been with our company for over 13 years and previously served as our vice president of engineering from January 2016 to April 2017, director of software engineering from January 2015 to January 2016, associate director of software engineering from December 2012 to January 2015, project leader from January 2011 to December 2012 and scientific developer from September 2006 to December 2012.

Prior to joining our company, Mr.

Lorton served as a chemistry research assistant from December 2005 to September 2006 and a computer science research assistant from August 2004 to July 2006 at Indiana University Bloomington.

Lorton received a B.S.

in Computer Science and a B.A.

in Mathematics and Chemistry from Indiana University Bloomington.

Yvonne Tran has served as our executive vice president and chief legal officer since April 2017, and previously served as our general counsel from April 2010 to April 2017.

Prior to joining our company, Ms.

Tran previously served as senior corporate counsel at Oracle America, Inc., or Oracle, a technology company, from January 2008 to April 2010.

Prior to joining Oracle, Ms.

Tran served as outside legal consultant from January 2006 to January 2008 and deputy general counsel from April 2000 to January 2006 at DoubleClick, Inc., an advertising technology company since acquired by Google LLC.

Tran received a B.A.

in Molecular Biophysics and Biochemistry from Yale University and a J.D.

from the University of Virginia School of Law.

Jörg Weiser has served as the executive vice president and managing director of our German office and wholly owned subsidiary, Schrödinger GmbH, since October 2002.

Weiser previously served as co-founder and managing director at Anterio Consult & Research GmbH, a German consulting and research company, from June 1999 to September 2002.

Weiser received a doctorate in Organic Chemistry from the University of Göttingen and was a post-doctoral fellow at Columbia University.

Non-Employee Directors

Michael Lynton has served as a member of our board of directors since January 2018 and chairman of our board of directors since October 2018.

He has served as a director at General Catalyst Partners, a venture capital firm, since December 2018.

Lynton served as chief executive officer of Sony Entertainment Inc., an international entertainment company, from April 2012 to August 2017, as chairman and chief executive officer of Sony Pictures Entertainment Inc., from January 2004 to May 2017 and as chief executive officer of Sony Corporation of America, from March 2012 to August 2017.

Lynton currently serves as chairman of the board of directors of Snap Inc., a publicly-traded technology company, and as a member of the board of directors of Ares Management Corporation, a publicly traded, global alternative asset manager, and Pearson plc., a publicly traded publishing and education company.

Lynton also served as a member on the board of directors of Pandora Media, Inc.

from August 2017 to February 2019.

Lynton received a B.A.

in History and Literature from Harvard College and an M.B.A.

from Harvard Business School.

We believe that Mr.

Lynton’s public company board and management experience and his extensive business and leadership experience qualifies him to serve as chairman of our board of directors.

Friesner, Ph.D.

has served as a member of our board of directors since August 1990, when he co-founded us.

Friesner is currently the William P.

Schweitzer professor of chemistry at Columbia University, the principal investigator of the Friesner Research Group, a research laboratory within the Department of Chemistry at Columbia University, and he has served as a professor of chemistry at Columbia University since September 1990.

Friesner is a Fellow of the American Academy of Sciences and a member of the National Academy of Sciences.

Friesner received a B.S.

in Chemistry from the University of Chicago and a Ph.D.

in Chemistry from the University of California, Berkeley.

We believe that Dr.

Friesner’s extensive experience in theoretical chemistry and his extensive knowledge of our company since inception, as well as his distinguished scientific record, qualifies him to serve on our board of directors.

Rosana Kapeller-Libermann, M.D., Ph.D.

has served as a member of our board of directors since January 2019.

Kapeller-Libermann has served as president and chief executive officer of Rome Therapeutics, Inc., a therapeutics company, since April 2019.

She has also served as an entrepreneur in residence at GV, a venture capital investment arm of Alphabet Inc.

since November 2018.

Prior to that, Dr.

Kapeller-Libermann served as founding chief scientific officer of Nimbus Therapeutics, or Nimbus, a biotechnology company, from February 2010 to March 2018.

Prior to joining Nimbus, she served as vice president of research at Aileron Therapeutics, Inc., a biopharmaceutical company, from August 2005 to September 2009.

Kapeller-Libermann received an M.D.

from Universidade do Estado do Rio de Janeiro and a Ph.D.

in Molecular and Cellular Physiology from Tufts University.

We believe Dr.

Kapeller-Libermann’s scientific experience in the field of drug discovery and extensive experience working with life sciences companies qualifies her to serve on our board of directors.

Gary Sender has served as a member of our board of directors since July 2019.

Sender has served as chief financial officer of Nabriva Therapeutics plc, or Nabriva, a publicly-traded biopharmaceutical company, since May 2016.

Prior to joining Nabriva, Mr.

Sender served as chief financial officer and executive vice president at Synergy Pharmaceuticals Inc., or Synergy, a publicly-traded biopharmaceutical company, from November 2015 to April 2016.

Prior to joining Synergy, from August 2009 to June 2015, Mr.

Sender served as senior vice president, finance at Shire plc., or Shire, a biopharmaceutical company since acquired by Takeda Pharmaceutical Company Limited.

Prior to joining Shire, Mr.

Sender served as founding chief financial officer of Tengion, Inc., a regenerative medicine company, from August 2004 to July 2009.

Sender also spent over 15 years in several leadership roles within Merck, a pharmaceutical company.

Sender received a B.S.

in Finance from Boston University and an M.B.A.

from Carnegie-Mellon University.

We believe Mr.

Sender’s extensive experience in the life sciences industry, and in particular his financial acumen, qualifies him to serve on our board of directors.

Nancy Thornberry has served as a member of our board of directors since September 2019.

Thornberry has served as chief executive officer of Kallyope, Inc., a biotechnology company, since November 2015.

Between August 2013 and October 2015, Ms.

Thornberry was self-employed as a consultant to companies in the biotechnology and pharmaceutical industries.

Prior to that, Ms.

Thornberry spent over 30 years at Merck, a pharmaceutical company, where she held a variety of positions including senior vice president and franchise head, diabetes and endocrinology, from April 2011 to July 2013, senior vice president and franchise head, diabetes and obesity, from September 2009 to April 2011, vice president, worldwide basic research head, diabetes and obesity, from February 2007 to September 2009 and executive director, metabolic disorders, from 2004 to February 2007, among other positions.

Thornberry received a B.S.

in Chemistry and Biology from Muhlenberg College.

We believe Ms.

Thornberry’s scientific background and experience in the life sciences industry qualifies her to serve on our board of directors.

has served as a member of our board of directors since April 2015.

Wright has served as general partner at Time BioVentures, a life sciences venture capital firm, since April 2019.

Prior to that, Dr.

Wright served as chief research and development officer at Regulus Therapeutics, Inc.

or Regulus, a biopharmaceutical company, from September 2016 to March 2019.

Prior to joining Regulus, Dr.

Wright served as executive vice president, translational sciences at the California Institute for Biomedical Research, a non-profit organization, from February 2015 to August 2016.

Prior to that, Dr.

Wright held positions of increasing responsibility at Novartis Pharmaceuticals, a multinational pharmaceutical company, from April 2004 to January 2015, including deputy head of translational research, global head of translational medicine, global head of translational sciences and global head of pharma development.

Wright currently serves as a scientific advisor to the Bill and Melinda Gates Foundation and to the Leonard Schaeffer Center for Health Policy and Economics at University of Southern California.

Wright received a B.A.

in Biology from the University of Delaware and an M.D.

from the Johns Hopkins University School of Medicine where he also completed postdoctoral training.

We believe Dr.

Wright’s business experience and knowledge of the life sciences industry in which we operate qualifies him to serve on our board of directors.

Board Composition

Our board of directors is currently authorized to have seven members and consists of seven members.

Our directors hold office until their successors have been elected and qualified or until the earlier of their death, resignation or removal.

In accordance with the terms of our certificate of incorporation and bylaws that became effective upon the closing of our initial public offering, our board of directors is divided into three classes, class I, class II and class III, with members of each class serving staggered three-year terms.

The members of the classes are divided as follows:

the class I directors are Ramy Farid and Timothy M.

Wright, and their term will expire at the annual meeting of stockholders to be held in 2021;

the class II directors are Michael Lynton and Nancy Thornberry, and their term will expire at the annual meeting of stockholders to be held in 2022;

the class III directors are Richard A.

Friesner, Rosana Kapeller-Libermann, and Gary Sender, and their term will expire at the annual meeting of stockholders to be held in 2023.

Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires.

There are no family relationships among any of our directors or executive officers.

Code of Business Conduct and Ethics

The information required by this Item 10 is incorporated herein by reference from the information that will be contained in our proxy statement related to the 2021 Annual Meeting of Stockholders, which we intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscal year ended December 31, 2020 pursuant to General Instruction G(3) of Form 10-K.

We have adopted a written code of business conduct and ethics that applies to our directors, officers, and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

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Our website is not incorporated by reference into this Annual Report and you should not consider any information contained in or accessible from our website to be a part of this Annual Report.

Audit Committee and Audit Committee Financial Expert

Our audit committee consists of Gary Sender, Rosana Kapeller-Libermann and Michael Lynton.

Gary Sender is the chair of the audit committee .

Our board of directors has determined that Gary Sender is an “audit committee financial expert” within the meaning of SEC regulations and that he possesses the financial sophistication required for audit committee membership under the Nasdaq rules.

Our board of directors has determined that Gary Sender is an “independent director” as defined under applicable Nasdaq rules, including the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934.

Stockholder Recommendation of Director Nominees

Our nominating and corporate governance committee will consider director candidates recommended by stockholders.

The nominating and corporate governance committee does not intend to alter the manner in which it evaluates candidates, based on whether or not the candidate was recommended by a stockholder.

Stockholders who wish to recommend individuals for consideration by the nominating and corporate governance committee to become nominees for election to our board of directors may do so by delivering a written recommendation to our Secretary at the following address:

120 West 45th Street, 17th Floor, New York, New York, at least 90 days, but not more than 120 days, prior to the first anniversary of the preceding year’s annual meeting.

Submissions must include (1) such person’s name, age, business address and, if known, residence address, (2) such person’s principal occupation or employment, (3) the class and series and number of shares of stock of the corporation that are, directly or indirectly, owned, beneficially or of record, by such person, (4) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among (x) the stockholder, the beneficial owner, if any, on whose behalf the nomination is being made and the respective affiliates and associates of, or others acting in concert with, such stockholder and such beneficial owner, on the one hand, and (y) each proposed nominee, and his or her respective affiliates and associates, or others acting in concert with such nominee(s), on the other hand, including all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made or any affiliate or associate thereof or person acting in concert therewith were the “registrant” for purposes of such Item and the proposed nominee were a director or executive officer of such registrant, and (5) any other information concerning such person that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Exchange Act.

Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.

Executive Compensation.

The following discussion relates to the compensation of Ramy Farid, our president and chief executive officer, Cony D’Cruz, our executive vice president and chief business officer, and Yvonne Tran, our executive vice president and chief legal officer for fiscal year 2019.

D’Cruz, and Ms.

Tran are collectively referred to in this Annual Report as our named executive officers.

On January 24, 2020, we effected a one-for-7.47534 reverse stock split of shares of our common stock.

All issued and outstanding shares of common stock and per share amounts referenced in this section have been retroactively adjusted to reflect this reverse stock split for all periods presented.

Summary Compensation Table

The following table sets forth information regarding compensation awarded to, earned by or paid to each of our named executive officers for the years ended December 31, 2019 and 2018.

Name and Principal Position

Option Awards

Non-Equity Incentive Plan Compensation

All Other Compensation

President and Chief Executive Officer

Executive Vice President and Chief Business Officer

Executive Vice President and Chief Legal Officer

The amounts reported in the “Bonus” column reflect discretionary annual cash bonuses paid to our executive officers for their performance in 2018.

The amounts reported in the “Option Awards” column reflect the aggregate grant date fair value of stock-based compensation awarded during the year computed in accordance with the provisions of Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718.

See Note 10 to our consolidated financial statements appearing elsewhere in this Annual Report regarding assumptions underlying the valuation of equity awards.

These amounts reflect the accounting cost for these stock options and do not reflect the actual economic value that may be realized by the named executive officer upon the vesting of the stock options, the exercise of the stock options or the sale of the common stock underlying such stock options.

The amounts reported in the “Non-Equity Incentive Plan Compensation” column reflect annual cash bonuses earned by our executive officers for their performance in 2019 under the Senior Executive Incentive Compensation Plan.

For a description of the plan, see “—Senior Executive Incentive Compensation Plan” below.

Represents (i) premiums of $501 paid by us during 2019 with respect to group life, accidental death and dismemberment and long-term disability insurance policies consistent with those provided to all of our employees, and (ii) matching contributions of $11,200 made by us under our 401(k) plan.

Represents (i) premiums of $489 paid by us during 2018 with respect to group life, accidental death and dismemberment and long-term disability insurance policies consistent with those provided to all of our employees, and (ii) matching contributions of $4,125 made by us under our 401(k) plan.

Narrative to Summary Compensation Table

In 2018, we paid Dr.

Farid an annualized base salary of $464,000 and Mr.

D’Cruz an annualized base salary of $428,000.

In 2019, we paid Dr.

Farid an annualized base salary of $478,000, Mr.

D’Cruz an annualized base salary of $443,000 and Ms.

Tran an annualized base salary of $415,000.

Farid’s 2020 annual base salary is $525,800, Mr.

D’Cruz’s 2020 annual base salary is$456,000 and Ms.

Tran’s 2020 annual base salary is $428,000.

We use base salaries to recognize the experience, skills, knowledge, and responsibilities required of all our employees, including our named executive officers.

None of our named

executive officers is currently party to an employment agreement or other agreement or arrangement that provides for automatic or scheduled increases in base salary.

Annual Bonus.

Our board of directors may, in its discretion, award bonuses to our named executive officers from time to time.

Our board of directors has approved discretionary annual cash bonuses to our named executive officers with respect to their prior year performance.

With respect to 2018 performance, our board of directors awarded bonuses of $80,000 and $107,000 to Dr.

Farid and Mr.

D’Cruz, respectively.

In August 2019, our board of directors adopted our Senior Executive Incentive Compensation Plan.

The Senior Executive Incentive Compensation Plan provides for cash bonus payments to be made to certain eligible executive officers, including named executive officers, based upon the attainment of performance targets established by our compensation committee, which are related to financial and operational measures or objectives with respect to our company.

Each executive officer who is selected to participate in the plan has a targeted bonus opportunity set for each performance period, but payments under this plan may be higher or lower than the executive’s target bonus opportunity, depending upon our performance.

This plan is designed to motivate our executive officers to achieve annual goals based on financial and operating performance objectives.

The 2019 corporate performance goals included, but were not limited to, those related to drug discovery and the drug discovery pipeline, software sales, collaborations, technology enhancement, corporate hiring, and our initial public offering.

Each named executive officer’s individual target bonus amount for 2019, expressed as a percentage of his or her annual base salary, was 25%.

With respect to 2019 performance, our board of directors awarded cash bonuses under our Senior Executive Incentive Compensation Plan of $143,400, $132,900, and $124,500 to Dr.

D’Cruz and Ms.

Tran, respectively, which represents cash bonus awards at 30% of each named executive officer’s 2019 base salary, which exceeds the target bonus percentage for each such officer.

For a further description of the plan, see “—Senior Executive Incentive Compensation Plan” below.

Equity Incentives.

Although we do not have a formal policy with respect to the grant of equity incentive awards to our executive officers, or any formal equity ownership guidelines applicable to them, we believe that equity grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and our stockholders.

In addition, we believe that equity grants with a time-based vesting feature promote executive retention because this feature incentivizes our executive officers to remain in our employment during the vesting period.

Accordingly, our board of directors periodically reviews the equity incentive compensation of our executive officers, including our named executive officers, and from time to time may grant equity incentive awards to them in the form of stock options which may include time-based vesting features.

Prior to our initial public offering, our executives were eligible to receive equity awards under our 2002 Stock Incentive Plan, which plan is now expired, and our 2010 Stock Plan, as amended to date, or the 2010 Plan.

During 2018 and 2019, all stock options were granted pursuant to our 2010 Plan.

Following the closing of our initial public offering, our employees and executives are eligible to receive stock options and other equity-based awards pursuant to

our 2020 Equity Incentive Plan, or the 2020 Plan.

For a description of our 2010 Plan and our 2020 Plan, see “—Stock Option and Other Compensation Plans” below.

In November 2018, we granted options to purchase 334,432 and 26,754 shares of our common stock to Dr.

Farid and Mr.

D’Cruz, respectively, each at an exercise price of $4.34 per share, which price was equal to the fair market value of our common stock on the date of grant as determined by our board of directors.

These option grants were granted pursuant to our 2010 Stock Plan, were merit-based awards, and such options vested as to 25% of the original number of shares underlying the options on December 31, 2019 and will vest as to an additional 2.0833% of the original number of shares underlying the options monthly thereafter.

The options have a term of ten years.

We did not grant option awards to our named executive officers in 2019.

In February 2020, we granted options to purchase 896,280, 33,443 and 200,659 shares of our common stock to Dr.

D’Cruz and Ms.

Tran, respectively, each at an exercise price per share of $17.00 per share.

These options were granted pursuant to our 2020 Plan, were merit-based awards, and such options will vest as to 25% of the original number of shares underlying the options on February 5, 2021 and as to an additional 2.0833% of the original number of shares underlying the options monthly thereafter.

The options have a term of ten years.

We use stock options to compensate our executive officers in the form of initial grants in connection with the commencement of employment and also at various times, often but not necessarily annually, if we or they have performed as expected or better than expected.

None of our executive officers is currently party to an employment agreement that provides for the automatic award of stock options.

We have granted option awards to our executive officers with time-based vesting.

The options that we have granted to our executive officers prior to November 2018 typically vest and become exercisable as to 25% of the shares underlying the option on each anniversary of the vesting commencement date until the fourth anniversary of the vesting commencement date.

The options that we have granted to our executive officers in or following November 2018 typically vest and become exercisable as to 25% of the shares underlying the option on the first anniversary of the vesting commencement date and as to an additional 2.0833% of the original number of shares underlying the option monthly thereafter.

Vesting rights cease upon termination of employment and exercise rights for previously vested stock options cease shortly after termination of employment, though exercisability is extended in the case of death or disability.

Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including no voting rights and no right to receive dividends or dividend equivalents.

We have historically granted stock options with exercise prices that are equal to the fair market value of our common stock on the date of grant as determined by our board of directors, based on a number of objective and subjective factors.

The exercise price of all stock options granted after our initial public offering will be equal to the fair market value of shares of our common stock on the date of grant, which will be determined by reference to the closing market price of our common stock on the date of grant.

The typical term of such stock options will be ten years.

Outstanding Equity Awards at December 31, 2019

The following table sets forth information regarding all outstanding stock options held by each of our named executive officers as of December 31, 2019.

Option Awards

unexercisable

__________________________

This option is fully vested.

This option to purchase 160,527 shares vests over four years, in equal yearly installments through April 1, 2020, subject to continued service.

This option to purchase 334,432 shares vests over four years, with 25% of the original number of shares underlying such option having vested on December 31, 2019, and 2.0833% of the original number of shares underlying such option vesting thereafter in equal monthly installments through December 31, 2022, subject to continued service.

This option to purchase 133,773 shares vests over four years, in equal yearly installments through March 1, 2020, subject to continued service.

All vested shares under this option have been exercised as of December 31, 2019, and the unvested portion of the option vests as to 33,443 shares on March 1, 2020.

This option to purchase 11,731 shares vests over four years, in equal yearly installments through January 1, 2021, subject to continued service.

All vested shares under this option have been exercised as of December 31, 2019, and the unvested portion of the option vests as to 2,933 shares on January 1, 2020 and 2,932 shares on January 1, 2021.

This option to purchase 26,754 shares vests over four years, with 25% of the original number of shares underlying such option having vested on December 31, 2019, and 2.0833% of the original number of shares underlying such option vesting thereafter in equal monthly installments through December 31, 2022, subject to continued service.

This option is fully vested.

This option to purchase 13,377 shares vests over four years, in equal yearly installments through April 1, 2020, subject to continued service.

This option to purchase 11,731 shares vests over four years, in equal yearly installments through January 1, 2021, subject to continued service.

Employment Agreements

We have entered into employment agreements with each of our named executive officers.

These agreements set forth the terms of the named executive officer’s compensation, including initial base salary.

Each named executive officer’s salary is reviewed by our compensation committee and the board of directors on an annual or more frequent basis and is subject to change in the discretion of our board of directors or compensation committee.

Our named executive officers are eligible to participate in company-sponsored benefit programs that are generally available to all of our similarly-situated employees.

Under these agreements, each named executive officer is also eligible to receive equity awards at such times and on such terms and conditions as the board of directors may determine.

Employment Agreement with Ramy Farid

We entered into an employment agreement with Ramy Farid, dated May 11, 2010.

Under the employment agreement, Dr.

Farid is an at-will employee and his employment may be terminated by us or by him at any time, for any reason, upon 30 days’ written or verbal notice.

In the event we elect to terminate Dr.

Farid’s employment immediately without 30 days’ notice, he is entitled to continued payment of his then-current base salary and continued benefit coverage for a period of 30 days following such termination.

The employment agreement provides that Dr.

Farid was entitled to an annualized base salary of $250,000, prorated for the period beginning May 11, 2010 and ending on December 31, 2010, and that Dr.

Farid’s salary may be increased or decreased thereafter in our sole discretion.

Farid’s current salary is $525,800.

Employment Agreement with Cony D’Cruz

We entered into an employment agreement with Cony D’Cruz, dated April 15, 2013.

Under the employment agreement, Mr.

D’Cruz is an at-will employee and his employment may be terminated by us or by him at any time, for any reason, upon 30 days’ written or verbal notice.

In the event we elect to terminate Mr.

D’Cruz’s employment immediately without 30 days’ notice, he is entitled to continued payment of his then-current base salary for a period of 30 days following such termination.

The employment agreement provides that Mr.

D’Cruz was entitled to an annualized base salary of $290,000, prorated for the period beginning April 15, 2013 and ending on December 31, 2013, and that Mr.

D’Cruz’s salary may be increased or decreased thereafter in our sole discretion.

D’Cruz’s current salary is $456,000.

Employment Agreement with Yvonne Tran

We entered into an employment agreement with Yvonne Tran, dated April 27, 2010.

Under the employment agreement, Ms.

Tran is an at-will employee and her employment may be terminated by us or by her at any time, for any reason, upon 30 days’ written or verbal notice.

In the event we elect to terminate Ms.

Tran’s employment immediately without 30 days’ notice, she is entitled to continued payment of her then-current base salary and continued benefit coverage for a period of 30 days following such termination.

The employment agreement provides that Ms.

Tran was entitled to an annualized base salary of $235,000, prorated for the period beginning April 27, 2010 and ending on December 31, 2010, and that Ms.

Tran’s salary may be increased or decreased thereafter in our sole discretion.

Tran’s current salary is $428,000.

Employee Non-Competition, Non-Solicitation, Confidentiality, and Assignment of Inventions

As part of their employment agreements, each of our named executive officers has agreed to certain standard non-competition, non-solicitation, confidential information, and assignment of invention restrictions.

Pursuant to their employment agreements, each of Dr.

Farid and Mr.

D’Cruz has agreed that we own all developments that are made, created, developed, conceived or reduced to practice by such officer, alone or with others, (i) in the course of employment with us, whether during regular working hours or other hours, or (ii) during the period of employment with us, whether or not in the course of such employment, to the extent the same is related to our business or actual or demonstrably anticipated research or development or is made, created, developed, conceived or first reduced to practice with the time, private or proprietary information, or facilities of our company, our subsidiaries or our other affiliates, which we refer to collectively as the Schrödinger Companies.

Pursuant to Ms.

Tran’s employment agreement, Ms.

Tran has agreed that we own all developments that are conceived, developed, made or produced by her, alone or in conjunction with others, (i) in the course of her employment with us, or (ii) with the time, private or proprietary information, or facilities of the Schrödinger Companies.

In addition, each of our named executive officers has agreed not to, during his or her employment and for a period of one year thereafter, (i) solicit or encourage any customers, prospective customers, vendors, strategic partners or business associates of the Schrödinger Companies to cease or reduce their relationship with the Schrödinger Companies or to refrain from establishing or expanding a relationship with Schrödinger Companies, (ii) solicit or induce any employees, consultants, sales agents, contract researchers, contract programmers or other independent agents of the Schrödinger Companies or of certain D.

Shaw group entities to cease employment or retention with the Schrödinger Companies or such D.

Shaw group entities, or (iii) hire or engage any employee of the Schrödinger Companies or of certain D.

Shaw group entities.

Each of our named executive officers has agreed not to, during the term of his or her employment, knowingly engage in any activity or business which is the same nature as, or substantively similar to, our business or an activity or business which a Schrödinger Company is developing and of which such named executive officer has knowledge, and to protect our confidential and proprietary information indefinitely.

Senior Executive Incentive Compensation Plan

In August 2019, our board of directors adopted the Senior Executive Incentive Compensation Plan, or the Executive Cash Incentive Plan.

The Executive Cash Incentive Plan provides for cash bonus payments to certain eligible executive officers, including named executive officers, based upon the attainment of performance targets established by our compensation committee, which are related to financial and operational measures or objectives with respect to our company.

Our compensation committee administers the Executive Cash Incentive Plan, selects the eligible executive officers and may select corporate performance goals in its discretion.

The 2020 corporate performance goals include, but are not limited to, those related to drug discovery deals and the internal drug discovery pipeline, software sales, collaborations, technology enhancement, corporate hiring and retention of key employees, and our initial public offering.

Under the Executive Cash Incentive Plan, each executive officer who is selected to participate in the Executive Cash Incentive Plan has a targeted bonus opportunity set for each performance period, but payments under this plan may be higher or lower than the executive’s target bonus opportunity, depending upon our performance.

Bonuses paid under the Executive Cash Incentive Plan are based upon bonus formulas that tie such bonuses to one or more performance targets relating to the corporate performance goals.

The bonus formulas are adopted in each performance period by the compensation committee and communicated to each executive officer at the beginning of each performance period.

The level of achievement of the corporate performance goals will be determined by the compensation committee, in its discretion and after applying any adjustments that the committee determines to be appropriate, at the end of each fiscal year after our financial reports have been issued.

If the corporate performance goals are met, payments will be made as soon as practicable following the compensation committee’s determination of the bonus payable to each executive officer.

Subject to the compensation committee’s discretion to pay a pro-rated bonus under limited circumstances, each executive officer must be employed by us on the date the bonus is payable in order to be eligible to receive the bonus payment.

The board of directors or the compensation committee may amend or terminate the Executive Cash Incentive Plan at any time for any reason.

Farid’s individual target bonus amount for 2020, expressed as a percentage of his annual base salary, is 60%.

D’Cruz’s individual target bonus amount for 2020, expressed as a percentage of his annual base salary, is 40%.

Tran’s individual target bonus amount for 2020, expressed as a percentage of her annual base salary, is 40%.

Executive Severance and Change in Control Benefits Plan

The Executive Severance and Change in Control Benefits Plan, which we refer to as the Severance Plan, became effective following the closing of our initial public offering and provides severance benefits to certain of our executives, including our named executive officers, if their employment is terminated by us without “cause” or, only in connection with a “change in control” of our company, they terminate employment with us for “good reason” (as each of those terms is defined in the Severance Plan).

Under the Severance Plan, if we terminate an eligible executive’s employment without cause prior to or more than 12 months following the closing of a change in control of our company, the executive is entitled to (i) continue receiving his or her base salary for a specified period (in the case of Dr.

Farid, for 12 months, in the case of Ms.

Tran, for nine months and, in the case of Mr.

D’Cruz, for six months) following the date of termination, (ii) company contributions to the cost of health care continuation under the Consolidated Omnibus Budget Reconciliation Act, or COBRA, for up to 12 months following the date of termination, and (iii) the amount of any unpaid annual bonus determined by our board of directors in its discretion to be payable to the executive for any completed bonus period which ended prior to the date of such executive’s termination.

The Severance Plan also provides that, if, within 12 months following the closing of a change in control of our company, we terminate an eligible executive’s employment without cause or such executive terminates his or her employment with us for good reason, the executive is entitled to (i) a single lump-sum payment equal to a percentage of his or her annual base salary (in the case of Dr.

Farid, 100%, in the case of Ms.

Tran, 75%, and, in the case Mr.

D’Cruz, 50%), (ii) a single lump sum payment in an amount equal to a percentage of his or her target annual bonus for the year in which the termination of employment occurs or for the year in which the change in control occurs, if greater (in the case of Dr.

Farid, 100%, in the case of Ms.

Tran, 75%, and, in the case Mr.

D’Cruz, 50%), (iii) company contributions to the cost of health care continuation under COBRA for up to 12 months following the date of termination of employment (18 months in the case of Dr.

Farid), and (iv) the amount of any unpaid annual bonus determined by our board of directors to be payable to the executive for any completed bonus period which ended prior to the date of such executive’s termination.

In addition, all of the executive’s outstanding unvested equity awards that vest solely based on the passage of time will vest and become fully exercisable or non-forfeitable on the date of such termination.

To the extent that any severance or other compensation payment to any of our executives pursuant to the Severance Plan, any employment agreement or any other agreement constitutes an “excess parachute payment” within the meaning of Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended, then such executive will receive the full amount of such severance and other payments, or a reduced amount intended to avoid the application of Sections 280G and 4999, whichever provides the executive with the highest amount on an after-tax basis.

All payments and benefits provided under the Severance Plan are contingent upon the execution and effectiveness of a release of claims by the executive in our favor and continued compliance by the executive with any proprietary information and inventions, nondisclosure, non-competition, non-solicitation (or similar) agreement to which we and the executive are party.

Stock Option and Other Compensation Plans

In this section we describe our 2010 Plan, our 2020 Plan, and our 2020 Employee Stock Purchase Plan, or the 2020 ESPP.

Prior to our initial public offering, we granted awards to eligible participants under the 2010 Plan.

We expect to grant awards to eligible participants from time to time only under the 2020 Plan.

2010 Stock Plan

The 2010 Plan was initially approved by our board of directors in October 2010 and by our stockholders in November 2010 and was subsequently amended in 2011, 2012, 2016, 2017, and 2018, in each case solely to increase the total number of shares reserved for issuance under the 2010 Plan.

The 2010 Plan provided for the direct award or sale of shares of our common stock and for the grant of incentive stock options and nonstatutory stock options.

Our employees, directors, and consultants were eligible to receive awards or purchase shares under the 2010 Plan;

however, incentive stock options could only be granted to our employees.

The type of award granted under the 2010 Plan and the terms of such award, or the terms of a sale of shares under the plan, are set forth in the applicable award or purchase agreement.

Pursuant to the terms of the 2010 Plan, our board of directors (or a committee appointed by our board of directors) administers the 2010 Plan and, subject to any limitations in the plan, selects the recipients of awards or purchasers of shares and determines:

the number of shares of our common stock covered by options and the dates upon which the options become exercisable;

the type of options to be granted;

the duration of options, which may not be in excess of ten years;

the exercise price of options, which must be at least equal to the fair market value of our common stock on the date of grant;

the number of shares of our common stock subject to and the terms and conditions of any direct award or sale of shares of our common stock, including conditions for forfeiture or repurchase, and the purchase price of such shares, if any.

The maximum number of shares of common stock authorized for issuance under the 2010 Plan is 6,964,231.

Our board of directors may amend, suspend, or terminate the 2010 Plan at any time and for any reason, except that stockholder approval may be required to comply with applicable law.

Unless terminated earlier by our board of directors, the 2010 Plan will automatically terminate ten years after the date when our board of directors approved the most recent increase in the number of shares of stock authorized for issuance under the plan that was also approved by our stockholders, which occurred on November 9, 2018.

The termination of the 2010 Plan, or any amendment thereof, will not affect any shares of common stock or any option previously granted and outstanding thereunder.

Effect of Certain Changes in Capitalization .

In the event of a subdivision of our outstanding stock, a stock dividend, a combination or consolidation of our outstanding stock into a lesser number of shares, a reclassification, or any other increase or decrease in the number of issued shares of our common stock effected without receipt of consideration by us, under the terms of the 2010 Plan, proportionate adjustments will be automatically made to each of:

the number of shares of our common stock available for future grants under the 2010 Plan;

the number of shares of our common stock covered by each outstanding option;

the exercise price under each outstanding option.

In the event of the declaration of an extraordinary dividend payable in a form other than shares of our common stock in an amount that has a material effect on the fair market value of our common stock, a recapitalization, a spin-off, or a similar occurrence, our board of directors, in its sole discretion, may make appropriate adjustments in one or more of:

the number of shares of our common stock available for future grants under the 2010 Plan;

the number of shares of our common stock covered by each outstanding option;

the exercise price under each outstanding option.

Effect of Certain Transactions .

In the event we are a party to a merger or consolidation, outstanding options, and shares of our common stock acquired under the 2010 Plan will be subject to the agreement of merger or consolidation, which may not treat all outstanding options in an identical manner.

The agreement of merger or consolidation, without the optionee’s consent, may dispose of options that are not exercisable as of the effective date of the merger or consolidation in any manner permitted by applicable law, including the cancellation of such options without payment of any consideration.

The agreement of merger or consolidation, without the optionee’s consent, will provide for one or more of the following with respect to options that are exercisable as of the effective date of the merger or consolidation:

the continuation of the options by us (if we are the surviving corporation);

the assumption of the options by the surviving corporation or its parent;

the substitution of the options by the surviving corporation or its parent for new options;

the cancellation of the options and a payment to the optionees equal to the excess, if any, of (A) the fair market value of the shares of our common stock subject to such options as of the effective date of the merger or consolidation over (B) the exercise price of the options (which payment will be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a fair market value equal to the required amount);

the cancellation of the options without the payment of any consideration (any exercise of such option prior to the closing date of the merger or consolidation may be contingent on the closing of the merger or consolidation).

Subject to the terms of the 2010 Plan, our board of directors may modify, extend, or assume outstanding options or may accept the cancellation of outstanding options in return for the grant of new options for the same or a different number of shares of our common stock and at the same or a different exercise price.

However, no modification of an option will impair the optionee’s rights or increase the optionee’s obligations under the option without the consent of the optionee.

The 2010 Plan contains four sub-plans that include additional terms applicable to awards or sales of shares and options to acquire shares granted to residents of each of California, India, Ireland, and the United Kingdom.

The sub-plan for residents of California contains provisions that govern the treatment of options upon the optionee’s termination from service other than by reason of death or disability, termination of service by reason of disability, termination of service due to optionee’s death, or leave of absence.

The sub-plan for residents of India contains provisions limiting the eligible recipients of awards under the plan to employees (and excludes

consultants and non-employee directors resident in India) and requires that the exercise price for options be paid in cash and not through services rendered or a promissory note.

The sub-plan for residents of Ireland contains provisions stipulating that references to “withholding taxes” in the sub-plan include all taxes, charges, levies, and contributions in Ireland and elsewhere, including the Universal Social Charge and Pay Related Social Insurance, establishes a tax indemnity by the participant in respect of any tax liabilities of the participant associated with participation in the sub-plan and includes required data privacy provisions.

The sub-plan for residents of the United Kingdom contains provisions related to the counting of shares subject to the sub-plan, limits the awards granted under the sub-plan to options, permits the company to require holders of options to make certain United Kingdom tax elections in connection with the exercise of options, and permits the transferability of options solely upon the death of the holder.

As of December 31, 2019, there were options to purchase an aggregate of 4,943,778 shares of our common stock outstanding under the 2010 Plan at a weighted average exercise price of $3.57 per share and options to purchase 236,005 shares of our common stock were available for future issuance under the 2010 Plan.

No further awards will be made under the 2010 Plan, however, awards outstanding under the 2010 Plan will continue to be governed by their existing terms.

2020 Equity Incentive Plan

In January 2020, our board of directors adopted and our stockholders approved the 2020 Plan, which became effective immediately prior to the effectiveness of the registration statement for our initial public offering, which occurred on February 5, 2020.

The 2020 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards.

The number of shares of our common stock reserved for issuance under the 2020 Plan is the sum of:

(1) 5,645,228 shares of our common stock;

plus (2) the number of shares (up to a maximum of 5,180,194 shares) equal to the sum of (x) the number of shares of our common stock reserved for issuance under the 2010 Plan that remained available for grant under the 2010 Plan immediately prior to the effectiveness of the registration statement for our initial public offering, which occurred on February 5, 2020 and (y) the number of shares of our common stock subject to outstanding awards granted under the 2010 Plan that expire, terminate, or are otherwise surrendered, cancelled, forfeited, or repurchased by us at their original issuance price pursuant to a contractual repurchase right;

plus (x) an annual increase to be added on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2021 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2025, by a number of shares of common stock equal to the smallest of (i) 1.5% of the sum of (A) the outstanding shares of common stock, (B) the outstanding shares of limited common stock and (C) the outstanding stock options granted by us (which sum we refer to as the “outstanding equity”), calculated on the last business day of the prior fiscal year or (ii) the number of shares of common stock determined by our board of directors and (y) an annual increase to be added on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2026 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2030, by a number of shares of common stock equal to the smallest of (i) 1.0% of the outstanding equity, calculated on the last business day of the prior fiscal year or (ii) the number of shares of common stock determined by our board of directors.

Subject to adjustment under the 2020 Plan, no more than 5,645,228 shares of common stock may be issued as incentive stock options under the 2020 Plan.

Subject to adjustment under the 2020 Plan, any award that is not a “full-value award” (as defined below) shall be counted against the share limits set forth in the 2020 Plan as one share for each share of common stock subject to such award and any award that is a full-value award shall be counted against the share limits specified in the plan as 1.775 shares for each one share of common stock subject to such full-value award.

“Full-value award” means any award of restricted stock, restricted stock units or other stock-based award with a per share price or per unit purchase price lower than 100% of the fair market value per share of common stock (valued in the manner determined or approved by the board of directors) on the date of grant.

To the extent a share that was subject to an award that counted as one share is returned to the 2020 Plan, each applicable share reserve will be credited with one share.

To the extent that a share that was subject to an award that counts as 1.775 shares is returned to the 2020 Plan, each applicable share reserve will be credited with 1.775 shares.

Notwithstanding anything in the 2020 Plan to the contrary, in no event may more than 20% of the maximum number of shares of common stock available for the granting of awards under the 2020 Plan be issued in the form of full-value awards.

For purposes of this limitation, the number of shares subject to each award shall be counted on a one (1)-for-one (1) basis and without regard to the fungible counting ratio described above.

The maximum aggregate amount of cash and value (calculated based on grant date fair value for financial reporting purposes) of awards granted in any calendar year to any individual non-employee director in his or her capacity as a non-employee director shall not exceed $750,000;

provided, however, that such maximum aggregate amount shall not exceed $1,000,000 in any calendar year for any individual non-employee director in such non-employee director’s initial year of election;

and provided, further, however, that fees paid by us on behalf of any non-employee director in connection with regulatory compliance and any amounts paid to a non-employee director as reimbursement of an expense shall not count against the foregoing limit.

Our board of directors may make additional exceptions to this limit for individual non-employee directors in extraordinary circumstances, as the board may determine in its discretion, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation.

For the avoidance of doubt, cash and awards granted under the 2020 Plan to non-employee directors in their capacity as consultants or advisors to us are not subject to the foregoing limitation.

Our employees, officers, directors, consultants, and advisors are eligible to receive awards under the 2020 Plan.

Incentive stock options, however, may only be granted to our employees.

Pursuant to the terms of the 2020 Plan, our board of directors (or a committee delegated by our board of directors) administers the 2020 Plan and, subject to any limitations in the 2020 Plan, selects the recipients of awards and determines:

the number of shares of our common stock covered by options and the dates upon which the options become exercisable;

the type of options to be granted;

the duration of options, which may not be in excess of ten years;

the exercise price of options, which must be at least equal to the fair market value of our common stock on the date of grant;

the number of shares of our common stock subject to and the terms of any stock appreciation rights, restricted stock awards, restricted stock units, or other stock-based awards, including conditions for repurchase, measurement price, issue price and repurchase price (though the measurement price of stock appreciation rights must be at least equal to the fair market value of our common stock on the date of grant and the duration of such awards may not be in excess of ten years).

If our board of directors delegates authority to one or more of our officers to grant awards under the 2020 Plan, the officers will have the power to make awards to all of our employees, except executive officers (as such terms are defined in the 2020 Plan).

Our board of directors will fix the terms of the awards to be granted by any such officer, the maximum number of shares subject to awards that such officer may grant, and the time period in which such awards may be granted.

Effect of Certain Changes in Capitalization.

Upon the occurrence of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off, or other similar change in capitalization or event, or any dividend or distribution to holders of our common stock other than an ordinary cash dividend, under the terms of the 2020 Plan, we are required to equitably adjust (or make substitute awards, if applicable), in the manner determined by our board of directors:

the number and class of securities available under the 2020 Plan;

the share counting rules under the 2020 Plan;

the number and class of securities and exercise price per share of each outstanding option;

the share and per-share provisions and the measurement price of each outstanding stock appreciation right;

the number of shares and the repurchase price per share subject to each outstanding award of restricted stock;

the share and per-share related provisions and the purchase price, if any, of each outstanding restricted stock unit award and other stock-based award.

Effect of Certain Corporate Transactions.

In connection with a merger or other reorganization event (as defined in the 2020 Plan), our board of directors may, on such terms as our board of directors determines (except to the extent specifically provided otherwise in an applicable award agreement or other agreement between the participant and us), take any one or more of the following actions pursuant to the 2020 Plan as to all or any (or any portion of) outstanding awards, other than certain awards of restricted stock:

provide that outstanding awards will be assumed, or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof);

upon written notice to a participant, provide that all of the participant’s unvested awards will be forfeited immediately prior to the consummation of the reorganization event and/or unexercised awards will terminate immediately prior to the consummation of the reorganization event unless exercised by the participant (to the extent then exercisable) within a specified period following the date of the notice;

provide that outstanding awards will become exercisable, realizable, or deliverable, or restrictions applicable to an award will lapse, in whole or in part, prior to or upon such reorganization event;

in the event of a reorganization event pursuant to which holders of shares of our common stock will receive a cash payment for each share surrendered in the reorganization event, make or provide for a cash payment to participants with respect to each award held by a participant equal to (1) the number of shares of our common stock subject to the vested portion of the award (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such reorganization event) multiplied by (2) the excess, if any, of the cash payment for each share surrendered in the reorganization event over the exercise, measurement, or purchase price of such award and any applicable tax withholdings, in exchange for the termination of the award;

provide that, in connection with our liquidation or dissolution, awards will convert into the right to receive liquidation proceeds (if applicable, net of the exercise, measurement, or purchase price thereof and any applicable tax withholdings);

any combination of the foregoing.

Our board of directors is not obligated under the 2020 Plan to treat all awards, all awards held by a participant, or all awards of the same type, identically.

In the case of certain restricted stock units, no assumption or substitution is permitted, and the restricted stock units will instead be settled in accordance with the terms of the applicable restricted stock unit agreement.

Upon the occurrence of a reorganization event, other than our liquidation or dissolution, our repurchase and other rights with respect to outstanding awards of restricted stock will continue for the benefit of the succeeding company (or any affiliate of the succeeding company) and will, unless our board of directors determines otherwise, apply to the cash, securities, or other property which our common stock was converted into or exchanged for pursuant to the reorganization event.

However, our board of directors may provide for the termination or deemed satisfaction of such repurchase or other rights under the restricted stock award

agreement or in any other agreement between a participant and us, either initially or by amendment.

Upon our liquidation or dissolution, except to the extent specifically provided to the contrary in the restricted stock award agreement or any other agreement between the participant and us, all restrictions and conditions on all restricted stock awards then outstanding will automatically be deemed terminated or satisfied.

At any time, our board of directors may provide that any award under the 2020 Plan will become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in whole or in part, as the case may be.

Except with respect to certain actions requiring stockholder approval under the Internal Revenue Code or Nasdaq Stock Market rules, our board of directors may amend, modify, or terminate any outstanding award under the 2020 Plan, including but not limited to, substituting for the award another award of the same or a different type, changing the date of exercise or realization, and converting an incentive stock option to a non-qualified stock option, subject to certain participant consent requirements.

However, unless our stockholders approve such action, the 2020 Plan provides that we may not (except as otherwise permitted in connection with a change in capitalization or reorganization event):

amend any outstanding stock option or stock appreciation right granted under the 2020 Plan to provide an exercise or measurement price per share that is lower than the then-current exercise or measurement price per share of such outstanding award;

cancel any outstanding stock option or stock appreciation right (whether or not granted under the 2020 Plan) and grant a new award under the 2020 Plan in substitution for the cancelled award (other than substitute awards permitted in connection with a merger or consolidation of an entity with us or our acquisition of property or stock of another entity) covering the same or a different number of shares of our common stock and having an exercise or measurement price per share lower than the then-current exercise or measurement price per share of the cancelled award;

cancel in exchange for a cash payment any outstanding option or stock appreciation right with an exercise or measurement price per share above the then-current fair market value of our common stock (valued in the manner determined by (or in the manner approved by) our board of directors);

take any other action that constitutes a “repricing” within the meaning of Nasdaq Stock Market rules or rules of any other exchange or marketplace on which our common stock is listed or traded.

No award may be granted under the 2020 Plan on or after February 5, 2030.

Our board of directors may amend, suspend, or terminate the 2020 Plan at any time, except that stockholder approval may be required to comply with applicable law or stock market requirements.

2020 Employee Stock Purchase Plan

In January 2020, our board of directors adopted and our stockholders approved the 2020 ESPP, which became effective immediately prior to the effectiveness of the registration statement for our initial public offering, which occurred on February 5, 2020.

The 2020 ESPP will be administered by our board of directors or by a committee appointed by our board of directors.

The 2020 ESPP initially provides participating employees with the opportunity to purchase up to an aggregate of 586,845 shares of our common stock.

All of our employees and employees of any designated subsidiary, as defined in the 2020 ESPP, are eligible to participate in the 2020 ESPP, provided that:

such person is customarily employed by us or a designated subsidiary for more than 20 hours a week and for more than five months in a calendar year;

such person has been employed by us or by a designated subsidiary for at least three months prior to enrolling in the 2020 ESPP;

such person was our employee or an employee of a designated subsidiary on the first day of the applicable offering period under the 2020 ESPP.

We retain the discretion to determine which eligible employees may participate in an offering under applicable regulations.

We expect to make one or more offerings to our eligible employees to purchase stock under the 2020 ESPP beginning at such time and on such dates as our board of directors may determine, or the first business day thereafter.

Each offering will consist of a six-month offering period during which payroll deductions will be made and held for the purchase of our common stock at the end of the offering period.

Our board of directors or a committee designated by the board of directors may, at its discretion, choose a different period of not more than 27 months for offerings.

On each offering commencement date, each participant will be granted the right to purchase, on the last business day of the offering period, up to a number of shares of our common stock determined by multiplying $2,083 by the number of full months in the offering period and dividing that product by the closing price of our common stock on the first day of the offering period.

No employee may be granted an option under the 2020 ESPP that permits the employee’s rights to purchase shares under the 2020 ESPP and any other employee stock purchase plan of ours or of any of our subsidiaries to accrue at a rate that exceeds $25,000 of the fair market value of our common stock (determined as of the first day of each offering period) for each calendar year in which the option is outstanding.

In addition, no employee may purchase shares of our common stock under the 2020 ESPP that would result in the employee owning 5% or more of the total combined voting power or value of our stock or the stock of any of our subsidiaries.

Each eligible employee may authorize up to a maximum of 15% of his or her compensation to be deducted by us during the offering period.

Each employee who continues to be a participant in the 2020 ESPP on the last business day of the offering period will be deemed to have exercised an option to purchase from us the number of whole shares of our common stock that

his or her accumulated payroll deductions on such date will pay for, not in excess of the maximum numbers set forth above.

Under the terms of the 2020 ESPP, the purchase price shall be determined by our board of directors or the committee for each offering period and will be at least 85% of the applicable closing price of our common stock.

If our board of directors or the committee does not make a determination of the purchase price, the purchase price will be 85% of the lesser of the closing price of our common stock on the first business day of the offering period or on the last business day of the offering period.

An employee may at any time prior to the close of business on the fifteenth business day prior to the end of an offering period (or such other number of days as is determined by us), and for any reason, permanently withdraw from participating in an offering and permanently withdraw the balance accumulated in the employee’s account.

Partial withdrawals are not permitted.

If an employee elects to discontinue his or her payroll deductions during an offering period but does not elect to withdraw his or her funds, funds previously deducted will be applied to the purchase of common stock at the end of the offering period.

If a participating employee’s employment ends before the last business day of an offering period, no additional payroll deductions will be taken and the balance in the employee’s account will be paid to the employee.

We will be required to make equitable adjustments to the extent determined by our board of directors or a committee thereof to the number and class of securities available under the 2020 ESPP, the share limitations under the 2020 ESPP, and the purchase price for an offering period under the 2020 ESPP to reflect stock splits, reverse stock splits, stock dividends, recapitalizations, combinations of shares, reclassifications of shares, spin-offs, and other similar changes in capitalization or events or any dividends or distributions to holders of our common stock other than ordinary cash dividends.

In connection with a merger or other reorganization event, as defined in the 2020 ESPP, our board of directors or a committee of our board of directors may take any one or more of the following actions as to outstanding options to purchase shares of our common stock under the 2020 ESPP on such terms as our board of directors or committee thereof determines:

provide that options will be assumed, or substantially equivalent options will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof);

upon written notice to employees, provide that all outstanding options will be terminated immediately prior to the consummation of such reorganization event and that all such outstanding options will become exercisable to the extent of accumulated payroll deductions as of a date specified by our board of directors or committee thereof in such notice, which date shall not be less than ten days preceding the effective date of the reorganization event;

upon written notice to employees, provide that all outstanding options will be cancelled as of a date prior to the effective date of the reorganization event and that all accumulated payroll deductions will be returned to participating employees on such date;

in the event of a reorganization event under the terms of which holders of our common stock will receive upon consummation thereof a cash payment for each share surrendered in the reorganization event, change the last day of the offering period to be the date of the consummation of the reorganization event and make or provide for a cash payment to each employee equal to (1) the cash payment for each share surrendered in the reorganization event times the number of shares of our common stock that the employee’s accumulated payroll deductions as of immediately prior to the reorganization event could purchase at the applicable purchase price, where the cash payment for each share surrendered in the reorganization event is treated as the fair market value of our common stock on the last day of the applicable offering period for purposes of determining the purchase price and where the number of shares that could be purchased is subject to the applicable limitations under the 2020 ESPP minus (2) the result of multiplying such number of shares by the purchase price;

provide that, in connection with our liquidation or dissolution, options will convert into the right to receive liquidation proceeds (net of the purchase price thereof).

Our board of directors may at any time, and from time to time, amend or suspend the 2020 ESPP or any portion of the 2020 ESPP.

We will obtain stockholder approval for any amendment if such approval is required by Section 423 of the Internal Revenue Code.

Further, our board of directors may not make any amendment that would cause the 2020 ESPP to fail to comply with Section 423 of the Internal Revenue Code.

The 2020 ESPP may be terminated at any time by our board of directors.

Upon termination, we will refund all amounts in the accounts of participating employees.

We maintain a defined contribution employee retirement plan for our employees, including our named executive officers.

The plan is intended to qualify as a tax-qualified 401(k) plan so that contributions to the 401(k) plan, and income earned on such contributions, are not taxable to participants until withdrawn or distributed from the 401(k) plan (except in the case of contributions under the 401(k) plan designated as Roth contributions).

Under the 401(k) plan, each employee is fully vested in his or her deferred contributions.

Vesting in our discretionary matching contributions is based on years of service to us, with 25% vesting per year of service to us and 100% vesting at the end of the fourth year of service to us.

Employee contributions are held and invested by the plan’s trustee as directed by participants.

Our 401(k) plan provides that each participant can contribute up to 75% of such participant’s eligible compensation (pre-tax or post-tax Roth contributions), up to the statutory limit, which was $18,500 for 2018, $19,000 for 2019, and $19,500 for 2020.

Participants who are at least 50 years old were also eligible to make “catch-up” contributions of up to an additional $6,000 above the statutory limit in 2018 and 2019, and are eligible to make “catch-up” contributions of up to an additional $6,500 above the statutory limit in 2020.

The 401(k) plan provides us with the discretion to match participant contributions up to certain specified amounts.

In 2018, we made a matching contribution equal to 1.5% of the total eligible compensation up to the 2018 annual limit of $275,000, equating to a maximum matching contribution amount of $4,125.

We provided a true-up to eligible participants to ensure that our match was 1.5% of eligible compensation up to the 2018 annual limit.

Effective January 1, 2019, we began making discretionary matching contributions to participants under our 401(k) plan equal to 50% of the participant’s contribution to the 401(k) plan up to a maximum participant contribution of 8% of participant’s eligible compensation for a total match of up to 4%, or $11,200.

Rule 10b5-1 Sales Plans

Our directors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sell shares of our common stock on a periodic basis.

Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or officer when entering into the plan, without further direction from the director or officer.

Director Compensation

The table below shows all compensation to our non-employee directors during the year ended December 31, 2019.

Fees Earned or

Option Awards

Michael Lynton

Richard Friesner, Ph.D.

Timothy Wright, M.D.

Rosana Kapeller-Libermann, M.D.,

Gary Sender (4)

Nancy Thornberry (5)

__________________________

See Note 10 to our consolidated financial statements appearing elsewhere in this Annual Report regarding assumptions underlying the valuation of equity awards.

These amounts reflect the accounting cost for these stock options and do not reflect the actual economic value that may be realized by the directors upon the vesting of the stock options, the exercise of the stock options or the sale of the common underlying such stock options.

As of December 31, 2019, the aggregate number of shares of our common stock subject to outstanding option awards for each non-employee director serving during 2019 was as follows:

Lynton, 80,263 shares;

Friesner, 160,527 shares;

Wright, 0 shares;

Kapeller-Libermann, 53,509 shares;

Sender, 40,131 shares;

Thornberry, 46,820 shares.

Kapeller-Libermann joined our board of directors on January 9, 2019.

Sender joined our board of directors on July 22, 2019.

Thornberry joined our board of directors on September 13, 2019.

Represents consulting fees paid to Dr.

Friesner in connection with his consulting agreement.

For further information about our consulting agreement with Dr.

Friesner, as well our transactions with Dr.

Freisner and his employer, Columbia University, see “Item 13.

Certain Relationships and Related Transactions, and Director Independence.”

Prior to the closing of our initial public offering, we paid cash fees and granted options to purchase shares of our common stock to certain of our non-employee directors for their service on our board of directors;

however, we did not have a formal non-employee director compensation program .

Prior to the closing of our initial public offering, we reimbursed our non-employee directors, on an as requested basis, for reasonable travel expenses incurred in connection with attending board of director and committee meetings.

Farid, one of our directors who also serves as our president and chief executive officer, does not receive any additional compensation for his service as a director.

Farid is one of our named executive officers and, accordingly, the compensation that we pay to Dr.

Farid is discussed above under “—Summary Compensation Table” and “—Narrative to Summary Compensation Table.”

In January 2020, our board of directors approved a director compensation program that became effective on the effective date of the registration statement for our initial public offering, which was February 5, 2020.

Under this director compensation program, we pay our non-employee directors a cash retainer for service on the board of directors and for service on each committee on which the director is a member.

The chairman of the board of directors and of each committee receive higher retainers for such service.

These fees are payable in arrears in four equal quarterly installments on the last day of each quarter, provided that the amount of such payment will be prorated for any portion of such quarter that the director is not serving on our board of directors and no fee under the program is payable in respect of any period prior to the completion of our initial public offering.

The fees paid to non-employee directors for service on the board of directors and for service on each committee of the board of directors on which the director is a member are as follows:

Board of Directors

Audit Committee

Compensation Committee

Nominating and Corporate Governance Committee

We also will continue to reimburse our non-employee directors for reasonable travel and other expenses incurred in connection with attending meetings of our board of directors and any committee of our board of directors on which he or she serves.

In addition, under our director compensation program, each non-employee director will receive, upon his or her initial election or appointment to our board of directors, an option to purchase 25,216 shares of our common stock under the 2020 Plan.

Each of these options will vest as to one-third of the shares of our common stock underlying such option on each of the first, second and third anniversaries of the grant.

Further, on the date of the first board meeting held after each annual meeting of stockholders commencing with our 2021 annual meeting of stockholders, each non-employee director will receive an option to purchase 12,909 shares of our common stock under the 2020 Plan;

provided, however, that for a non-employee director who was initially elected to our board of directors within the 12 months preceding the annual meeting of stockholders, the number of shares subject to such option shall be pro-rated on a monthly basis for time in service.

Each of these options will vest on the twelve-month anniversary of the date of grant of the award (or, if earlier, the date of the next annual meeting of stockholders following the date of grant of the award).

All options issued to our non-employee directors under our director compensation program will be issued at exercise prices equal to the fair market value of our common stock on the date of grant, will vest based on continued service, and will become exercisable in full upon specified change in control events.

The foregoing share numbers for initial and annual option grants to our non-employee directors are subject to adjustment in the event of stock splits, reverse stock splits and other events.

In February 2020, we granted to each of our non-employee directors an option to purchase 12,909 shares of our common stock under our 2020 Plan, each at an exercise price per share of $17.00.

These options will vest on February 5, 2021.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serves, or in the past year has served, as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our board of directors or our compensation committee.

None of the members of our compensation committee is, or has ever been, an officer or employee of our company.

The information required by this Item 11 is incorporated herein by reference from the information that will be contained in our proxy statement related to the 2021 Annual Meeting of Stockholders, which we intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscal year ended December 31, 2020 pursuant to General Instruction G(3) of Form 10-K.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth information with respect to the beneficial ownership of our capital stock as of February 29, 2020 by:

each of our directors;

each of our named executive officers;

all of our directors and executive officers as a group;

each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our capital stock.

The columns entitled “Percentage of Shares Beneficially Owned” are based on a total of 50,091,685 shares of our common stock and 13,164,193 shares of our limited common stock outstanding as of February 29, 2020.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to our common stock and limited common stock.

Shares of our common stock subject to options that are currently exercisable or exercisable within 60 days after February 29, 2020 are considered outstanding and beneficially owned by the person holding the options for the purpose of calculating the percentage ownership of that person but not for the purpose of calculating the percentage ownership of any other person.

Except as otherwise noted, the persons and entities in this table have sole voting and investment power with respect to all of the shares of our common stock and limited common stock beneficially owned by them, subject to community property laws, where applicable.

Except as otherwise set forth below, the address of each beneficial owner is c/o Schrödinger, Inc., 120 West 45 th Street, 17 th Floor, New York, New York 10036.

Number of Shares

Beneficially Owned

Percentage of Shares

Beneficially Owned

Name of Beneficial Owner

5% Stockholders

Bill & Melinda Gates Foundation Trust (1)

Entities affiliated with David E.

Directors and Named Executive Officers

Ramy Farid (3)

Yvonne Tran (4)

Cony D’Cruz (5)

Michael Lynton (6)

Rosana Kapeller-Libermann (8)

Nancy Thornberry

All executive officers and directors as a group

(16 persons) (9)

Less than one percent

Based solely on a Form 4 filed by the Bill & Melinda Gates Foundation Trust, or the Trust, on February 12, 2020.

Consists of (i) 6,981,664 shares of common stock held by the Trust, and (ii) 13,164,193 shares of limited common stock held by the Trust.

For purposes of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, all shares beneficially owned by the Trust may be deemed to be beneficially owned by William H.

Gates III and Melinda French Gates, as Co-Trustees of the Trust.

The address of the Trust is 2365 Carillon Point, Kirkland, Washington 98033.

Based solely on a Form 4 filed jointly by David E.

Shaw and Schrodinger Equity Holdings LLC on February 10, 2020.

Consists of (i) 14,890,845 shares of common stock held by Schrodinger Equity Holdings, LLC, (ii) 1,133,158 shares of common stock held by D.

Shaw & Co., L.P., (iii) 467,889 shares of common stock held by D.

Shaw Valence Portfolios, L.L.C., and (iv) 4,264 shares of common stock held by D.

Shaw Technology Development, LLC.

By virtue of David E.

Shaw’s position as the manager of Schrodinger Equity Holdings, LLC, and by virtue of David E.

Shaw’s position as president and sole shareholder of D.

Shaw & Co., Inc., which is the general partner of D.

Shaw & Co., L.P., which in turn is the investment adviser of D.

Shaw Valence Portfolios, L.L.C., and by virtue of David E.

Shaw’s position as president and sole shareholder of D.

II, Inc., which is the sole member of D.

Shaw Technology Development, LLC and the managing member of D.

Shaw & Co., L.L.C., which in turn is the manager of D.

Shaw Valence Portfolios, L.L.C., David E.

Shaw may be deemed to have the shared power to vote or direct the vote of, and the shared power to dispose or direct the disposition of, the shares held by Schrodinger Equity Holdings, LLC, D.

Shaw & Co., L.P., D.

Shaw Valence Portfolios, L.L.C., and D.

Shaw Technology Development, LLC.

The principal business address of Schrodinger Equity Holdings, LLC and D.

Shaw Technology Development, LLC is 120 West 45 th Street, 39 th Floor, New York, New York 10036;

the principal business address of D.

Shaw & Co., L.P.

Shaw Valence Portfolios, L.L.C.

is 1166 Avenue of the Americas, Ninth Floor, New York, New York 10036.

Consists of (i) 334,432 shares of common stock held by Dr.

Farid and (ii) 331,923 shares of common stock underlying options held by Dr.

Farid that are exercisable as of February 29, 2020 or will become exercisable within 60 days after such date.

Consists of (i) 40,131 shares of common stock held by Ms.

Tran and (ii) 57,289 shares of common stock underlying options held by Ms.

Tran that are exercisable as of February 29, 2020 or will become exercisable within 60 days after such date.

Consists of (i) 173,081 shares of common stock held by Cony and Pearl D’Cruz Revocable Trust dated August 20, 2019, and any amendments thereto, of which Mr.

D’Cruz is a co-trustee, and (ii) 44,735 shares of common stock underlying options held by Mr.

D’Cruz that are exercisable as of February 29, 2020 or will become exercisable within 60 days after such date.

Consists of 45,148 shares of common stock underlying options held by Mr.

Lynton that are exercisable as of February 29, 2020 or will become exercisable within 60 days after such date.

Consists of (i) 1,105,450 shares of common stock held by Dr.

Friesner, (ii) 754,925 shares of common stock held by RF 2018 GRAT, of which Dr.

Friesner is trustee, and (iii) 160,527 shares of common stock underlying options held by Dr.

Friesner that are exercisable as of February 29, 2020 or will become exercisable within 60 days after such date.

Consists of 16,721 shares of common stock underlying options held by Dr.

Kapeller-Libermann that are exercisable as of February 29, 2020 or will become exercisable within 60 days after such date.

Consists of 2,747,131 shares of common stock and 973,722 shares of common stock underlying options that are exercisable as of February 29, 2020 or will become exercisable within 60 days after such date.

Equity Compensation Plan Information

The following table provides certain information with respect to our equity compensation plans in effect as of December 31, 2019:

Plan category

Number of securities

to be issued upon

exercise of outstanding

Weighted-average

exercise price of

Number of securities

remaining available

for future issuance

compensation plans

(excluding securities

column (a)) (c)

Equity compensation plans approved by

security holders :

2010 Stock Plan (1)

Equity compensation plans not approved by

security holders

Our 2010 Stock Plan, which was approved by our board of directors and stockholders, was the only equity compensation plan we had in place as of December 31, 2019.

In connection with our initial public offering in 2020, our board of directors and our stockholders approved two new equity compensation plans, the 2020 Plan and the 2020 ESPP.

Each plan became effective on February 5, 2020.

See “Item 11.

Executive Compensation” for further information regarding the 2020 Plan and the 2020 ESPP.

The information required by this Item 12 is incorporated herein by reference from the information that will be contained in our proxy statement related to the 2021 Annual Meeting of Stockholders, which we intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscal year ended December 31, 2020 pursuant to General Instruction G(3) of Form 10-K.

Certain Relationships and Related Transactions, and Director Independence.

Certain Relationships and Related Transactions

Since January 1, 2018, we have engaged in the following transactions in which the amounts involved exceeded $120,000 and any of our directors, executive officers or holders of more than 5% of our voting securities, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest.

Series E Preferred Stock Financing

From November 9, 2018 to May 14, 2019, we issued and sold an aggregate of 73,795,777 shares of our Series E preferred stock at a price per share of $1.4906 in cash, for an aggregate purchase price of $109,999,985 .

The following table sets forth the aggregate number of shares of our Series E preferred stock that we issued and sold to our holders of more than 5% of our voting securities in this transaction and the aggregate amount of consideration for such shares:

Shares of Series E

Preferred Stock

Cash Purchase

Bill & Melinda Gates Foundation Trust (1)

__________________________

See “Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for additional information about shares held by this entity.

Participation in Initial Public Offering

On February 10, 2020, the Bill & Melinda Gates Foundation Trust, which is a holder of more than 5% of our voting securities, purchased shares of our common stock in our initial public offering.

The following table sets forth the aggregate number of shares of our common stock purchased by such holder and the aggregate amount of consideration paid for such shares:

Consideration

Bill & Melinda Gates Foundation Trust (1)

__________________________

See “Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for additional information about shares held by this entity.

Share Exchange Agreement with Bill & Melinda Gates Foundation Trust

On November 9, 2018, we entered into a share exchange agreement, or the Share Exchange Agreement, with the Bill & Melinda Gates Foundation Trust, a holder of more than 5% of our voting securities.

Under the Share Exchange Agreement, the Bill & Melinda Gates Foundation Trust had the right to elect to exchange all or any portion of its shares of our common stock and/or our preferred stock for shares of our non-voting common stock, at any time without the payment of additional consideration, and we had covenanted to reserve and keep available such number of duly authorized shares of our non-voting common stock as shall be sufficient to permit the Bill & Melinda Gates Foundation Trust to exchange its shares of our common stock and/or our preferred stock for shares of our non-voting common stock.

Under the Share Exchange Agreement, each share of preferred stock was exchangeable for a number of shares of our non-voting common stock that equals the number of shares of common stock into which

such share of preferred stock is then convertible and cash for any fractional shares.

Each share of common stock was exchangeable for one share of our non-voting common stock.

On January 24, 2020, we changed the name of our non-voting common stock to limited common stock and entered into an amended and restated share exchange agreement with the Bill & Melinda Gates Foundation Trust pursuant to which we and the Bill & Melinda Gates Foundation Trust have agreed that in lieu of exchanging shares of their common stock and/or preferred stock into non-voting common stock, they have the right to exchange shares of their common stock and/or preferred stock for limited common stock.

Upon the closing of our initial public offering, the Bill & Melinda Gates Foundation Trust exchanged 98,406,823 shares of its preferred stock for an aggregate of 13,164,193 shares of our limited common stock.

Relationship with Richard Friesner

Consulting Agreement with Richard Friesner

We are party to a consulting agreement with Richard Friesner dated July 1, 1999, as amended, pursuant to which Dr.

Friesner provides certain services related to enhancing, improving and further developing of our molecular modeling software.

Friesner is one of our co-founders and has been a member of our board of directors since 1990.

Under the consulting agreement, we paid Dr.

Friesner $347,000 and $347,000 for consulting services during 2018 and 2019, respectively.

Under his consulting agreement, we have agreed to pay Dr.

Friesner a monthly consulting fee of $28,917 from January 1, 2020 through June 30, 2020, of which $57,833 was paid as of the date hereof.

In addition, on February 5, 2020, our board of directors granted to Dr.

Friesner, in connection with his services to us as a consultant, an option to purchase 535,092 shares of our common stock, at an exercise price of $17.00 per share.

This option vests as to 25% of the shares underlying the option on February 5, 2021 and will vest as to an additional 2.0833% of the original number of shares underlying the options monthly thereafter until February 5, 2024.

Columbia License Agreements and Royalty Payments to Columbia University and Richard Friesner

We have entered into various license agreements with the Trustees of Columbia University, or Columbia University, pursuant to which we license software and code from Columbia University in exchange for our obligation to make specified royalty payments to Columbia University.

For a description of certain of our license agreements with Columbia University, see “Item 1.

Business—License Agreements with Columbia University”.

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, and one of our co-founders and a member of our board of directors, was the inventor of certain of the technologies licensed to us pursuant to certain of our license agreements with Columbia University.

Columbia University distributes a portion of the royalties we pay to it pursuant to such license agreements to Dr.

Friesner and to Dr.

Friesner’s laboratory at Columbia University.

Columbia University distributed $138,047 and $265,618 to Dr.

Friesner on account of royalties we paid to Columbia University in 2018 and 2019, respectively.

Columbia University distributed $218,244 and $480,280 to Dr.

Friesner’s laboratory on account of royalties we paid to Columbia University in 2018 and 2019, respectively.

Gift to Columbia University for Richard Friesner’s Laboratory

On May 31, 2019, we entered into a letter agreement with the Trustees of Columbia University in the City of New York, or the Trustees of Columbia University, pursuant to which we agreed to provide a gift of up to $1,500,000, in five annual installments of $300,000 beginning on June 30, 2019, to the Trustees of Columbia University to establish the Computational Chemistry & Pharmaceutical Sciences Research Fund at Columbia University.

Such gift will be used to support Dr.

Friesner’s laboratory at Columbia University.

As of the date hereof, we have provided $300,000 of the $1,500,000 gift to the Trustees of Columbia University.

Relationship with David Shaw

Services Agreement with D.

Shaw India Private Limited

Schrödinger, LLC, our wholly owned subsidiary, is party to a services agreement, dated as of June 25, 2013 and effective as of January 1, 2013, with D.

Shaw India Private Limited (f/k/a D.

Shaw India Software Private Limited), or DESIS.

DESIS is wholly owned by D.

Shaw & Co., L.P., or DESCO LP.

Shaw, who is a beneficial owner of more than 5% of our voting securities, is a limited partner of DESCO LP and the president and sole shareholder of D.

Shaw & Co., Inc., which is the general partner of DESCO LP.

Pursuant to the services agreement, DESIS provides a number of services to Schrödinger, LLC, including development and maintenance of software, support for technical and scientific research projects, programming, functional testing and validation of products and support for our data entry team.

Schrödinger, LLC paid to DESIS $1,790,410, $1,808,516 and $609,041 for such services in 2018, 2019 and 2020, respectively.

In connection with the services agreement, Schrödinger, LLC also paid to DESCO LP $267,410, $324,162 and $609,041 in 2018, 2019 and 2020, respectively, for certain indirect costs and expenses, including travel-related expenses, incurred by DESCO LP in connection with DESIS’s provision of services to us.

Agreements with D.

Shaw Research LLC

From time to time, Schrödinger, LLC, our wholly owned subsidiary, has engaged in transactions with D.

Shaw Research, LLC, or DESRES.

Shaw, who is a beneficial owner of more than 5% of our voting securities, is the chief scientist and a member of DESRES and the president and sole shareholder of D.

Shaw & Co., II, Inc., the sole member of D.

Shaw Technology Development, LLC, or DESTECH, which is the managing member of DESRES.

Schrödinger, LLC sold licenses to a number of our software products to DESRES in exchange for aggregate consideration of $163,456 in 2018.

From January 1, 2019 through the date hereof, Schrödinger, LLC sold licenses to a number of our software products to DESRES in exchange for aggregate consideration of $147,328.

On March 14, 2013, Schrödinger, LLC entered into a license and software development agreement with DESRES.

Pursuant to the agreement, Schrödinger, LLC and DESRES agreed to develop and commercialize a software product, referred to as the Desmond/GPU Product, which combines certain of our software with certain DESRES software related to molecular simulation in connection with graphic processing units, which we refer to as the GPU DESRES Software.

Under the agreement, Schrödinger, LLC and DESRES license each other’s software so as to enable (i) Schrödinger, LLC and DESRES to market and distribute the Desmond/GPU Product and (ii) Schrödinger, LLC to market and distribute any of our other products, or the Other Schrödinger Products, incorporating or statically or dynamically linking to any portion of the GPU DESRES Software.

Schrödinger, LLC pays to DESRES a royalty equal to a low double-digit percentage of annual payments received by Schrödinger, LLC for licensing, leasing, renting or providing maintenance on the Desmond/GPU Product and any Other Schrödinger Product.

Such royalties are calculated on a graduated basis and are payable in perpetuity.

In addition, in the event Schrödinger, LLC performs services using the Desmond/GPU Product or Other Schrödinger Products on behalf of or in collaboration with third parties, Schrödinger, LLC pays to DESRES a single-digit royalty on the services fees that directly relate to such usage.

Schrödinger, LLC paid to DESRES $981,500 , $1,880,209 and $695,712 in royalties in 2018, 2019 and 2020, respectively .

To the extent DESRES were to commercially market or distribute the Desmond/GPU Product, we would be entitled to a royalty equal to a mid-double digit percentage of annual payments received by DESRES for licensing, leasing, renting or providing maintenance on the Desmond/GPU Product.

Such royalties are calculated on a graduated basis and are payable in perpetuity.

DESRES does not currently commercially sell or license the Desmond/GPU Product, and as such, DESRES did not pay us any royalties from January 1, 201 8 through the date hereof.

On May 20, 2014, Schrödinger, LLC entered into an amended and restated license and software development agreement with DESRES.

Pursuant to the agreement, Schrödinger, LLC and DESRES agreed to develop and commercialize a software product, or the Software Product, which combines certain of our software with certain DESRES software related to molecular simulation for central processing units, or the DESRES Software.

Under the agreement, Schrödinger, LLC and DESRES license each other’s software so as to enable (i) Schrödinger, LLC and DESRES to market and distribute the Software Product, and (ii) Schrödinger, LLC to market and distribute any of our other products, or the Other Schrödinger Software Products, incorporating or statically or dynamically linking to any portion of the DESRES Software.

Schrödinger, LLC pays to DESRES a royalty equal to a low-double-digit percentage of annual payments received by Schrödinger, LLC for licensing, leasing, renting or providing maintenance on the Software Product and any Other Schrödinger Software Product.

Such royalties are calculated on a graduated basis and are payable in perpetuity.

In addition, in the event Schrödinger, LLC performs services using the Software Product or Other Schrödinger Software Products on behalf of or in collaboration with third parties, Schrödinger, LLC pays to DESRES a single-digit royalty on the services fees that directly relate to such usage.

The royalties are graduated and are payable in perpetuity.

Under the agreement, Schrödinger, LLC paid to DESRES $ 591,796, $601,141 and $130,000 in aggregate royalties in 2018, 2019 and 2020, respectively.

To the extent DESRES were to commercially market or distribute the Software Product, we would be entitled to a royalty equal to a mid double-digit percentage of annual payments received by DESRES for licensing, leasing, renting or providing maintenance on the Software Product.

Such royalties are calculated on a graduated basis and are payable in perpetuity.

DESRES does not currently commercially sell or license the Software Product, and as such, DESRES did not pay us any royalties from January 1, 2018 through the date hereof.

Under both license and software development agreements, Schrödinger, LLC provides certain maintenance and support services for end users using the software product under unpaid non-commercial licenses.

In consideration of these maintenance and support services, DESRES paid to Schrödinger, LLC $50,023, $51,544 and $13,042 in 2018, 2019 and 2020, respectively .

Charles Ardai, the managing director of DESTECH, previously served as a member of our board of directors.

He resigned from our board of directors in October 2018.

Registration Rights

We are a party to an investor rights agreement with certain holders of our voting securities, including our 5% stockholders and their affiliates.

This investor rights agreement provides these holders the right, subject to certain conditions, to demand that we file a registration statement or to request that their shares be covered by a registration statement that we are otherwise filing.

Indemnification Agreements

Our certificate of incorporation provides that we will indemnify our directors and officers to the fullest extent permitted by Delaware law.

In addition, we have entered into indemnification agreements with all of our directors and executive officers.

These indemnification agreements may require us, among other things, to indemnify each such director or executive officer for some expenses, including attorneys’ fees, judgments, fines, and settlement amounts incurred by him or her in any action or proceeding arising out of his or her service as one of our directors or executive officers.

Employment Arrangements

We have entered into employment agreements with our executive officers.

For more information regarding the agreements with our named executive officers, see “Item 11.

Executive Compensation.”

Policies and Procedures for Related Person Transactions

Our board of directors has adopted written policies and procedures for the review of any transaction, arrangement, or relationship in which our company is a participant, the amount involved exceeds $120,000 and one of our executive officers, directors, director nominees, or 5% stockholders, or their immediate family members, each of whom we refer to as a “related person,” has a direct or indirect material interest.

If a related person proposes to enter into such a transaction, arrangement, or relationship, which we refer to as a “related person transaction,” the related person must report the proposed related person transaction to our chief legal officer.

The policy calls for the proposed related person transaction to be reviewed and, if deemed appropriate, approved by our audit committee.

Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction.

If advance review and approval is not practicable, the committee will review, and, in its discretion, may ratify the related person transaction.

The policy also permits the chairman of the audit committee to review and, if deemed appropriate, approve proposed related person transactions that arise between committee meetings, subject to ratification by the committee at its next meeting.

Any related person transactions that are ongoing in nature will be reviewed annually.

A related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the audit committee after full disclosure of the related person’s interest in the transaction.

As appropriate for the circumstances, the audit committee will review and consider:

the related person’s interest in the related person transaction;

the approximate dollar value of the amount involved in the related person transaction;

the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss;

whether the transaction was undertaken in the ordinary course of our business;

whether the terms of the transaction are no less favorable to us than terms that could have been reached with an unrelated third party;

the purpose, and the potential benefits to us, of the transaction;

any other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.

Our audit committee may approve or ratify the transaction only if it determines that, under all of the circumstances, the transaction is in, or is not inconsistent with, our best interests.

Our audit committee may impose any conditions on the related person transaction that it deems appropriate.

In addition to the transactions that are excluded by the instructions to the Securities and Exchange Commission’s related person transaction disclosure rule, our board of directors has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy:

interests arising solely from the related person’s position as an executive officer of another entity, whether or not the person is also a director of the entity, that is a participant in the transaction where the related person and all other related persons own in the aggregate less than a 10% equity interest in such entity, the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction and the amount involved in the transaction is less than the greater of $200,000 or 5% of the annual gross revenues of the company receiving payment under the transaction;

a transaction that is specifically contemplated by provisions of our certificate of incorporation or bylaws.

The policy provides that transactions involving compensation of executive officers shall be reviewed and approved by our compensation committee in the manner specified in the compensation committee’s charter.

We did not have a written policy regarding the review and approval of related person transactions prior to our initial public offering.

Nevertheless, with respect to such transactions, it has been the practice of our board of directors to consider the nature of and business reasons for such transactions, how the terms of such transactions compared to those which might be obtained from unaffiliated third parties and whether such transactions were otherwise fair to and in the best interests of, or not contrary to, our best interests.

Director Independence

Applicable Nasdaq rules require a majority of a listed company’s board of directors to be comprised of independent directors within one year of listing.

In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating, and corporate governance committees be independent.

Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act, and compensation committee members must also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act.

Under applicable Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of the listed company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries.

In order to be considered independent for purposes of Rule 10C-1, the

board must consider, for each member of a compensation committee of a listed company, all factors specifically relevant to determining whether a director has a relationship to such company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to:

(1) the source of compensation of the director, including any consulting advisory or other compensatory fee paid by such company to the director;

and (2) whether the director is affiliated with the company or any of its subsidiaries or affiliates.

In December 2019, our board of directors undertook a review of the composition of our board of directors and its committees and the independence of each director.

Based upon information requested from and provided by each director concerning his or her background, employment, and affiliations, including family relationships, our board of directors has determined that each of our directors, with the exception of Dr.

Farid and Dr.

Friesner, is an “independent director” as defined under applicable Nasdaq rules, including, in the case of all the members of our audit committee, the independence criteria set forth in Rule 10A-3 under the Exchange Act, and in the case of all the members of our compensation committee, the independence criteria set forth in Rule 10C-1 under the Exchange Act.

In making such determination, our board of directors considered the relationships that each such non-employee director has with our company and all other facts and circumstances that our board of directors deemed relevant in determining his or her independence, including the beneficial ownership of our capital stock by each non-employee director.

Farid is not an independent director under these rules because he is our president and chief executive officer, and Dr.

Friesner is not an independent director under these rules because he has received more than $120,000 in consulting fees from us during a 12-month period within the last three years.

See “Item 13.

Certain Relationships and Related Transactions, and Director Independence” for more information regarding Dr.

Principal Accounting Fees and Services.

Fees Paid to Independent Auditors

The following table summarizes the aggregate fees paid or accrued by us for professional services provided by KPMG LLP, our independent registered public accounting firm, in the fiscal years ended December 31, 2018 and 2019.

Audit-Related Fees

All Other Fees

This category consists of professional services provided by KPMG LLP in connection with the audit of our annual consolidated financial statements and the review of our unaudited quarterly consolidated financial statements.

The fees for fiscal year 2019 included services in connection with our initial public offering.

Audit-Related Fees.

This category consists of assurance and related services provided by KPMG LLP that were reasonably related to the performance of the audit or review of our consolidated financial statements and which are not reported above under “Audit Fees”.

This category consists primarily of professional services provided by KPMG LLP that encompass a variety of permissible tax services, including federal and state tax compliance services, technical tax advice related to federal and state income tax matters, assistance with sales tax, and other tax consulting matters.

All Other Fees.

This category consists of professional services other than the services reported in audit fees, audit-related fees, and tax fees.

There were no such services or fees for fiscal years 2018 and 2019.

In fiscal years 2018 and 2019, all audit, audit-related, tax and all other services and fees were pre-approved by our audit committee.

Our audit committee considered whether the non-audit services provided to us by KPMG LLP were compatible with maintaining the independence of KPMG LLP from us and determined that the provision of these services by KPMG LLP was compatible with maintaining that independence.

Pre-Approval Policies and Procedures

In March 2020, our audit committee adopted policies and procedures relating to the approval of all audit and other permitted non-audit services provided to us by our independent auditors.

These policies provide that we will not engage our independent auditors to render audit or non-audit services unless the service is specifically approved in advance by our audit committee or the engagement to render the service is entered into pursuant to the pre-approval procedure.

From time to time, our audit committee may pre-approve services that are expected to be provided to us by the independent auditors during the next 12 months.

These services may include audit services, audit-related services, tax services and other permissible non-audit services.

Our independent auditors and senior management will periodically report to the audit committee regarding the extent of services provided by the independent auditors.

Exhibits, Financial Statement Schedules.

The information required by this Item 13 is incorporated herein by reference from the information that will be contained in our proxy statement related to the 2021 Annual Meeting of Stockholders, which we intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscal year ended December 31, 2020 pursuant to General Instruction G(3) of Form 10-K.

Principal Accountant Fees and Services.

The information required by this Item 14 is incorporated herein by reference from the information that will be contained in our proxy statement related to the 2021 Annual Meeting of Stockholders, which we intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscal year ended December 31, 2020 pursuant to General Instruction G(3) of Form 10-K.

Exhibits and Financial Statement Schedules.

Financial Statements

22 unchanged sentences

2020 Employee Stock Purchase Plan

Director Compensation Policy

Second Amended and Restated Director Compensation Policy

Senior Executive Incentive Compensation Plan

28 unchanged sentences

Global Bonus Plan

Independent Contractor Agreement, dated June 23, 2020, by and between the Registrant and Gates Ventures, LLC

Restricted Stock Unit Agreement for Non-U.S.

Participants under the 2020 Equity Incentive Plan

Stock Option Agreement for Non-U.S.

Participants under the 2020 Equity Incentive Plan

Collaboration and License Agreement, dated November 22, 2020, by and between the Registrant and Bristol-Myers Squibb Company

2021 Inducement Equity Incentive Plan

Nonstatutory Stock Option Agreement under 2021 Inducement Equity Incentive Plan

Restricted Stock Unit Agreement for U.S.

Participants under 2021 Inducement Equity Incentive Plan

Restricted Stock Unit Agreement for Non-U.S.

Participants under 2021 Inducement Equity Incentive Plan

Subsidiaries of the Registrant

6 unchanged sentences

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

21 unchanged sentences

/s/ Jenny Herman

Vice President, Controller

Senior Vice President, Controller

March 4, 2021

4 unchanged sentences

Michael Lynton

/s/ Jeffrey Chodakewitz

March 4, 2021

Jeffrey Chodakewitz, M.D.

/s/ Richard Friesner

1 unchanged sentence

Richard Friesner, Ph.D.

/s/ Gary Ginsberg

March 4, 2021

Gary Ginsberg

/s/ Rosana Kapeller-Libermann

10 unchanged sentences

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 9A. Controls and Procedures