Weekend Update #233
Thank you for your continued support and engagement. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.
Equity markets began the week with optimism as officials from the U.S. and China met to discuss trade talks and a positive CPI report provided relief to investors, but an escalation of conflict between Iran and Israel caused a defensive repositioning to end the week. Commerce Secretary Howard Lutnick led 20 hours of trade negotiations with Chinese officials, which enabled progress on export controls from both sides and established a negotiation framework going forward. President Trump alluded to further action to speed up trade talks globally on Thursday with a threat of unilateral tariffs to be reinstated in the next 1-2 weeks. On Thursday night, Israeli Prime Minister Benjamin Netanyahu initiated missile strikes on Iranian nuclear sites. This sparked a swift Friday night response in which Iran launched missile attacks on civilian areas in Tel Aviv. Israel promised a severe response to Iran “crossing red lines” on Friday night. U.S. officials and Tehran were scheduled to meet on Sunday to discuss nuclear negotiations, but Tehran has signaled that Israel’s attacks have derailed these discussions.
In economic news for the week, the May CPI report was the key focus, where inflation came in cooler-than-expected across most key measures. CPI rose 0.1% month-over-month and 2.4% year-over-year, while core CPI rose 0.1% month-over-month and 2.8% year-over-year. This was the first full month of inflation data following Liberation Day tariff measures, and the hard data did not show significant price pressures taking effect. The May PPI report also showed lower-than-expected pricing pressures on producers. May’s NFIB Small Business Optimism report showed the first sentiment increase in 2025 as progress on tariffs and the tax bill both aided the economic outlook. The consumer outlook followed the small business outlook, with Consumer Sentiment rising for the first time in 6 months, driven by improved outlooks on inflation and personal finances.
With the fear of further escalation of conflict in the Middle East, Brent crude oil prices rose 7.7% to $74.72 per barrel on Friday. The heightened geopolitical conflict caused defense firm shares LMT, LHX, RTX to gain. Airline stocks AAL, UAL, and DAL all fell as air travel in the Middle East was rerouted and broader disruptions are expected. Market participants will closely monitor geopolitical developments over the weekend as Iran and Israel have escalated the severity of attacks and the speed of military action from the prior tit-for-tat attacks in October. The Federal Reserve’s FOMC is scheduled to meet next Tuesday and Wednesday, where the committee will discuss monetary policy decisions based on recent economic data. Investors will listen closely to the Federal Reserve’s messaging, given that better-than-expected inflation data is a welcome development while geopolitical uncertainty is increasing at the same time.
Friday’s Close (Weekly Performance)
S&P 500 5,976.97 (-0.39%)
Nasdaq 19,406.83 (-0.63%)
Dow Jones 42,197.79 (-1.32%)
Thank you Blue Room Senior Analyst JARED FENLEY.
Consumer sentiment improved for the first time in six months, climbing 16% from last month to 60.5 but remaining about 20% below December 2024, when sentiment had exhibited a post-election bump.
These trends were unanimous across the distributions of age, income, wealth, political party, and geographic region. Moreover, all five index components rose, with a particularly steep increase for short and long-run expected business conditions, consistent with a perceived easing of pressures from tariffs.
Consumers appear to have settled somewhat from the shock of the extremely high tariffs announced in April and the policy volatility seen in the weeks that followed. However, consumers still perceive wide-ranging downside risks to the economy.
Their views of business conditions, personal finances, buying conditions for big ticket items, labor markets, and stock markets all remain well below six months ago in December 2024. Despite this month’s notable improvement, consumers remain guarded and concerned about the trajectory of the economy.
Company Participants
Ramy Farid — President & Chief Executive Officer
Karen Akinsanya — President, Head of Therapeutics R&D & Chief Strategy Officer, Partnerships
Margaret Dugan — Chief Medical Officer
Jaren Madden — Chief Corporate Affairs Officer and Head of Investor Relations
Conference Call Participants
Kyle Yang — Jefferies
Michael Yee — Jefferies
Connor McKay (on for Evan Seigerman) — BMO Capital Markets
Ryan (on for Mani Foroohar) — Leerink Partners
Vikram Purohit — Morgan Stanley
Ike Lee (on for David Lebowitz) — Citi
Matt Hewitt — Craig-Hallum
Jackie (on for Brendan Smith) — TD Cowen
Ramy Farid — President & Chief Executive Officer
Thanks, Jaren, and thank you everyone for joining us. It's a really exciting day for Schrödinger with the first presentation of clinical data from our proprietary pipeline at EHA. Before I hand things over to Karen and Margaret to walk through and detail our MALT1 program, I'd like to give you a quick overview of the company.
So as you can see, we have three businesses that synergistically generate value from our computational processes. We license our software to pharmaceutical, biotech, and material science companies, and also academic institutions globally. As you can see here, we have about 1,800 customers, and our retention rate is extremely high. In fact, it's 100% in the cohort of customers spending over $100,000 per year.
We also have a collaboration business where we earn upfront payments and milestones and are eligible for royalties on sales. We've also co-founded a number of biotech companies in which we have equity stakes.
Finally, in the third box there you see we have our proprietary pipeline, including our three programs in phase 1, where we have the potential to generate value through partnerships or other collaborations.
As I said earlier, these businesses are highly synergistic. We received significant feedback from our customers which is used of course to enhance our platform, which in turn benefits our collaborators and our proprietary programs. And the extensive validation we've gotten from our collaborations and proprietary programs has really been instrumental in growing our software business.
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ECONOMIC CHARTS
by Minyoung Sohn
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ART
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FAQ: "Oh I kind of get it, but can you tell me a little more?"
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Museum of Contemporary Art Denver
1485 Delgany Street
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MCA Denver Holiday Theater
2644 West 32nd Avenue
Denver, CO 80211
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