Shares of Schrödinger Inc. (SDGR) surged over 7% in pre-market trading on Monday after the computational drug discovery company announced a major collaboration deal with pharmaceutical giant Novartis.

Under the multi-year agreement, Schrödinger will work with Novartis to advance multiple drug development candidates into Novartis's portfolio across various therapeutic areas. Schrödinger will receive an upfront payment of $150 million from Novartis, and is eligible for up to $2.3 billion in additional milestone payments and royalties on future product sales if the collaboration is successful.

The deal also includes an expanded multi-year software licensing agreement that will allow Novartis to deploy Schrödinger's computational modeling and enterprise informatics platform at a significant scale across its global research organization. This expanded access to Schrödinger's AI-driven drug discovery technologies is aimed at accelerating Novartis's drug development efforts.