Welcome!

Eclipse Authors: Pat Romanski, Elizabeth White, Liz McMillan, David H Deans, JP Morgenthal

News Feed Item

Simulations Plus Provides Additional Details Regarding Cognigen Acquisition

Simulations Plus, Inc. (NASDAQ: SLP), a leading provider of simulation and modeling software for pharmaceutical discovery and development, today provided additional details regarding its Agreement and Plan of Merger (the “Agreement”) with Cognigen Corporation (“Cognigen”) of Buffalo, New York, announced yesterday.

Walt Woltosz, chairman and chief executive officer of Simulations Plus, Inc., said: “The excitement around this announcement has generated a number of questions on the part of our shareholders. In order to provide a level playing field for everyone, we are providing answers to the questions we have received to the market all at once through this release, and we will conduct an investor conference call tomorrow right after the close of the market. Answers to those questions we can answer at this time are provided below.”

Q. What is the current cash position of Simulations Plus, Inc. post-transaction, and should we expect the dividend to continue at the current rate?
A. The Board of Directors of Simulations Plus, Inc. (the “Board”) has indicated that they anticipate the dividend will continue at the current rate for the foreseeable future; however, the Board votes on this issue each quarter and reserves the right to increase, decrease, or discontinue dividend distributions as the cash needs of the business dictate. As of today, cash is approximately $9.5 million. Following the closing of the transactions contemplated by the Agreement, which we expect to occur on September 2, 2014, after the current Simulations Plus fiscal year closes on August 31, 2014, cash is expected to be approximately $6 million.

Q. Does Cognigen have any debt?
A. There will be no Cognigen debt at the close of the transaction.

Q. What will be the name of the new company?
A. Simulations Plus will continue to be Simulations Plus, Inc. Cognigen will be “Cognigen, a wholly owned subsidiary of Simulations Plus.”

Q. What share price will be used to determine the number of shares to be issued to the Cognigen shareholders?
A. The volume-weighted average trading price for the 30 trading days two days prior to closing.

Q. Is a Simulations Plus shareholder vote required?
A. The number of shares anticipated to be issued is currently expected to be well below the threshold that would require a shareholder vote under applicable law.

Q. Does Cognigen have similar revenue seasonality to Simulations Plus, Inc.?
A. Cognigen has not previously experienced a significant seasonality.

Q. What will the expected $5 million in new revenues add to EBITDA and EPS?
A. Simulations Plus does not provide earnings guidance. As noted in the initial press release, Cognigen is a profitable company and the Company anticipates it will continue to operate profitably. Because Cognigen’s revenues come primarily from consulting activities, the margins are not as high as for Simulations Plus’ software offerings, but management anticipates net margins of approximately 10 percent going forward.

Q. At what rate over the trailing 12 months has Cognigen been growing revenue and net income?
A. Revenue growth through May 31, 2014 has been just over 7%. Net income has not yet been determined for the period.

Q. What cost synergies are expected?
A1. One anticipated synergy will be in marketing and sales, where Cognigen will be able to “piggy-back” on the marketing and sales programs from Simulations Plus at minimal additional cost. Simulations Plus attends 50 to 60 conferences/shows per year, exhibiting at a majority of them. Cognigen has not exhibited at more than one or two shows per year, relying on the Company’s strong reputation to generate sales. Simulations Plus will be taking over all financial transactions, freeing up senior Cognigen management to participate in expanded marketing and sales activities. Management anticipates these activities to begin in the fall of 2014. Note that no staff reductions are planned for either company – management hopes all of Cognigen’s employees will stay on and participate in the combined company as new members of the Simulations Plus family.

A2. A second potential synergy involves Cognigen’s in-house cloud facility – a modern, secure capability used in their work. The capacity of the Cognigen cloud should be approximately doubled at minimal cost to accommodate hosting Simulations Plus software. Several Simulations Plus customers are currently asking for cloud-based capabilities and management has been testing using the Amazon cloud. Whether the Company would remain on the Amazon cloud or move some or all of the cloud-based offerings to the Cognigen cloud will require a study to determine the most cost-effective way to operate. Cognigen has built a resource and has IT staff who are familiar with not only operation of the cloud, but such activities as programming for parallel processing, and management anticipates there should be benefit to Simulations Plus as well as Cognigen.

A3. A third potential synergy is expected from the Simulations Plus customer base, which is larger than Cognigen’s and includes most of Cognigen’s customers, but from different departments. Cross-selling will be a focus, as each company will have the opportunity to be introduced to the other’s customers and relationships.

Q. Aside from the revenue metrics, what financial metrics and multiples were used in determining the purchase price?
A. A combination of multiples involving sales, revenues, and EBITDA were used in comparison with recent deals in the industry, along with consideration of the strategic value and financial potential of combining the capabilities of the two companies going forward.

Q. What are the cross-selling opportunities for customers of both companies?
A. This is one of the primary strategic reasons for this acquisition. Regulatory agencies have begun to take strong interest in using physiologically based pharmacokinetics (“PBPK” – a major strength of Simulations Plus) in clinical trial data analysis (a major strength of Cognigen). Management believes the combined capabilities of Simulations Plus and Cognigen will provide the industry with what the Company believes is a best-in-class offering to meet this new opportunity.

Q. Where do Cognigen’s product offerings fit within Simulations Plus’ product suite? Are there any competitive products or expected cannibalization of revenue from overlap?
A. Cognigen’s business is primarily analysis and reporting of clinical trial data. There is also a relatively new software product called KIWI, which manages much of the workflow for this type of work, and is currently in use at a small number of pharmaceutical companies. These services and software do not overlap with Simulations Plus’ business. There is a very small part of Simulations Plus’ consulting services that does similar calculations to some of Cognigen’s activities; however, the nature of Simulations Plus’ consulting contracts is quite different than Cognigen’s, so management does not expect any loss in revenues on either side. On the contrary, management expects the synergies of the combined capabilities of the two companies should provide growth opportunities that exceed those for either company alone.

Q. Is all of the software used by Cognigen homegrown/fully owned by the company?
A. Cognigen uses a mix of proprietary software and standard commercial and open-source software licensed by industry scientists for clinical trial data analysis.

Investor Conference Call

The Company will hold an investor conference call on Friday, July 25, at 1:15 PM PT/4:15 PM ET. The call will be webcast live and may be joined by registering at the following website: https://www2.gotomeeting.com/register/346573050. Upon registering, you will receive a confirmation e-mail with a unique link and instructions for joining the call. Please dial in five to ten minutes prior to the scheduled start time. For listen-only mode, you may dial 646-307-1705, and enter access code: 630-706-152.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 – With the exception of historical information, the matters discussed in this press release are forward-looking statements that involve a number of risks and uncertainties. Words like “believe,” “expect” and “anticipate” mean that these are our best estimates as of this writing, but that there can be no assurances that expected or anticipated results or events will actually take place, so our actual future results could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to maintain our competitive advantages, acceptance of new software and improved versions of our existing software by our customers, the general economics of the pharmaceutical industry, our ability to finance growth, our ability to continue to attract and retain highly qualified technical staff, our ability to properly manage the new combined company, and a sustainable market. Further information on our risk factors is contained in our quarterly and annual reports as filed with the U.S. Securities and Exchange Commission.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
Nordstrom is transforming the way that they do business and the cloud is the key to enabling speed and hyper personalized customer experiences. In his session at 21st Cloud Expo, Ken Schow, VP of Engineering at Nordstrom, will discuss some of the key learnings and common pitfalls of large enterprises moving to the cloud. This includes strategies around choosing a cloud provider(s), architecture, and lessons learned. In addition, he’ll go over some of the best practices for structured team migrat...
SYS-CON Events announced today that Taica will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Taica manufacturers Alpha-GEL brand silicone components and materials, which maintain outstanding performance over a wide temperature range -40C to +200C. For more information, visit http://www.taica.co.jp/english/.
SYS-CON Events announced today that MIRAI Inc. will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. MIRAI Inc. are IT consultants from the public sector whose mission is to solve social issues by technology and innovation and to create a meaningful future for people.
Recently, REAN Cloud built a digital concierge for a North Carolina hospital that had observed that most patient call button questions were repetitive. In addition, the paper-based process used to measure patient health metrics was laborious, not in real-time and sometimes error-prone. In their session at 21st Cloud Expo, Sean Finnerty, Executive Director, Practice Lead, Health Care & Life Science at REAN Cloud, and Dr. S.P.T. Krishnan, Principal Architect at REAN Cloud, will discuss how they bu...
Coca-Cola’s Google powered digital signage system lays the groundwork for a more valuable connection between Coke and its customers. Digital signs pair software with high-resolution displays so that a message can be changed instantly based on what the operator wants to communicate or sell. In their Day 3 Keynote at 21st Cloud Expo, Greg Chambers, Global Group Director, Digital Innovation, Coca-Cola, and Vidya Nagarajan, a Senior Product Manager at Google, will discuss how from store operations...
As hybrid cloud becomes the de-facto standard mode of operation for most enterprises, new challenges arise on how to efficiently and economically share data across environments. In his session at 21st Cloud Expo, Dr. Allon Cohen, VP of Product at Elastifile, will explore new techniques and best practices that help enterprise IT benefit from the advantages of hybrid cloud environments by enabling data availability for both legacy enterprise and cloud-native mission critical applications. By rev...
Join IBM November 1 at 21st Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA, and learn how IBM Watson can bring cognitive services and AI to intelligent, unmanned systems. Cognitive analysis impacts today’s systems with unparalleled ability that were previously available only to manned, back-end operations. Thanks to cloud processing, IBM Watson can bring cognitive services and AI to intelligent, unmanned systems. Imagine a robot vacuum that becomes your personal assistant tha...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
SYS-CON Events announced today that Datera will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Datera offers a radically new approach to data management, where innovative software makes data infrastructure invisible, elastic and able to perform at the highest level. It eliminates hardware lock-in and gives IT organizations the choice to source x86 server nodes, with business model option...
Infoblox delivers Actionable Network Intelligence to enterprise, government, and service provider customers around the world. They are the industry leader in DNS, DHCP, and IP address management, the category known as DDI. We empower thousands of organizations to control and secure their networks from the core-enabling them to increase efficiency and visibility, improve customer service, and meet compliance requirements.
Digital transformation is changing the face of business. The IDC predicts that enterprises will commit to a massive new scale of digital transformation, to stake out leadership positions in the "digital transformation economy." Accordingly, attendees at the upcoming Cloud Expo | @ThingsExpo at the Santa Clara Convention Center in Santa Clara, CA, Oct 31-Nov 2, will find fresh new content in a new track called Enterprise Cloud & Digital Transformation.
SYS-CON Events announced today that N3N will exhibit at SYS-CON's @ThingsExpo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. N3N’s solutions increase the effectiveness of operations and control centers, increase the value of IoT investments, and facilitate real-time operational decision making. N3N enables operations teams with a four dimensional digital “big board” that consolidates real-time live video feeds alongside IoT sensor data a...
SYS-CON Events announced today that NetApp has been named “Bronze Sponsor” of SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. NetApp is the data authority for hybrid cloud. NetApp provides a full range of hybrid cloud data services that simplify management of applications and data across cloud and on-premises environments to accelerate digital transformation. Together with their partners, NetApp emp...
Smart cities have the potential to change our lives at so many levels for citizens: less pollution, reduced parking obstacles, better health, education and more energy savings. Real-time data streaming and the Internet of Things (IoT) possess the power to turn this vision into a reality. However, most organizations today are building their data infrastructure to focus solely on addressing immediate business needs vs. a platform capable of quickly adapting emerging technologies to address future ...
SYS-CON Events announced today that Avere Systems, a leading provider of hybrid cloud enablement solutions, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Avere Systems was created by file systems experts determined to reinvent storage by changing the way enterprises thought about and bought storage resources. With decades of experience behind the company’s founders, Avere got its ...
SYS-CON Events announced today that Avere Systems, a leading provider of enterprise storage for the hybrid cloud, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Avere delivers a more modern architectural approach to storage that doesn't require the overprovisioning of storage capacity to achieve performance, overspending on expensive storage media for inactive data or the overbui...
SYS-CON Events announced today that IBM has been named “Diamond Sponsor” of SYS-CON's 21st Cloud Expo, which will take place on October 31 through November 2nd 2017 at the Santa Clara Convention Center in Santa Clara, California.
SYS-CON Events announced today that Ryobi Systems will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Ryobi Systems Co., Ltd., as an information service company, specialized in business support for local governments and medical industry. We are challenging to achive the precision farming with AI. For more information, visit http:...
High-velocity engineering teams are applying not only continuous delivery processes, but also lessons in experimentation from established leaders like Amazon, Netflix, and Facebook. These companies have made experimentation a foundation for their release processes, allowing them to try out major feature releases and redesigns within smaller groups before making them broadly available. In his session at 21st Cloud Expo, Brian Lucas, Senior Staff Engineer at Optimizely, will discuss how by using...
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lead...