Welcome!

Eclipse Authors: Liz McMillan, David H Deans, JP Morgenthal, Mano Marks, Yeshim Deniz

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
SYS-CON Events announced today that CA Technologies has been named "Platinum Sponsor" of SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business - from apparel to energy - is being rewritten by software. From planning to development to management to security, CA creates software that fuels transformation for companies in the applic...
"When we talk about cloud without compromise what we're talking about is that when people think about 'I need the flexibility of the cloud' - it's the ability to create applications and run them in a cloud environment that's far more flexible,” explained Matthew Finnie, CTO of Interoute, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
In his session at @ThingsExpo, Eric Lachapelle, CEO of the Professional Evaluation and Certification Board (PECB), provided an overview of various initiatives to certify the security of connected devices and future trends in ensuring public trust of IoT. Eric Lachapelle is the Chief Executive Officer of the Professional Evaluation and Certification Board (PECB), an international certification body. His role is to help companies and individuals to achieve professional, accredited and worldwide re...
Amazon started as an online bookseller 20 years ago. Since then, it has evolved into a technology juggernaut that has disrupted multiple markets and industries and touches many aspects of our lives. It is a relentless technology and business model innovator driving disruption throughout numerous ecosystems. Amazon’s AWS revenues alone are approaching $16B a year making it one of the largest IT companies in the world. With dominant offerings in Cloud, IoT, eCommerce, Big Data, AI, Digital Assista...
When growing capacity and power in the data center, the architectural trade-offs between server scale-up vs. scale-out continue to be debated. Both approaches are valid: scale-out adds multiple, smaller servers running in a distributed computing model, while scale-up adds fewer, more powerful servers that are capable of running larger workloads. It’s worth noting that there are additional, unique advantages that scale-up architectures offer. One big advantage is large memory and compute capacity...
Internet of @ThingsExpo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devic...
IoT solutions exploit operational data generated by Internet-connected smart “things” for the purpose of gaining operational insight and producing “better outcomes” (for example, create new business models, eliminate unscheduled maintenance, etc.). The explosive proliferation of IoT solutions will result in an exponential growth in the volume of IoT data, precipitating significant Information Governance issues: who owns the IoT data, what are the rights/duties of IoT solutions adopters towards t...
With the introduction of IoT and Smart Living in every aspect of our lives, one question has become relevant: What are the security implications? To answer this, first we have to look and explore the security models of the technologies that IoT is founded upon. In his session at @ThingsExpo, Nevi Kaja, a Research Engineer at Ford Motor Company, discussed some of the security challenges of the IoT infrastructure and related how these aspects impact Smart Living. The material was delivered interac...
No hype cycles or predictions of zillions of things here. IoT is big. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, Associate Partner at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He discussed the evaluation of communication standards and IoT messaging protocols, data analytics considerations, edge-to-cloud tec...
The Internet giants are fully embracing AI. All the services they offer to their customers are aimed at drawing a map of the world with the data they get. The AIs from these companies are used to build disruptive approaches that cannot be used by established enterprises, which are threatened by these disruptions. However, most leaders underestimate the effect this will have on their businesses. In his session at 21st Cloud Expo, Rene Buest, Director Market Research & Technology Evangelism at Ara...
Artificial intelligence, machine learning, neural networks. We’re in the midst of a wave of excitement around AI such as hasn’t been seen for a few decades. But those previous periods of inflated expectations led to troughs of disappointment. Will this time be different? Most likely. Applications of AI such as predictive analytics are already decreasing costs and improving reliability of industrial machinery. Furthermore, the funding and research going into AI now comes from a wide range of com...
We build IoT infrastructure products - when you have to integrate different devices, different systems and cloud you have to build an application to do that but we eliminate the need to build an application. Our products can integrate any device, any system, any cloud regardless of protocol," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA
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 Enzu will exhibit at SYS-CON's 21st Int\ernational Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Enzu’s mission is to be the leading provider of enterprise cloud solutions worldwide. Enzu enables online businesses to use its IT infrastructure to their competitive advantage. By offering a suite of proven hosting and management services, Enzu wants companies to focus on the core of their ...
SYS-CON Events announced today that Cloud Academy named "Bronze Sponsor" of 21st International Cloud Expo which will take place October 31 - November 2, 2017 at the Santa Clara Convention Center in Santa Clara, CA. Cloud Academy is the industry’s most innovative, vendor-neutral cloud technology training platform. Cloud Academy provides continuous learning solutions for individuals and enterprise teams for Amazon Web Services, Microsoft Azure, Google Cloud Platform, and the most popular cloud com...
SYS-CON Events announced today that MobiDev, a client-oriented software development company, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex software systems for startups and enterprises. Since 2009 it has grown from a small group of passionate engineers and business...
SYS-CON Events announced today that GrapeUp, the leading provider of rapid product development at the speed of business, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Grape Up is a software company, specialized in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market acr...
SYS-CON Events announced today that Ayehu will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on October 31 - November 2, 2017 at the Santa Clara Convention Center in Santa Clara California. Ayehu provides IT Process Automation & Orchestration solutions for IT and Security professionals to identify and resolve critical incidents and enable rapid containment, eradication, and recovery from cyber security breaches. Ayehu provides customers greater control over IT infras...
In his session at Cloud Expo, Alan Winters, an entertainment executive/TV producer turned serial entrepreneur, presented a success story of an entrepreneur who has both suffered through and benefited from offshore development across multiple businesses: The smart choice, or how to select the right offshore development partner Warning signs, or how to minimize chances of making the wrong choice Collaboration, or how to establish the most effective work processes Budget control, or how to ma...
SYS-CON Events announced today that CA Technologies has been named "Platinum Sponsor" of SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business - from apparel to energy - is being rewritten by software. From planning to development to management to security, CA creates software that fuels transformation for companies in the applic...