Click here to close now.

SYS-CON MEDIA Authors: Elizabeth White, Liz McMillan, Carmen Gonzalez, Plutora Blog, Pat Romanski

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.

Latest Stories
We certainly live in interesting technological times. And no more interesting than the current competing IoT standards for connectivity. Various standards bodies, approaches, and ecosystems are vying for mindshare and positioning for a competitive edge. It is clear that when the dust settles, we will have new protocols, evolved protocols, that will change the way we interact with devices and infrastructure. We will also have evolved web protocols, like HTTP/2, that will be changing the very core...
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective ...
Collecting data in the field and configuring multitudes of unique devices is a time-consuming, labor-intensive process that can stretch IT resources. Horan & Bird [H&B], Australia’s fifth-largest Solar Panel Installer, wanted to automate sensor data collection and monitoring from its solar panels and integrate the data with its business and marketing systems. After data was collected and structured, two major areas needed to be addressed: improving developer workflows and extending access to a b...
When an enterprise builds a hybrid IaaS cloud connecting its data center to one or more public clouds, security is often a major topic along with the other challenges involved. Security is closely intertwined with the networking choices made for the hybrid cloud. Traditional networking approaches for building a hybrid cloud try to kludge together the enterprise infrastructure with the public cloud. Consequently this approach requires risky, deep "surgery" including changes to firewalls, subnets...
Containers Expo Blog covers the world of containers, as this lightweight alternative to virtual machines enables developers to work with identical dev environments and stacks. Containers Expo Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. Bookmark Containers Expo Blog ▸ Here Follow new article posts on Twitter at @ContainersExpo
The true value of the Internet of Things (IoT) lies not just in the data, but through the services that protect the data, perform the analysis and present findings in a usable way. With many IoT elements rooted in traditional IT components, Big Data and IoT isn’t just a play for enterprise. In fact, the IoT presents SMBs with the prospect of launching entirely new activities and exploring innovative areas. CompTIA research identifies several areas where IoT is expected to have the greatest impac...
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. 8th International Big Data Expo, co-located with 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. As advanced data storage, access and analytics technologies aimed at handling high-volume and/or fast moving data all move center stage, aided by the cloud computing bo...
The 4th International Internet of @ThingsExpo, co-located with the 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - announces that its Call for Papers is open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
The 5th International DevOps Summit, co-located with 17th International Cloud Expo – being held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the...
You use an agile process; your goal is to make your organization more agile. But what about your data infrastructure? The truth is, today's databases are anything but agile - they are effectively static repositories that are cumbersome to work with, difficult to change, and cannot keep pace with application demands. Performance suffers as a result, and it takes far longer than it should to deliver new features and capabilities needed to make your organization competitive. As your application an...
Move from reactive to proactive cloud management in a heterogeneous cloud infrastructure. In his session at 16th Cloud Expo, Manoj Khabe, Innovative Solution-Focused Transformation Leader at Vicom Computer Services, Inc., will show how to replace a help desk-centric approach with an ITIL-based service model and service-centric CMDB that’s tightly integrated with an event and incident management platform. Learn how to expand the scope of operations management to service management. He will al...
Over the years, a variety of methodologies have emerged in order to overcome the challenges related to project constraints. The successful use of each methodology seems highly context-dependent. However, communication seems to be the common denominator of the many challenges that project management methodologies intend to resolve. In this respect, Information and Communication Technologies (ICTs) can be viewed as powerful tools for managing projects. Few research papers have focused on the way...
As the world moves from DevOps to NoOps, application deployment to the cloud ought to become a lot simpler. However, applications have been architected with a much tighter coupling than it needs to be which makes deployment in different environments and migration between them harder. The microservices architecture, which is the basis of many new age distributed systems such as OpenStack, Netflix and so on is at the heart of CloudFoundry – a complete developer-oriented Platform as a Service (PaaS...
The Industrial Internet revolution is now underway, enabled by connected machines and billions of devices that communicate and collaborate. The massive amounts of Big Data requiring real-time analysis is flooding legacy IT systems and giving way to cloud environments that can handle the unpredictable workloads. Yet many barriers remain until we can fully realize the opportunities and benefits from the convergence of machines and devices with Big Data and the cloud, including interoperability, ...
High-performing enterprise Software Quality Assurance (SQA) teams validate systems that are ready for use - getting most actively involved as components integrate and form complete systems. These teams catch and report on defects, making sure the customer gets the best software possible. SQA teams have leveraged automation and virtualization to execute more thorough testing in less time - bringing Dev and Ops together, ensuring production readiness. Does the emergence of DevOps mean the end of E...