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Exhibit 99.1
Simulations
Plus, Inc.
NASDAQ: SLP
Fourth Quarter and Fiscal Year 2009
Conference Call
November 30, 2009
NASDAQ: SLP
Fourth Quarter and Fiscal Year 2009
Conference Call
November 30, 2009
Introduction
and Welcome
• Introduction
and Welcome
• Agenda
– Fourth
Quarter FY 2009 (4QFY09)
Financial Summary
Financial Summary
– Fiscal
year 2009 Financial Summary
– Progress
in Business Units
– Strategy
Going Forward
– Questions
and Answers
With the
exception of historical information, the matters discussed in
this presentation are forward-looking statements that involve a number
of risks and uncertainties. The actual results of the Company could
differ significantly from those statements. Factors that could cause or
contribute to such differences include, but are not limited to: continuing
demand for the Company’s products; competitive factors; the
Company’s ability to finance future growth; the Company’s ability to
produce and market new products in a timely fashion; the Company’s
ability to continue to attract and retain skilled personnel; the Company’s
ability to identify, evaluate, and close suitable acquisitions; and the
Company’s ability to sustain or improve current levels of productivity.
Further information on the Company’s risk factors is contained in the
Company’s quarterly and annual reports and filed with the Securities
and Exchange Commission.
this presentation are forward-looking statements that involve a number
of risks and uncertainties. The actual results of the Company could
differ significantly from those statements. Factors that could cause or
contribute to such differences include, but are not limited to: continuing
demand for the Company’s products; competitive factors; the
Company’s ability to finance future growth; the Company’s ability to
produce and market new products in a timely fashion; the Company’s
ability to continue to attract and retain skilled personnel; the Company’s
ability to identify, evaluate, and close suitable acquisitions; and the
Company’s ability to sustain or improve current levels of productivity.
Further information on the Company’s risk factors is contained in the
Company’s quarterly and annual reports and filed with the Securities
and Exchange Commission.
Safe
Harbor Statement Under the
Private Securities Litigation Reform Act
of 1995
Private Securities Litigation Reform Act
of 1995
4QFY09
(3 months) Financial Summary
• Gross
revenues =
$1.839 MM (up 0.2% from 4QFY08)
– Pharmaceutical
software and services = $1.107 MM (up 1.4% from $1.092 MM in
4QFY08)
– Words+
subsidiary = $732,000 (down 1.5% from $744,000 4QFY08)
• SG&A =
$966,000 (down 2.8% from $995,000 in 4QFY08)
– SG&A
declined slightly because of reduced professional fees (tax credit consultant
and
valuation company for potential acquisitions in 08 but not 09)
valuation company for potential acquisitions in 08 but not 09)
• R&D
Expense =
$118,000 (down 59.4% from $290,000 from 4QFY08)
– Greater
time on contract studies (but COGS up $164K because of efforts on study
contracts)
• Income
Before Income Taxes =
$127,000 (down 16.0% from $151,000 in 4QFY08)
– ~$80,000
lower write-off of old Words+ invoices - conservative estimate - still working
on
them. Additional funding staff & special software have improved short-term collections.
them. Additional funding staff & special software have improved short-term collections.
• Net
Income =
$190,000 (up 15.8% from $165,000 in 4QFY08)
– ~$64,000
reduction from estimated income taxes for the first 3 quarters, due to
additional
credits related to stock options from earlier fiscal years discovered by our tax consultant
credits related to stock options from earlier fiscal years discovered by our tax consultant
• EPS =
$0.011 FD share (up $0.002 from $0.009/FD share in 4QFY08)
– Positive
results continue in spite of global economic crisis
– Share
repurchase reduced number of fully diluted shares
• Cash = $7.47
MM (up $1.58 MM or 26.9% from $5.89 MM in 4QFY08)
– Cash
increases even with share repurchase program spending over $1 MM in
FY09
• Shareholders’
Equity =
$10.571 MM (up 6.6% from $9.915 MM in 4QFY08)
FY09
(12 months) Financial Summary
• Gross
revenues =
$9.143 MM (up 2.0% from $8.968 MM in FY08)
– Pharmaceutical
software and services = $6. 031 MM (up 4.1% from $6.055 MM in FY08)
– Words+
subsidiary = $2.842 MM (down 2.4% from $2.912 MM in FY08)
• SG&A =
$3.896 MM (up 5.3% from $3.699 MM in FY08)
– Increased
spending for marketing and sales (trade shows, travel, etc.) is major factor,
along
with health insurance, and company contributions for payroll-related expenses
with health insurance, and company contributions for payroll-related expenses
• R&D
Expense =
$1,114,000 (up 12.5% from $990,000 in FY08)
– Greater
time on funded collaborations (4 at present), less capitalized software
development
• Income
Before Income Taxes =
$2.027 MM (down 17.1% from $2.446 MM in FY08)
– Increased
investments in marketing and sales, R&D, and less gross profit for the
year.
– ~$7,000
greater write-off of old Words+ invoices - conservative estimate - still working
on
them. Additional funding staff & special software have improved short-term collections.
them. Additional funding staff & special software have improved short-term collections.
• Net
Income =
$1.412 MM (down 18.2% from $1.726 MM in FY08)
– Contract
study costs produced increased cost of goods sold.
– Large
reduction in interest income in spite of larger cash position.
• EPS =
$0.082/FD share (down $0.013 from $0.095/FD share in FY08)
– Profitability
continues in spite of global economic crisis
• Cash = $7.47
MM (up $1.58 MM or 26.9% from $5.89 MM in FY08)
– Cash
increases even with share repurchase program spending over $1 MM in
FY09
• Shareholders’
Equity =
$10.571 MM (up 6.6% from $9.915 MM in FY08)
Share
Repurchase Program
• Board of
directors authorized share repurchase program for up to
$2.5 million from October 2008 through October 2009. Actually
repurchases began December 2, 2008, so the board extended the
repurchase period through December 1, 2009.
$2.5 million from October 2008 through October 2009. Actually
repurchases began December 2, 2008, so the board extended the
repurchase period through December 1, 2009.
• As of
November 27, over 1.02 MM shares had been bought back
at average price per share of about $1.32.
at average price per share of about $1.32.
• Share
repurchases are subject to Safe Harbor restrictions:
– Number of
shares that can be bought back per day in non-block trades is
25% of average daily trading volume for previous 4 weeks
25% of average daily trading volume for previous 4 weeks
– Block
repurchases can be made for large blocks
– Cannot
have block and non-block purchases on the same day
– Can only
purchase on an up-tick, etc.
– Cannot
have repurchases when insiders are trading
• No plans
at this time to repurchase shares after December 1;
however, the board of directors may decide to reinstitute
repurchasing shares at any time.
however, the board of directors may decide to reinstitute
repurchasing shares at any time.
Progress
- 1
• ADMET
Predictor™ (Structure-property prediction program)
– Version
4.0 was released in July
– New Dose
Optimization Module estimates dose amount needed for new
molecules based on mini-GastroPlus simulation
molecules based on mini-GastroPlus simulation
• Developed
under Pfizer funding and in active use at Pfizer now
– New
toxicity models: five new liver toxicity models were added
– New
metabolism models: seven new enzymes were added to the Enslein
Metabolism Module
Metabolism Module
– Expanded
graphics capability was added with Miner3D component
– Work began
in 4th quarter on
our $525,000 SBIR Phase II grant, which is
now well under way with excellent progress to date. This grant is funding
the development of a rapid atomic partial charge calculation method,
which was already shown in Phase I to provide new descriptors that
improve many of our predictive models. These descriptors are unique to
ADMET Predictor and provide a strategic advantage in predictive models.
now well under way with excellent progress to date. This grant is funding
the development of a rapid atomic partial charge calculation method,
which was already shown in Phase I to provide new descriptors that
improve many of our predictive models. These descriptors are unique to
ADMET Predictor and provide a strategic advantage in predictive models.
Solubility
in Biorelevant Fluids
• During
FY09 we funded a series of experiments with Northeastern
University to measure the solubility of 160 drugs and drug-like compounds
in three different types of biorelevant fluids:
University to measure the solubility of 160 drugs and drug-like compounds
in three different types of biorelevant fluids:
– Fasted
state simulated gastric fluid (FaSGF)
– Fasted
state simulated intestinal fluid (FaSSIF)
– Fed
state simulated intestinal fluid (FeSSIF)
• These data
have been used to build preliminary solubility models for
ADMET Predictor that can provide estimates for in vivo solubilities for new
compounds without the need to measure them.
ADMET Predictor that can provide estimates for in vivo solubilities for new
compounds without the need to measure them.
• In
vivo solubilities
are important for GastroPlus simulations of low-solubility
compounds.
compounds.
• Our Chief
Scientist, Dr. Michael Bolger, presented a scientific poster at the
American Association of Pharmaceutical Scientists meeting a few weeks ago
and received very high interest from scientists at the meeting.
American Association of Pharmaceutical Scientists meeting a few weeks ago
and received very high interest from scientists at the meeting.
• We may
decide to offer these data as a new product. We intend to conduct
more of these experiments to expand the database and improve our
predictions.
more of these experiments to expand the database and improve our
predictions.
Progress
- 2
• ClassPharmer™
(Data Mining and De Novo Molecule Design)
– Numerous
improvements were being incorporated during the 4th
quarter, and Version 4.7 was released in October.
quarter, and Version 4.7 was released in October.
– We
continue to enhance ClassPharmer’s capabilities in data mining and
de novo molecule design (design of new molecules) and to add
additional convenience features requested by our users.
de novo molecule design (design of new molecules) and to add
additional convenience features requested by our users.
– New
“scaffold hopping” capability was added in 4.7 - allows chemists
to change the core (or any portion) of a molecule while maintaining
other features and the bond distances between them.
to change the core (or any portion) of a molecule while maintaining
other features and the bond distances between them.
– Added a
new method to generate molecular transformations from our
Pair SAR results to design better molecules. Pair SAR’s compare two
molecules with very similar structures but very different values for one
or more properties.
Pair SAR results to design better molecules. Pair SAR’s compare two
molecules with very similar structures but very different values for one
or more properties.
– Coordination
between ADMET Predictor and ClassPharmer provides an
unmatched capability for new molecule design and screening, as well as
for screening molecules from high throughput screening activities.
unmatched capability for new molecule design and screening, as well as
for screening molecules from high throughput screening activities.
Progress
- 3
DDDPlus -
Simulates laboratory dissolution experiments
Sales
continue to increase steadily
Version
3.0 was released in Q3 with a number of important
enhancements
enhancements
Remains
the only tool of its kind
Progress
- 4
• GastroPlus™
– Development
of Drug-drug Interaction module continues under funded
collaboration with Roche - initial capability in use at Roche
collaboration with Roche - initial capability in use at Roche
– Development
of ocular delivery capability under a funded collaboration
with Pfizer is nearly complete
with Pfizer is nearly complete
– Development
of a nasal-pulmonary delivery module under a funded
collaboration with GlaxoSmithKline is nearly complete. Proposal has
been submitted for further extension in response to a request from GSK.
collaboration with GlaxoSmithKline is nearly complete. Proposal has
been submitted for further extension in response to a request from GSK.
– Consulting
contracts continue to come in to assist pharmaceutical
companies worldwide in analyzing preclinical and clinical data with
GastroPlus
companies worldwide in analyzing preclinical and clinical data with
GastroPlus
– At AAPS
meeting in November, GastroPlus was mentioned by every
speaker in at least 3 different sessions as the tool used to run the analyses
that were being presented.
speaker in at least 3 different sessions as the tool used to run the analyses
that were being presented.
GastroPlus
Ocular Delivery - Funded
Collaboration
Collaboration
GastroPlus
Pulmonary Delivery
Progress
- 5
• Words+
subsidiary
– General
economy appears to be affecting this business -
many states are struggling, and a large percentage of our
sales come from 3rd-party sources (Medicaid, Medicare,
schools, state vocational rehabilitation programs, etc.)
many states are struggling, and a large percentage of our
sales come from 3rd-party sources (Medicaid, Medicare,
schools, state vocational rehabilitation programs, etc.)
– New
Conversa™ communication device selling well
– Full-time
national sales manager working to improve
marketing and sales activities and dealer relationships
marketing and sales activities and dealer relationships
– Two new
employee sales reps added in California
Miscellaneous
Items
• Potential
acquisition we were working on for a number of months did not go
through - seller decided to go with another buyer. Potential remains to acquire
software part of the business, which was our primary interest.
through - seller decided to go with another buyer. Potential remains to acquire
software part of the business, which was our primary interest.
• Due
diligence currently in progress on three acquisition possibilities for
the
pharmaceutical side of the business.
pharmaceutical side of the business.
• Two new
Ph.D.s started recently. Interviewing additional scientists to hire at
least two more to work on contract studies and internal projects for both
existing products and new product development.
least two more to work on contract studies and internal projects for both
existing products and new product development.
• Recent
interview of very experienced medicinal chemist for the position of
Director of Life Sciences after the resignation of Dr. John Crison last month for
personal reasons. Dr. Michael Bolger, Chief Scientist, is also serving as Acting
Director of Life Sciences until the position is filled.
Director of Life Sciences after the resignation of Dr. John Crison last month for
personal reasons. Dr. Michael Bolger, Chief Scientist, is also serving as Acting
Director of Life Sciences until the position is filled.
• Mr. John
DiBella has been promoted to Manager, Marketing and Sales,
reporting to Dr. Michael Pelekis, Director, Business Development, Marketing,
and Sales after the resignation of Mr. Ronald Creeley for family health reasons.
reporting to Dr. Michael Pelekis, Director, Business Development, Marketing,
and Sales after the resignation of Mr. Ronald Creeley for family health reasons.
Strategy
Going Forward
• Continue
to expand product line and services
– Pharmaceutical
software and services
• Continue
to expand Life Sciences team
– For new
product development as identified in corporate strategic planning
– To
increase capacity to conduct consulting studies and funded
collaborations
• Seek and
complete strategic acquisitions
– Goal is
to add both new products & services as well as additional scientific
staff
• Examine
additional SBIR opportunities
– Words+
subsidiary
• Continue
product improvements and more aggressive marketing and sales
• Added
staff and new billing software to process prior authorizations and
accounts
receivable more quickly - collecting old receivables from state Medicaid agencies
receivable more quickly - collecting old receivables from state Medicaid agencies
• Look for
SBIR funding opportunities that fit our expertise
• Continue
our expanded marketing and sales activities - increasing number
of conferences and meetings worldwide - lead list is growing
of conferences and meetings worldwide - lead list is growing
– China
appears to be significant potential market for pharmaceutical
business
• New
dealer in Shanghai just signed up this month.
– Continue
our new push into the environmental toxicology area
Summary
• Simulations
Plus financial strength continues
– Excellent
cash position that continues to grow in spite of spending over $1
million
on share repurchases - cash increased
on share repurchases - cash increased
– No
debt
– Share
repurchase has reduced number of shares outstanding by over 1 million
shares
shares
• Decent
fourth quarter - not outstanding, but in this economy, healthy
– Pharmaceutical
software and services revenues up slightly from 4QFY08
– Words+
subsidiary had ~$10,000 loss, last year ~$83,000 loss for 4th quarter
• Decent
fiscal year - again not outstanding, but healthy
– Pharmaceutical
software and services earnings $1.5 MM
– Words+
subsidiary had $87,000 loss, last year $29,000 profit
• Partial
loss of European customer who replaced one of our products with their
own
• Medicare
accreditation was achieved during the fiscal year in a single visit
• Expanded
funding staff and new billing software expected to improve A/R
collections
• Focus on
maintaining best-in-class position in product quality and superior
customer service in both business units
customer service in both business units
• Continue
to actively seek strategic acquisitions.
• Slides
available by e-mail on request through
info@simulations-plus.com
Additional
Factors
• State of
the pharmaceutical industry
– Mergers
have had no effect on business to date - in fact licenses have
increased at the larger companies. Academic and government licenses
have also increased.
increased at the larger companies. Academic and government licenses
have also increased.
– Large
companies continue to adopt in
silico
(software) technologies in
various departments, and Simulations Plus software is independently
ranked as best-in-class.
various departments, and Simulations Plus software is independently
ranked as best-in-class.
– Smaller
companies are recognizing the value of in
silico tools as
a result
of the many scientific presentations that are now being presented at
meetings around the world.
of the many scientific presentations that are now being presented at
meetings around the world.
• Marketing
and sales efforts are paying off - big push early this
year with typical 6-month sales cycle
year with typical 6-month sales cycle
• Strategic
acquisition opportunities are being sought both for
new products that are synergistic with our expertise and
products, and that can add to the capabilities we offer now.
new products that are synergistic with our expertise and
products, and that can add to the capabilities we offer now.
Questions?