UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
April 10, 2017
(Date of the earliest event reported)
Simulations Plus, Inc.
(Exact name of registrant as specified in its charter)
California | 001-32046 | 95-4595609 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
42505 10th Street West, Lancaster, California 93534-7059
(Address of principal executive offices) (Zip Code)
661-723-7723
Registrant's telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14z-12 under Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under Exchange Act (17 CFR 240.13e-4(c))
Item 8.01 Other Events
On April 10, 2017, Simulations Plus, Inc., a California corporation (the "Company"), issued a press release announcing financial results for its second quarter of FY2017 ended February 28, 2017. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
On April 10, 2017, Simulations Plus, Inc., a California corporation (the "Company"), held an investor conference call reporting financial results for its second quarter of FY2017 ended February 28, 2017. The PowerPoint slides, which were used for this Investor Conference Call, are attached herein as exhibit 99.2 to this Current Report on Form 8-K.
The information contained in this Current Report on Form 8-K shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The information set forth in this Current Report on Form 8-K shall not be deemed an admission as to the materiality of any information in this report on Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.
This report on Form 8-K (the "Report"), including the disclosures set forth herein, contains certain forward-looking statements that involve substantial risks and uncertainties. When used herein, the terms "anticipates," "expects," "estimates," "believes" and similar expressions, as they relate to us or our management, are intended to identify such forward-looking statements.
Forward-looking statements in this Report or hereafter, including in other publicly available documents filed with the Securities and Exchange Commission (the "Commission"), reports to the stockholders of Simulations Plus, Inc., a California corporation (the "Company" or "us," "our" or "we") and other publicly available statements issued or released by us involve known and unknown risks, uncertainties and other factors which could cause our actual results, performance (financial or operating) or achievements to differ from the future results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements. Such future results are based upon management's best estimates based upon current conditions and the most recent results of operations. These risks include, but are not limited to, the risks set forth herein and in such other documents filed with the Commission, each of which could adversely affect our business and the accuracy of the forward-looking statements contained herein. Our actual results, performance or achievements may differ materially from those expressed or implied by such forward-looking statements.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 | Press release issued on April 10, 2017. |
99.2 | PowerPoint presentation at the Investor Conference Call on April 10, 2017. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SIMULATIONS PLUS, INC. | |
Dated: April 11, 2017 | By: /s/ John R Kneisel |
John R. Kneisel | |
Chief Financial Officer |
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Exhibit 99.1
For Further Information:
Simulations Plus, Inc.
42505 10th Street West
Lancaster, CA 93534-7059
CONTACT:
Simulations Plus Investor Relations | Hayden IR |
Ms. Renee Bouche | Mr. Cameron Donahue |
661-723-7723 | 651-653-1854 |
renee@simulations-plus.com | cameron@haydenir.com |
For Immediate Release:
April 10, 2017
Simulations Plus Reports Second Quarter FY2017 Financial Results
Record second quarter as revenues grow 10.5%, 6MoFY17 net income up 13.6%
LANCASTER, CA, April 10, 2017 – Simulations Plus, Inc. (Nasdaq: SLP), the premier provider of simulation and modeling software and consulting services for all phases of pharmaceutical discovery and development from the earliest discovery through all phases of clinical trials, today reported financial results for its second quarter of fiscal year 2017, the period ended February 28, 2017 (2QFY17).
2QFY17 highlights compared with 2QFY16:
· | Net revenues increased 10.5%, or $542,000, to a record $5.71 million from $5.16 million |
· | Gross profit increased 6.5%, or $252,000, to $4.15 million from $3.90 million |
· | SG&A increased 13.1%, or $226,000, to $1.95 million from $1.72 million |
· | Income before taxes increased 5.5%, or $93,000, to $1.78 million from $1.69 million |
· | Net income increased 4.4% to $1.20 million, or $0.07 per share, compared to $1.15 million, or $0.07 per share in 2QFY16 |
6MoFY17 highlights compared with 6MoFY16:
· | Net revenues increased 11.2%, or $1.12 million, to a record $11.12 million from $10 million |
· | Gross profit increased 7.6%, or $578,000, to $8.23 million from $7.66 million |
· | SG&A increased 12.1%, or $412,000, to $3.81 million from $3.4 million |
· | R&D expenditures decreased 5.5%, or $75,000, to $1.28 million from $1.36 million in 6MoFY16 |
o | In 6MoFY17, $584,000 was capitalized and $699,000 was expensed |
o | In 6MoFY16, $545,000 was capitalized and $813,000 was expensed |
· | Income before taxes increased 10.1%, or $343,000, to $3.75 million from $3.41 million |
· | Net income increased 13.6% to $2.56 million, or $0.15 per share, compared to $2.25 million, or $0.13 per share, in 6MoFY16 |
John Kneisel, chief financial officer of Simulations Plus, said: “We continue our trend of consistent revenue and earnings growth. As of today, cash remains in excess of $8.5 million after our two quarterly dividend distributions totaling over $1.7 million this fiscal year. This quarter, we will make our final payment of $1 million to TSRL as part of the royalty agreement buyout announced in May 2014, which has proven to be a strategically valuable decision for the Company.”
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John DiBella, vice president for marketing and sales of Simulations Plus, said: “The first half of 2017 has seen us realize robust gains across all business categories, with software renewal rates of 96% in terms of fees, 43 software customers added, including new licenses at all major regulatory agencies, and 18% revenue growth in consulting services. With the recent releases of GastroPlus™ 9.5 and ADMET Predictor™ 8.1, coupled with the upcoming new versions of MembranePlus™ and PKPlus™, increased staffing, and the new distribution agreement in South Korea, we are well-positioned to penetrate new markets and close out the second half of the year on a strong note.”
Ted Grasela, president of Simulations Plus, added: “We have been successful in our recruitment efforts and are on-boarding software engineers and scientists to sustain our growth. We have accelerated development of the KIWI modeling and communication platform. Our goal is to drive model-informed drug development and bring new ways of collaboration between multidisciplinary scientists. The addition of scientists will bring in new creativity and extend our range of modeling and simulation services so that we can meet the needs of the changing business models favoring outsourcing in the pharmaceutical industry.”
Walt Woltosz, chairman and chief executive officer of Simulations Plus, concluded: “Once again we have achieved record results for the quarter. Our momentum continues, and with the need for increased productivity and a reduction in the time and cost to bring new drugs to market, we expect the trend for ever-increasing use of modeling and simulation in pharmaceutical research to continue for the foreseeable future.”
Investor Conference Call
The Company will host a conference call on April 10, 2017, at 4:15 p.m. Eastern Time. All interested parties are invited to join the call by registering at: https://attendee.gotowebinar.com/register/4180367779839643905. On registering, you will receive a confirmation e-mail with 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 +1 (631) 992-3221, and enter access code 784-451-032.
About Simulations Plus, Inc.
Simulations Plus, Inc. is a premier developer of drug discovery and development software as well as a leading provider of both preclinical and clinical pharmacometric consulting services for regulatory submissions. The company is a global leader focused on improving the ways scientists use knowledge and data to predict the properties and outcomes of pharmaceutical and biotechnology agents. Our software is licensed to and used in the conduct of drug research by major pharmaceutical and biotechnology companies and regulatory agencies worldwide. Our innovations in integrating new and existing science in medicinal chemistry, computational chemistry, pharmaceutical science, biology, and physiology into our software have made us the leading software provider for physiologically based pharmacokinetic modeling and simulation. For more information, visit our website at www.simulations-plus.com.
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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 identify and close acquisitions on terms favorable to the 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.
--Tables follow --
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SIMULATIONS PLUS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) | (Audited) | |||||||
February 28, | August 31, | |||||||
ASSETS | ||||||||
2017 | 2016 | |||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 7,426,811 | $ | 8,030,284 | ||||
Accounts receivable, net of allowance for doubtful accounts of $0 | 4,668,219 | 3,009,517 | ||||||
Revenues in excess of billings | 1,223,520 | 694,131 | ||||||
Prepaid income taxes | 374,405 | 555,486 | ||||||
Prepaid expenses and other current assets | 296,394 | 410,811 | ||||||
Total current assets | 13,989,349 | 12,700,229 | ||||||
Long-term assets | ||||||||
Capitalized computer software development costs, net of accumulated amortization of $9,187,363 and $8,613,487 | 4,023,627 | 4,013,127 | ||||||
Property and equipment, net | 280,631 | 256,381 | ||||||
Intellectual property, net of accumulated amortization of $1,712,500 and $1,408,750 | 4,362,500 | 4,666,250 | ||||||
Other intangible assets net of accumulated amortization of $368,750 and $295,000 | 1,281,250 | 1,355,000 | ||||||
Goodwill | 4,789,248 | 4,789,248 | ||||||
Other assets | 34,082 | 34,082 | ||||||
Total assets | $ | 28,760,687 | $ | 27,814,317 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 221,355 | $ | 108,111 | ||||
Accrued payroll and other expenses | 538,575 | 481,610 | ||||||
Accrued bonuses to officers | 30,500 | 121,000 | ||||||
Other current liabilities | – | 8,274 | ||||||
Current portion - Contracts payable | 1,000,000 | 1,000,000 | ||||||
Billings in excess of revenues | 155,073 | 230,100 | ||||||
Deferred revenue | 194,938 | 176,422 | ||||||
Total current liabilities | 2,140,441 | 2,125,517 | ||||||
Long-term liabilities | ||||||||
Deferred income taxes | 2,755,636 | 2,956,206 | ||||||
Total liabilities | $ | 4,896,077 | $ | 5,081,723 | ||||
Commitments and contingencies | ||||||||
Shareholders' equity | ||||||||
Preferred stock, $0.001 par value 10,000,000 shares authorized no shares issued and outstanding | $ | – | $ | – | ||||
Common stock, $0.001 par value 50,000,000 shares authorized 17,230,478 and 17,225,478 shares issued and outstanding | 7,241 | 7,227 | ||||||
Additional paid-in capital | 11,673,696 | 11,376,007 | ||||||
Retained earnings | 12,183,673 | 11,349,360 | ||||||
Total shareholders' equity | $ | 23,864,610 | $ | 22,732,594 | ||||
$ | – | – | ||||||
Total liabilities and shareholders' equity | $ | 28,760,687 | $ | 27,814,317 |
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SIMULATIONS PLUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended February 28, 2017 and February 29, 2016
Three months ended | Six months ended | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net Revenues | $ | 5,705,590 | $ | 5,163,726 | $ | 11,123,525 | $ | 10,002,346 | ||||||||
Cost of revenues | 1,553,952 | 1,263,741 | 2,889,935 | 2,347,088 | ||||||||||||
Gross margin | 4,151,638 | 3,899,985 | 8,233,590 | 7,655,258 | ||||||||||||
Operating expenses | ||||||||||||||||
Selling, general, and administrative | 1,948,136 | 1,722,844 | 3,811,692 | 3,399,278 | ||||||||||||
Research and development | 408,536 | 461,389 | 698,836 | 812,696 | ||||||||||||
Total operating expenses | 2,356,672 | 2,184,233 | 4,510,528 | 4,211,974 | ||||||||||||
Income from operations | 1,794,966 | 1,715,752 | 3,723,062 | 3,443,284 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest income | 4,429 | 4,486 | 8,886 | 8,953 | ||||||||||||
Gain(loss) on currency exchange | (14,441 | ) | (28,330 | ) | 20,486 | (43,224 | ) | |||||||||
Total other income (expense) | (10,012 | ) | (23,844 | ) | 29,372 | (34,271 | ) | |||||||||
Income before provision for income taxes | 1,784,954 | 1,691,908 | 3,752,434 | 3,409,013 | ||||||||||||
Provision for income taxes | (589,194 | ) | (546,559 | ) | (1,195,109 | ) | (1,157,191 | ) | ||||||||
Net Income | $ | 1,195,760 | $ | 1,145,349 | $ | 2,557,325 | $ | 2,251,822 | ||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.07 | $ | 0.07 | $ | 0.15 | $ | 0.13 | ||||||||
Diluted | $ | 0.07 | $ | 0.07 | $ | 0.15 | $ | 0.13 | ||||||||
Weighted-average common shares outstanding | ||||||||||||||||
Basic | 17,233,017 | 17,005,649 | 17,229,586 | 16,985,869 | ||||||||||||
Diluted | 17,438,508 | 17,268,144 | 17,421,457 | 17,230,099 |
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Exhibit 99.2
(NASDAQ:SLP) Investor Conference Call April 10, 2017
2 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, 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
3 Highlights John DiBella VP of Marketing & Sales
4 • Major provider of software and consulting services for scientific R&D • Earliest drug discovery – when a chemist first draws a molecule • Preclinical development (lab and animals) through first - in - human trials • Safety research and risk assessment • Phase 2 and 3 clinical trials • Beyond patent life to supporting generic companies • 2QFY17 • Revenues up $542,000 (10.5%) to $5.71 million • Net income up $50,000 (4.4%) to $1.20 million • Software renewal rates: 89% (accounts); 96%(fees) • 20 new software clients added • Strong consulting pipeline resulted in significant increase in revenues • Current backlog remains high • Successfully adding modelers and scientists to team • 6MoFY17 • Revenues up $1.12 million (11.2%) to $11.12 million • Net income up $306,000 (13.6%) to $2.56 million • Diluted earnings per share up 12.3% to 15¢ per share • 43 new software clients added Overview
5 • Now in 3 rd and final year of $200,000/year collaboration for improved ocular dosing simulations • Established consortium of leading pharmaceutical companies • The global ophthalmic drugs market was valued at $16 billion in 2012, and was expected to reach an estimated value of $21.6 billion in 2018 • Prevalence of eye disorders is increasing as the population ages (e.g., diabetic retinopathy, macular degeneration) FDA Office of Generic Drugs (OGD) Funded Collaborations • In year two of 3 - year, $200,000/year collaboration for simulation of long - acting injectable microspheres • Formed consortium of industry partners, FDA scientists, and Simulations Plus • Added intramuscular dosing to GastroPlus (v9.5) • Developed enhancements to DDDPlus to simulate in vitro dissolution/release from polymer microspheres
* Yahoo! Data 4/7/2017 Two - year stock performance compared to DOW, NASDAQ, & S&P 500 *
7 Financial Overview John Kneisel Chief Financial Officer
8 Income Statement: 2QFY17 Versus 2QFY16 (in millions) Lancaster Buffalo 2QFY17 2QFY16 Diff % chg Net sales $ 4.04 $ 1.66 $ 5.71 $ 5.16 $ 0.54 10.5% Gross profit 3.31 0.84 4.15 3.90 0.25 6.5% Gross profit margin 82.0% 50.3% 72.8% 75.5% - 2.8% - 3.7% SG&A $ 1.34 $ 0.60 $ 1.95 $ 1.72 $ 0.23 13.1% R&D 0.40 0.01 0.41 0.46 (0.05) - 11.5% Total operating expenses 1.75 0.61 2.36 2.18 0.17 7.9% Income from operations 1.57 0.23 1.80 1.72 0.08 4.6% Income from operations before income taxes 1.56 0.23 1.79 1.69 0.09 5.5% Net income 1.06 0.14 1.20 1.15 0.05 4.4% Diluted earnings per share (in dollars) $ 0.069 $ 0.066 $ 0.002 3.4% EBITDA 1.98 0.322 2.302 2.177 0.125 5.7%
9 Income Statement: 6MoFY17 Versus 6MoFY16 (in millions) Lancaster Buffalo 6MoFY17 6MoFY16 Diff % chg Net sales $ 7.74 $ 3.39 $ 11.12 $ 10.00 $ 1.12 11.2% Gross profit 6.33 1.91 8.2 7.7 $ 0.6 7.6% Gross profit margin 81.8% 56.3% 74.0% 76.5% - 2.5% - 3.3% SG&A $ 2.59 $ 1.22 $ 3.81 $ 3.40 $ 0.41 12.1% R&D 0.68 0.02 0.70 0.81 (0.11) - 14.0% Total operating expenses 3.27 1.24 4.51 4.21 0.30 7.1% Income from operations 3.06 0.67 3.72 3.44 0.28 8.1% Income from operations before income taxes 3.09 0.67 3.75 3.41 0.34 10.1% Net income 2.14 0.42 2.56 2.25 0.31 13.6% Diluted earnings per share (in dollars) $ 0.147 0.131 0.016 12.3% EBITDA 3.93 0.86 4.79 4.02 0.76 19.0%
10 Consolidated Revenues: Fiscal Quarter ( pro forma prior to 2012; in millions) 4.01 4.57 5.94 3.71 4.84 5.16 6.01 3.96 5.42 5.71 $0 $1 $2 $3 $4 $5 $6 $7 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 2014 2015 2016 2017
11 Consolidated Net Income: Fiscal Quarter ( pro forma prior to 2012; in millions) $0.33 $0.47 $0.53 $0.17 $0.44 $0.85 $0.74 $0.21 $0.56 $0.91 $1.05 $0.17 $0.76 $0.84 $0.87 $0.35 $0.59 $1.06 $0.99 $0.24 $0.69 $0.81 $1.31 $0.22 $0.53 $0.97 $1.85 $0.49 $1.11 $1.15 $1.91 $0.79 $1.36 $1.20 $ - $0.50 $1.00 $1.50 $2.00 $2.50 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 2014 2015 2016 2017
12 Consolidated Diluted Earnings Per Share 0 0.02 0.04 0.06 0.08 0.1 0.12 Q1 Q2 Q3 Q4 $0.03 $0.06 $0.11 $0.03 $0.06 $0.07 $0.11 $0.05 $0.08 $0.07 Quarterly EPS FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
13 Consolidated EBITDA: Fiscal Quarter ( in millions) 1.20 1.35 2.30 0.67 1.22 1.97 3.33 1.19 2.22 2.18 3.28 1.51 2.48 2.30 $0 $1 $2 $3 $4 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 2014 2015 2016 2017
14 Returning Cash to Shareholders (in millions) 0.8 0.8 2.2 0 0.5 0.5 0.6 0.81 0.81 0.81 0.84 0.84 0.84 0.85 0.85 0.85 0.85 0.85 0.86 0.86 12.7 11.4 9.3 9.8 10 10.1 10.6 11 7.8 8.6 5.8 6.1 6.4 8.6 7.2 7.1 8.8 8 8.8 7.4 8.6 $0 $1 $1 $2 $2 $3 $0 $2 $4 $6 $8 $10 $12 $14 Dividend Paid Cash on Hand Cash paid $2.5M TSRL Cash paid $2.1M for Cognigen Cash paid $720K for Cognigen
15 Selected Balance Sheet Items (in millions, except where indicated) February 28, 2017 August 31, 2016 Cash and cash equivalents $ 7.427* $ 8.030* Cash per share ( in Dollars ) $ 0.43 $ 0.47 Total current assets 13.989 12.700 Total assets 28.761 27.814 Total current liabilities 2.140 2.126 Total liabilities 4.896 5.082 Current ratio 6.54x 5.98x Shareholders’ equity 23.865 22.733 Total liabilities and shareholders’ equity 28.761 27.814 Shareholders’ equity per diluted share( in Dollars ) $1.370 $1.335 * Cash as of April 7, 2017 ~$8.6 million.
16 Marketing and Sales John DiBella VP of Marketing and Sales
17 End - to - end M&S Solutions Provider N H O OH O CH 3 CH 3 CH 3 ADMET Predictor™ GastroPlus ™ MedChem Studio™ MedChem Designer™ DDDPlus ™ MembranePlus™ Consulting Services and Collaborations Discovery Preclinical Clinical PKPlus™ KIWI™
18 • Version 9.5 released in April 2017 ‒ Intramuscular dosing model – optional add - on model ‒ Antibody - drug conjugate (ADC) models for biologics • Version 8.1 released in January 2017 ‒ 64 - bit compatibility & minor bug fixes ‒ Rebuilt toxicity models • Version 4.0 still licensed by clients ‒ Many features merged into ADMET Predictor 8.0 as optional add - on to consolidate under one GUI Software Product News • Version 5.5 scheduled for mid - 2017 ‒ New dosage form options for immediate & controlled release formulations ‒ Tighter integration with GastroPlus: options for analyzing data collected from experiments • Version 1.5 scheduled for mid - 2017 ‒ Ability to model multiple compounds to optimize in vitro drug - drug interaction parameters ‒ New models to analyze data collected from hepatocyte studies (expands user base) • Version 1.5 scheduled for mid - 2017 ‒ Addresses several items reported from prospects/clients during testing ‒ Numerous evaluations ongoing/planned
2QFY17 Sales Review • Consolidated revenue +10.5% vs. 2QFY16 • Highlights: – Software revenue +7.4% • 89% renewal rate (accounts) • 96% renewal rate (fees) • 6% increase in license units • 9 new commercial companies • 11 new nonprofit groups – Expansion of licenses at U.S. and China FDAs – Consulting revenue +14.9% • +9.7% in Buffalo • +65.8% in Lancaster – Training revenue +211% 54% 12% 33% 1% Consolidated Sales Breakdown Renewal New Consulting Training 0 50 100 150 200 250 Q1 Q2 Q3 Q4 Software License Units/Quarter FY14 FY15 FY16 FY17 19
6MoFY17 Sales Review • Consolidated revenue +11.2% vs. 6MoFY16 • Highlights: – Software revenue +7.3% • 88% renewal rate (accounts) • 96% renewal rate (fees) • 2% increase in license units • 22 new commercial companies • 21 new nonprofit groups – Expansion of licenses at U.S. EPA and CDC – Consulting revenue +18% • +14.5% in Buffalo • +42.2% in Lancaster – Training revenue +56.1% 52% 12% 35% 1% Consolidated Sales Breakdown Renewal New Consulting Training 0 50 100 150 200 250 Q1 Q2 Q3 Q4 Software License Units/Quarter FY14 FY15 FY16 FY17 20
2QFY17 Software Revenue – by Region Europe 33% North America 44% Asia 23% South America <1% Japan = 59% India = 22% China = 19% Korea = <1% 21
2Q17 Marketing Activities Website Content • Created video production room in Lancaster – Producing more video content for promotional/branding purposes • Increased focus on SEO performance Workshops and Conferences • GastroPlus PBPK workshops held in Orlando, Tokyo & San Diego – Full slate of workshops scheduled around the globe in 2017 • Hosted several onsite trainings at individual companies Strategic Digital Marketing Initiatives • Hosted 3 webinars on ADMET Predictor/GastroPlus modeling applications • Continued with active social media campaigns – Twitter/LinkedIn/Facebook followers have increased 15% vs. April 2016 – GastroPlus User Group membership increased 17% vs. April 2016 22
23 Buffalo Division Update Re - imagining the future of science - based research and development Ted Grasela President
24 Consulting Services • Strategic and synergistic benefits of the Buffalo (Cognigen) acquisition are being realized, as evidence by the record first quarter for Buffalo • Strong collaborations between Buffalo and Lancaster scientists have identified new and innovative ways of using modeling and simulation to bringing value to our clients • Consulting projects help shape management and regulatory decision - making process • Successful projects help drive additional consulting and software sales
25 Status Report - Consulting • In FY2017 working with 25 companies on 38 drugs, 65 projects – 6 new companies in FY2017 – 33 new projects in FY17 – 15 projects expanded scope in FY17 – 3 projects with reduced scope – 32 outstanding proposals with 20 different companies • In FY2017 presented 6 posters, published 1 peer - reviewed manuscript; 3 invited presentations, and 1 book chapter published – Working on 17 publications and 5 conference abstracts • Most common therapeutic area is oncology, followed by neurology, endocrinology, and infectious disease – ~45% of projects result directly in regulatory interaction.
26 Posters of Note • Lead Antimalarial Identification Using In Silico Prediction Methods and Simulation. – American Society for Clinical Pharmacology and Therapeutics – Morris D, Woltosz W, Lawless M, Grasela T, Clark R. • Modeling and simulation strategy to support eslicarbazepine acetate (ESL) development in pediatric patients in the treatment of partial - onset seizures. – Interactive Session on Pharmacometrics Applications to Pediatric Drug Development – American Conference on Pharmacometrics – Sunkaraneni S, Bihorel S, Ludwig E, Fiedler - Kelly J, Morris D, Hopkins S, Gallupi G, Blum D. Predicted K i = 0.0250 µ M (0.0110 µ g/mL) Effective Conc = 10* K i = 0.250 µ M (0.110 µ g/mL) Target concentration = 0.110 µ g/mL) Dosing Regimen: 100 mg, followed by 50 mg at 6, 24, and 48 hours
27 • Jill Fiedler - Kelly, has been appointed as a Member - at - Large to the American Society for Clinical Pharmacology and Therapeutics (ASCPT) Board of Directors for a 3 year term • ASCPT was founded in 1900, and consists of over 2,200 professionals whose primary interest is to advance the science and practice of clinical pharmacology and translational medicine for the therapeutic benefit of patients and society. ASCPT is the largest scientific and professional organization serving the disciplines of Clinical Pharmacology and Translational Medicine. Scientific Community Engagement
28 • Continued to work on $4.7 million contract with a major foundation to implement a KIWI platform for global teams engaged in model - based drug development; 5 - year term contingent on satisfactory completion of milestones • Project builds on our extensive process - related research; enables substantial enhancements to the KIWI platform • Enhancements will provide a scaffold with broad applicability and will be available to academic and industry clients of KIWI • Currently have 8 KIWI licenses • Have several KIWI demonstrations ongoing with research groups ranging from academics to large pharma • Have hired 3 full stack developers and a software quality assurance manager KIWI Update
29 Buffalo division is strong and growing • Consulting activities continuing to expand, and realizing synergies with Lancaster division for PBPK modeling in clinical pharmacology • Successful recruiting and on - boarding of software engineers and scientists to sustain growth patterns • Foundation contract accelerating KIWI platform development and is a major step forward in our long - term vision for the product • Continued interest in the academic and industry communities regarding licensing the product Summary
30 Final Summary John DiBella VP of Marketing & Sales
31 • 2QFY17 • Revenues up 10.5% to $5.71 million • Net income up by 4.4%, to $1.20 million or 7¢ per share, compared to $1.15 million, or 7¢ per share in 2QFY16 • 6MoFY17 • Revenues up 11.2% or $1.12 million to $11.12 million • Net income up 13.6% to $2.56 million, d iluted earnings per share up 15¢ per share from 13¢ per share in 6MoFY16 • California and Buffalo divisions both performing well • Expected synergies being realized • Addressing regulatory agency focus on applying PBPK modeling in clinical pharmacology & safety research • New guidance documents issued by FDA and EMA helping drive interest • 5 - year, $4.7 million contract with research foundation • Offers potential for additional such contracts with other organizations • We believe Simulations Plus continues to lead the trend toward greater use of modeling and simulation in research & development Summary
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