Simulations Plus, Inc. designs, develops, and markets drug discovery and development software for mechanistic modeling and simulation. It offers GastroPlus that simulates the absorption, pharmacokinetics, and pharmacodynamics of drugs administered to humans and animals; DDDPlus, which simulates in vitro laboratory experiments that measure the rate of dissolution of the drug and additives in a dosage form; and MembranePlus that simulates laboratory experiments. The company also provides PKPlus, a standalone program that provides the functionality needed by pharmaceutical industry scientists to generate the analyses and outputs to satisfy regulatory agency requirements for NCA and compartmental pharmacokinetics; ADMET Predictor, a chemistry-based computer program that takes molecular structures as inputs and predicts their properties; and MedChem Designer, a molecule drawing program or sketcher that integrates with MedChem Studio and ADMET Predictor. In addition, it offers MedChem Studio, a tool for data mining and designing new molecules; and KIWI, a cloud-based Web application that organizes, processes, maintains, and communicates the volume of data and results generated by pharmacologists and scientists over the duration of a drug development program. Further, the company provides consulting services ranging from early drug discovery through preclinical and clinical trial data analysis, and reporting to regulatory agencies; and population modeling and simulation contract research services for the pharmaceutical and biotechnology industries. It offers software and services to pharmaceutical, biotechnology, agrochemical, and food companies, as well as regulatory agencies in North America, South America, Europe, Japan, Australia, New Zealand, India, Singapore, and the Peoples Republic of China. Simulations Plus, Inc. was founded in 1996 and is headquartered in Lancaster, California.
(Summary) (Company) (Chart)
12 April 2016
1yr Target $13.30
Payout Ratio 76.92%
1yr Cap Gain 51.13%
1yr Tot Return 53.40%
EPS (ttm) $0.26
EPS next yr $0.35
EPS next 5yr 20.00%
1yr Price Support $7.00
Market Cap $149.51 Mil
Revenues $19.10 Mil
Earnings $4.40 Mil
Profit Margin 23.03%
Quick Ratio 3.20
Current Ratio 3.20
1yr RevGR 59.80%
3yr RevGR 24.41%
5yr RevGR 11.32%
1yr EarnGR 27.77%
3yr EarnGR 6.50%
5yr EarnGR 12.08%
1yr DivGR 5.26%
3yr DivGR 9.95%
5yr DivGR ---
Simulations Plus is a premier developer of groundbreaking drug discovery and development modeling and simulation software. They then license that software to major pharmaceutical, biotechnology, agrochemical, and food industry companies and to regulatory agencies worldwide for use in the conduct of industry-based research. They also provide consulting services to these industries. In addition they are exploring the application of some of their machine-learning technologies for problems in aerospace and healthcare outside of their traditional markets. Simulations Plus is headquartered in Southern California and its common stock trades on the NASDAQ Capital Market under the symbol “SLP.”
In September 2014, Simulations Plus acquired Cognigen Corporation (Cognigen) as a wholly owned subsidiary. The acquisition has added $5 million to their revenues for the fiscal year ended August 31, 2015. Cognigen, incorporated in 1992, is a leading provider of population modeling and simulation contract research services for the pharmaceutical and biotechnology industries. Cognigen’s clinical pharmacology-based consulting services include pharmacokinetic and pharmacodynamic modeling, clinical trial simulations, data programming, and technical writing services in support of regulatory submissions. Cognigen develops software for harnessing cloud-based computing in support of modeling and simulation activities and provides consulting services to improve interdisciplinary collaborations and R&D productivity.
Simulation Plus is the global leader focused on improving the ways scientists use knowledge and data to predict the properties and outcomes of pharmaceutical and biotechnology agents, and one of only two global companies who provide a wide range of preclinical and clinical consulting services and software. Their innovations in integrating new and existing science in medicinal chemistry, computational chemistry, pharmaceutical science, biology, and physiology into our software have made them the leading software provider for physiologically based pharmacokinetics (PBPK) modeling and simulation.
The company generates revenue by delivering relevant, cost-effective software and creative and insightful consulting services. Pharmaceutical and biotechnology companies use our software programs and scientific knowledge to guide discovery and preclinical development programs. They also use it to enhance their understanding of the properties of potential new medicines and to use emerging data to improve formulations, select and justify dosing regimens, support the generics industry, optimize clinical trial design, and simulate outcomes in special populations, such as the elderly and pediatric patients.
Simulations Plus develops and produces software for use in pharmaceutical research and in the education of pharmacy and medical students, as well as provides contract consulting services to the pharmaceutical and chemical industries. Their wholly owned subsidiary, Cognigen, conducts high-quality analysis and regulatory report generation for data gathered during clinical trials of new and existing pharmaceutical products. Cognigen also has developed a proprietary software product called KIWI which is used internally and by some of its customers to access data and analysis results on Cognigen’s internal computer cloud.
The company currently offers six software products for pharmaceutical research: three simulation programs that provide time-dependent results based on solving large sets of differential equations: GastroPlus, DDDPlus, and MembranePlus; and three programs that are based on predicting and analyzing static (not time-dependent) properties of chemicals: ADMET Predictor, MedChem Designer, and MedChem Studio. The combination of ADMET Predictor, MedChem Designer and MedChem Studio is called the ADMET Design Suite.
GastroPlus. The company's flagship product and largest source of revenues is GastroPlus. GastroPlus simulates the absorption, pharmacokinetics, and pharmacodynamics of drugs administered to humans and animals, and is currently the most widely used software of its type in pharmaceutical companies, the U.S. Food and Drug Administration (FDA), the U.S. National Institutes of Health (NIH), and other government agencies in the U.S. and other countries.
Because of the widespread use of GastroPlus, Simulation Plus was the only non-European company invited to join the European Innovative Medicines Initiative (IMI) program for Oral Bioavailability Tools (OrBiTo). OrBiTo is an international collaboration among 27 industry, academic, and government organizations working in the area of oral absorption of pharmaceutical products.
In September 2014 the company entered into a research collaboration agreement (RCA) with the FDA to enhance the Ocular Compartmental Absorption and Transit (OCATTM) model within the Additional Dosing Routes Module of GastroPlus to provide a tool for generic companies and the FDA to assess the likely bioequivalence of generic drug formulations dosed to the eye. Under this RCA, Simulation Plus receives $200,000 per year. This RCA may be renewed for up to a total of three years based on the progress achieved during the project.
An interim release of GastroPlus, version 8.6, was released in August 2014, adding two important requested capabilities: (1) the addition of minipig physiology – a species becoming common in preclinical research; and (2) the expansion of the Drug-Drug Interaction (DDI) Module to include population simulations.
The next major release, version 9.0, added the ability to simulate dermal (through the skin) drug absorption from creams and ointments. This capability was developed through a funded collaboration with a top-5 pharmaceutical company, and is currently in use at the customer’s sites. A number of other improvements will be included in version 9.0 that will be announced with the release of the product, and which the company believes will expand the market for GastroPlus in pharmaceutical research and development.
DDDPlus. DDDPlus simulates in vitro laboratory experiments used to measure the rate of dissolution of the drug and, if desired, the additives (excipients) in a particular dosage form (e.g., tablet or capsule) under a variety of experimental conditions. This software program is used by formulation scientists in industry and the FDA to (1) understand the physical mechanisms affecting the dissolution rate for various formulations, (2) reduce the number of cut-and-try attempts to design new drug formulations, and (3) design in vitro dissolution experiments to better mimic in vivo conditions.
MembranePlus. MembranePlus is a relatively new product that was released in October 2014. Similar to DDDPlus, MembranePlus simulates laboratory experiments, but in this case, the experiments are for measuring permeability of drug-like molecules through various membranes, including several different cell cultures (Caco-2, MDCK) as well as artificially formulated membranes (PAMPA). The value of such a simulation derives from the fact that when the permeabilities of the same molecules are measured in different laboratories, results are often significantly different. These differences are caused by a complex interplay of factors in how the experiment was set up and run. MembranePlus simulates these experiments with their specific experimental details, and this enables the scientist to better interpret how results from specific experimental protocols can be used to predict permeability in human and animals, which is the ultimate goal.
ADMET Predictor. ADMET (Absorption, Distribution, Metabolism, Excretion, and Toxicity) Predictor is a chemistry-based computer program that takes molecular structures as inputs and predicts approximately 145 different properties for them at an average rate of over 100,000 compounds per hour. This capability allows chemists to generate estimates for a large number of important molecular properties without the need to synthesize and test the molecules, or to generate estimates of unknown properties for molecules that have been synthesized but for which only a limited number of experimental properties have been measured. Thus, a chemist can assess the likely success of a large number of existing molecules in a company’s chemical library, as well as molecules that have never been made, by providing their molecular structures, either by drawing them using a tool such as the company's MedChem Designer software, or by automatically generating large numbers of molecules using various computer algorithms, including those embedded in our MedChem Studio software.
ADMET Predictor has been top-ranked for predictive accuracy in peer-reviewed, independent comparison studies, while generating its results at a high throughput rate. Although the state-of-the-art of this type of software does not enable identifying the best molecule in a series, it does allow early screening of molecules that are highly likely to fail as potential drug candidates (i.e., the worst molecules, which is usually the majority of a chemical library) before synthesizing and testing them. Thus, millions of compounds can be created and screened in a day, compared to potentially months or years of work to actually synthesize and test a much smaller number of actual compounds.
During 2014 the company released version 7.1 of ADMET Predictor. This version incorporates a powerful new model for predicting ionization constants (pKa’s), developed in a collaboration with Bayer AG that enabled the company to more than double the size of their data set from about 16,000 pKa values to more than 35,000, and to expand the chemical space it covers to include a larger number of molecules more like those of interest to the pharmaceutical industry today. Simulation Plus believes the resulting improvement in pKa prediction will further differentiate their best-in-class model from any competitor. Predicting ionization is critical to predicting most other properties, so all of their models (approximately 144) were retrained based on this new capability for version 7.1.
The ADMET Modeler subprogram that is integrated into ADMET Predictor enables scientists to use their own experimental data to quickly create proprietary high-quality predictive models. Pharmaceutical companies expend substantial time and money conducting a wide variety of experiments on new molecules each year, resulting in large databases of experimental data. Using this proprietary data to build predictive models can provide a second return on their investment. The automation in ADMET Modeler makes it easy for a scientist to create very powerful models with a minimum of training.
Simulation Plus is examining two different applications for this modeling engine: (1) building predictive models for missile aerodynamic force and moment coefficients as a function of missile geometry, Mach number, and angle of attack, and (2) classifying patients as healthy or experiencing some disease state or genetic disorder evidenced by magnetic resonance imaging (MRI) of the brain.
The analysis of magnetic resonance imaging (MRI) data to classify patients as healthy or (in the company's first proof-of-concept case) likely to experience a form of autism has been developed in cooperation with the MRI facility at Auburn University. This state-of-the-art facility has two MRIs: a 3-Tesla machine and a 7-Tesla machine. The company's current goal is to demonstrate the potential for modeling technology to provide useful classification of a patient into one of the four groups based only on MRI data, so that Simulation Plus can approach various agencies (such as the NIH) to obtain funding to develop commercial products.
MedChem Designer. MedChem Designer was launched in 2011. It was initially a molecule drawing program, or “sketcher”, but now has capabilities exceeding those of other molecule drawing programs because of its integration with both MedChem Studio and ADMET Predictor. When used with a license for ADMET Predictor, MedChem Designer becomes a de novo molecule design tool. With it, a researcher can draw one or more molecular structures, then click on the ADMET Predictor icon and have over 140 properties for each structure calculated in seconds, including the company's proprietary ADMET Risk index. Researchers can also click on an icon to generate the likely metabolites of a molecule and then predict all of the properties of those metabolites from ADMET Predictor, including their ADMET Risk scores. This is important because a metabolite of a molecule can be therapeutically beneficial (or harmful) even though the parent molecule is not.
This proprietary ADMET Risk score provides a single number that tells the chemist how many default threshold values for various predicted properties were crossed (or violated) by each structure. The rules can be modified and new rules added by the user to include any desired rule set based on any combination of calculated descriptors, predicted properties, and user inputs. Thus, in a single number, the chemist can instantly compare the effects of different structural changes in many dimensions. As chemists attempt to modify structures to improve one property, they often cause others to become unacceptable. Without ADMET Risk, the chemist would have to individually examine many key properties for each new molecule (and its metabolites) to determine whether any of them became unacceptable as a result of changing the structure.
Version 3.0 of MedChem Designer added the ability to capture the image of a molecular structure from a variety of publication files with a new snapshot tool, and then have the program automatically convert the graphic image into any of several computer-based chemical structure files. Converting from lines and letters on the screen to an exact chemical representation of the molecule (Optical Structure Recognition, or OSR) is a complex task. Such a capability allows chemists to quickly capture molecular structures from the scientific literature to use for various purposes, including for use in our simulation and modeling software programs.
MedChem Studio. MedChem Studio is a tool that is used both for data mining and forde novo design of new molecules. In its data-mining role, MedChem Studio facilitates searching of large chemical libraries to find molecules that contain identified substructures, and it enables rapid generation of clusters (classes) of molecules that share common substructures from high throughput screening (HTS) data.
While MedChem Designer can be used to refine a small number of molecules, MedChem Studio can be used to create and screen (with ADMET Predictor) a very large number of molecules down to a few promising lead candidates. MedChem Studio has features that enable it to generate new molecular structures using a variety of de novo design methods. When MedChem Studio is used with ADMET Predictor and MedChem Designer (which the company refers to as their ADMET Design Suite), the company believes the programs provide an unmatched capability for chemists to search through large libraries of compounds that have undergone high-throughput screening experiments to find the most promising classes (groups of molecules with a large part of their structures the same) and molecules that are active against a particular target. In addition, MedChem Studio can take an interesting (but not acceptable) molecule and, using a variety of design algorithms, quickly generate many thousands to millions of high quality analogs (similar new molecules). These molecules can then be screened using ADMET Predictor to find molecules that are both active against the target as well as acceptable in a variety of ADMET properties.
NCE Projects. Simulation Plus initiated a new molecule (NCE, or New Chemical Entity) design project in which they used their own products to design novel molecules and have them synthesized and tested. Their goal was to demonstrate the ability of theirr ADMET Design Suite to generate new lead molecules in a fraction of the time and cost normally required in the pharmaceutical industry. They have conducted two NCE design projects so far. In the first, they designed molecules to test against the malaria parasite and in the other they designed molecules to test against the cyclo-oxygenase-2 (COX-2) enzyme that is the target for Celebrex®. Both projects were successful. When the molecules that they designed were tested against the malaria parasite and the COX-2 enzyme, the molecules successfully inhibited the malaria parasite and the COX-2 enzyme. Simulation Plus believes these projects demonstrate that their ADMET Design Suite can save considerable time and money in developing new lead compounds for particular targets.
Simulation PLus acquired Cognigen in Sep 2014 because it had a reputation for high-quality analysis and regulatory reporting of data collected during clinical trials of new and existing pharmaceutical products. The analysis of clinical trial data that Cognigen performs is different from the type of consulting services offered by Simulations Plus. Cognomen relies more on statistical models, whereas the Simulation Plus relies more on mechanistic models. Statistical models rely on equations that are shown to fit the data, but without a detailed mechanistic understanding of why they do so. Mechanistic models involve detailed science-based mathematical representations of phenomena involved in drug absorption, distribution throughout the body, metabolism, and other effects.
At recent meetings held by the FDA and other regulatory agencies, such agencies emphasized an interest in bringing physiologically based pharmacokinetics (PBPK – a core strength of Simulations Plus) into clinical pharmacology (a core strength of Cognigen). The company believes that the combined strengths of Cognigen and Simulation Plus will uniquely position the company at the forefront of model-based drug development going forward.
I found this company while doing one of my normal sorting routines. Usually when I do this I get many of the same companies over and over again which provides a level of confidence in those companies that I've already invested in. But occasionally a new company surfaces. One that I've never heard of. And that happened recently when I uncovered Simulation Plus.
It's an extremely small company that's been around for a little while and it appears that it's finally starting to get some traction in the area of sales and profits. Interestingly enough this small company pays a relatively large 2.27% dividend that's growing faster than inflation.
It also seems that this company is in the highly needed and desirable area of bio-chemical modeling and simulation. And it doesn't appear to have much competition. I'm sure that many of the large pharmaceutical companies have this expertise in-house but many of the smaller pharmaceutical and bio-technology companies do not. And that's where Simulation Plus excels.
I think there's potential here and the company's future earnings estimates confirm this. Near term estimates have this company's earning growing 20% this year as well as next year. Future estimate continue this with 20% growth extending for the next 5 year. This is simply a continuation of the success of the company's stock which can be seen simply by looking at its stock chart.
I intend to start a small position in this company very soon. It will by no means be a core holding but rather fall into that area of speculative investing in my portfolio. As such it'll never be a large portion of my accounts but it the company progresses as I expect, it will probably become a more substantial investment over time. I have low expectations in the near term and high hopes for the future of this company.