Simulations Plus Reports FY2012 and Fourth Quarter FY2012 Financial Results

Keywords: earnings, financial results, net income
Division: PBPK

Simulations Plus, Inc. (NASDAQ: SLP), a leading provider of software for pharmaceutical discovery and development, today reported its financial results for its 2012 fiscal year (FY12) and fourth quarter (4Q12) ended August 31, 2012. The former Words+ subsidiary was sold on November 30, 2011, therefore results provided in this press release and in our annual report treat Words+ as discontinued operations and are based on the performance of the ongoing pharmaceutical software and services business.

Results for the 2012 fiscal year (FY12):

  • Revenues were $9.45 million, representing an increase of 8.1% over $8.74 million in FY11
  • SG&A expense increased 6.1% to $3.38 million from $3.19 million in FY11
    • As a percent of sales, SG&A decreased to 35.8% from 36.5% in FY11
  • R&D expense was $0.947 million, an increase of 104% over $0.464 million in FY11
    • This increase was due to investments in expanding our scientific staff and in our malaria project
  • Net income was $3.03 million, representing an increase of 11.5% over $2.71 million in FY11
  • Net income per fully diluted share was $0.187, representing an increase of 11.1% over $0.169 for FY11
  • Cash increased to $12.7 million, representing an increase of 24.8% from $10.2 million at the end of FY11
    • This was in spite of dividend distributions to shareholders of nearly $2.4 million
  • Shareholders’ equity increased to $15.1 million, representing an increase of 7.9% from $14.0 million at the end of FY11

Results for the fourth quarter FY12 (4Q12):

  • Revenues were $1.64 million, representing an increase of 14.9% over $1.43 million in 4Q11
  • SG&A decreased 14.5% to $0.831 million from $0.973 million in FY11
  • R&D expense was $0.203 million, an increase of 462.0% from $0.036 million in FY11
    • This increase was due to investments in expanding our scientific staff and in our malaria project
  • Net income was $0.349 million, representing an increase of 88.1% over $0.186 million in FY11
  • Earnings per fully diluted share were $0.021, representing an increase of 85.4% over $0.012 in 4Q11

Ms. Momoko Beran, chief financial officer for Simulations Plus, said: “We completed another record fiscal year, with all four quarters setting new quarterly records. Earnings per share increased by more than 11% – the direct result of a strong performance from our pharmaceutical software and services business. R&D expenses increased because we have increased our scientific staff, increased salaries for existing staff, and because of outside expenses incurred through our investment in our malaria project. SG&A increased 6.1% primarily because we now pay the entire office lease following the sale of Words+ on November 30, 2011. Words+ pays 20% of the lease, however it is reported as other income rather than offsetting the lease expense. Other increases in SG&A were advertising, trade shows, marketing labor as we attended more trade shows and conferences, insurance (health/dental, directors and officers), and increased legal fees incurred during our due diligence activities for the unsuccessful attempted acquisition of Entelos in bankruptcy court.”

Walt Woltosz, chairman and chief executive officer of Simulations Plus, added: “The sale of Words+ last year has enabled us to focus all of our energies and resources on the pharmaceutical software and services business. Our sustained growth and profitability in this business is the result of our annual license business model and the high renewal rates that we have consistently enjoyed, as well as continued growth in our consulting, collaboration, and training activities. During this fiscal year, we conducted Advanced GastroPlus™ Training Workshops and we added Introductory GastroPlus Training Workshops which have been well attended by scientists from the pharmaceutical industry, academia, and government agencies in the U.S., Europe, and Asia. These workshops generate a profit and they serve to anchor our software with our customers as they learn how much more they can do with it beyond the basics.”

Mr. Woltosz continued: “During this fiscal year, we embarked on a New Chemical Entity (NCE) project for malaria. Using our ADMET Design Suite™, which consists of our MedChem Studio™, MedChem Designer™, and ADMET Predictor™ software, we designed new molecules to treat malaria. In September 2011, we announced that we had completed our design efforts and that we were soliciting quotations from chemistry companies to synthesize these novel molecules. At that time, we had no idea whether we would be successful in our predictions that these molecules would inhibit the growth of the malaria parasite Plasmodium falciparum. After nearly nine months of challenging synthesis efforts, we had a total of seven new molecules synthesized and tested, and our hope was that at least one of our new molecules would inhibit the growth of the parasite. We were excited to learn that all of them did, but it’s important to add that our goal was not to develop a cure for malaria with this small effort. Rather, the purpose was to demonstrate that by using our software and design approaches, scientists can rapidly generate promising leads in a fraction of the typical time and cost – leads that could be followed up with a greater investment. As we have presented these results to audiences around the world, we’ve seen great interest and numerous requests to evaluate our ADMET Design Suite.”

“We are now communicating with several organizations that fund research for malaria and other diseases,” Mr. Woltosz continued. “We hope to secure outside funding to take the malaria effort on a larger scale and to pursue other disease targets with our tools and chemistry expertise. We will also select an additional target on our own and invest in a second demonstration project to confirm that this process can be repeated for targets other than malaria.”

For complete balance sheets, click here.