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Simulations Plus, Inc. Message Board

  • dickmilde dickmilde Jul 24, 2014 7:08 AM Flag

    Simulations Plus to Acquire Cognigen Corporation

    Simulations Plus, Inc. (SLP), a leading provider of simulation and modeling software for pharmaceutical discovery and development, today announced that it has entered into an Agreement and Plan of Merger (the “Agreement”) with Cognigen Corporation of Buffalo, New York.

    Pursuant to the Agreement, upon closing, Cognigen will become a wholly-owned subsidiary of Simulations Plus and will continue to operate under the Cognigen name. This will result in the total number of Simulations Plus employees increasing from 30 to 65, and is expected to add approximately $5 million to the revenues of the combined company in the coming fiscal year.
    Walt Woltosz, chairman and chief executive officer of Simulations Plus, Inc., said, “This is an exciting step forward for both Simulations Plus and Cognigen. Upon closing, management of the combined company will be comprised of individuals from the current management teams of Simulations Plus and Cognigen, including Ted Grasela, the current President of Cognigen. I will remain as Chairman and CEO.”
    Under the terms of the Agreement, Simulations Plus will pay the shareholders of Cognigen total consideration of $7,000,000, comprised of $2,800,000 of cash and $4,200,000 worth of newly-issued, unregistered shares of common stock of Simulations Plus.

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    • Interesting acquisition! I will presume that it is "accretive" based on Walt's statements through the years but I have not looked at the numbers yet. I am curious why the acquired company will be the surviving company. I am also curious why the news appears to have moved the shares very little today. I actually canceled my pending buy order based on the news until things shake out, but I am very pleased that I got a toe back in the water before this was announced! Congrats to all who kept their faith in management through the years. This is an exciting development, imo.

      Sentiment: Hold

    • The 4.2 million worth of shares (~ 724K shares at today's prices) should add to the total number of shares outstanding, leading to some dilution, right ? Anyone know if this is the case ? Love this company's prospects and careful management.

      Sentiment: Buy

    • Looking like SLP positioning for significant growth.

    • Far as I can tell Cognigen is basically "applied" Simulations Plus. I'm guessing they use SLP software- and probably SLP competitor's software too. Cognigen staffs people who know how to use it. It, and more basic statistical packages. For pharma clients they build models, analyze data, clean data, write the data up in a submittable form; more generally, they help guide clients through the FDA review process: "this is the sort of trial you wanna do next, dose like this, test for this, use these subpopulations", which they accomplish via knowledge of the FDA process, and of relevant scientific data that the client may not be aware of.

      That's my rough picture.

      Why does SLP wanna buy them?

      First off, the Cog CEO Graesala, a youngish guy, said he looks forward to being mentored by Woltosz; this is a likely successor situation. Also, I'm guessing Walt likes Cog's culture in general, thinks its filled w/ lots of brains he'd like to have inside the company.

      What else? It sounds like Cog knows lots about how exactly the FDA wants to incorporate, on a growing basis, in silico data into the review process. More intensive use of modeling data in clinical review, the better for SLP.

      Still working this out. I'm damn sure Walt wouldn't acquire for a simple short-run EPS boost. This thing is strategic- just gotta work out how.

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