Simulations Plus Launches Corporate Development Initiative

Rhea-AI Summary

Simulations Plus, Inc. (Nasdaq: SLP) announces a strategic shift towards investing in early-stage companies to drive innovation and collaboration. The company aims to enhance innovation, grow its M&A pipeline, expand revenue opportunities, and drive shareholder returns through strategic investments and partnerships.

Insights

Market Research Analyst

The strategic shift by Simulations Plus towards increased investments and partnerships in early-stage technology companies is a significant move that could potentially reshape its market standing and financial outlook. By targeting computational biology and chemistry, the company is aiming to position itself at the cutting edge of pharmaceutical software and services, a sector that is increasingly influenced by advancements in artificial intelligence and machine learning. The focus on artificial intelligence-driven drug design (AIDD) is particularly noteworthy as this emerging field promises to revolutionize the way pharmaceuticals are developed, with implications for efficiency and cost reduction.

From a market perspective, expanding the total addressable market (TAM) through such strategic investments is a proactive approach to growth. It not only diversifies revenue streams but also sets the stage for future mergers and acquisitions (M&A). By seeding early-stage companies, Simulations Plus is effectively building a pipeline of potential acquisition targets that align with its core competencies and strategic vision. This could lead to enhanced shareholder returns over the long term, provided these investments are managed effectively and yield successful integrations.

Financial Analyst

Analyzing the financial implications of Simulations Plus's announcement, the focus on enhancing innovation and adopting emerging technologies is likely to incur significant R&D expenses in the short term. However, if managed prudently, these investments could lead to substantial operating leverage, with the scalability of software products potentially yielding high-margin returns. Investors should monitor the company's capital allocation to these initiatives, ensuring that they strike a balance between growth and profitability.

Furthermore, the company's emphasis on driving shareholder returns through a combination of organic growth and strategic M&A activities suggests a clear commitment to long-term value creation. The success of such a strategy, however, hinges on the company's ability to integrate new technologies and services seamlessly and to capitalize on new revenue opportunities. The market will likely look for evidence of these strategies translating into revenue growth and margin expansion in future financial reports.

Legal Expert

When a company like Simulations Plus announces a strategy to invest in early-stage companies, it is essential to consider the legal and regulatory implications. The due diligence process for these investments will be critical to mitigate risks associated with intellectual property, compliance and potential litigation. Additionally, as the company explores M&A opportunities, it will need to navigate antitrust laws and other regulatory hurdles that can impact the speed and feasibility of such transactions. The legal landscape governing cross-border investments and partnerships must also be considered, as it can pose challenges in terms of data privacy, security and protection of trade secrets.

It is also important to note that strategic investments and partnerships in technologies such as AIDD may involve complex licensing agreements and collaborations, which require careful legal structuring to ensure the protection of Simulations Plus's interests and to facilitate future integration into its existing portfolio.

Strategic investments in early-stage companies to drive innovation and collaboration

LANCASTER, Calif.--(BUSINESS WIRE)-- Simulations Plus, Inc. (Nasdaq: SLP) (“Simulations Plus”), a leading provider of modeling and simulation software and services for pharmaceutical safety and efficacy, today provided additional information on advancing its corporate allocation strategy, specifically increased focus on strategic investments and partnerships.

Simulations Plus will actively pursue investments and partnerships in early-stage technology companies aimed at accelerating software and services innovations, increasing technology leadership in computational biology and chemistry, expanding total market opportunity, and identifying potential M&A candidates.

Key investment objectives include:

1. Enhance Innovation and Adoption of Emerging Technologies: Explore software and services innovation and seek deeper visibility into evolving technologies, including artificial intelligence-driven drug design (AIDD) and development.
2. Grow M&A Pipeline: Seed investments and partnerships in early-stage companies are expected to broaden the opportunity pipeline and total addressable market (TAM).
3. Expand Revenue Opportunities: Broaden portfolio offerings through software technology and scientific service partnerships and explore new partner revenue models.
4. Drive Shareholder Returns: Optimize the combination of organic growth, operating leverage, and strategic M&A to deliver long-term sustainable returns to our stakeholders.

“Our team is very excited to launch this corporate development initiative and formalize our corporate development programs with the flexibility to make strategic investments and form joint partnerships in early-stage companies,” said Will Frederick, Chief Financial Officer and Chief Operating Officer. “Strategic acquisitions to complement organic growth and expand TAM remain a priority, and this corporate development initiative is designed to allow us to reach into relevant technologies for immediate competitive benefit and long-term support of future acquisitions.”

Chief Executive Officer, Shawn O’Connor, added, “As leaders in simulation software and consulting services, our research scientists are uniquely qualified to identify promising new technologies and services that can advance our growth objectives. Many technologies used today were conceived and developed by early-stage companies, and we believe that partnering and investing in high-potential technologies will complement our R&D efforts and keep Simulations Plus at the forefront of innovation.”

Interested parties can obtain more information here.

About Simulations Plus

Serving clients worldwide for more than 25 years, Simulations Plus is a leading provider in the biosimulation market providing software and consulting services supporting drug discovery, development, research, and regulatory submissions. We offer solutions that bridge artificial intelligence (AI)/machine learning, physiologically based pharmacokinetics, quantitative systems pharmacology/toxicology, and population PK/PD modeling approaches. Our technology is licensed and applied by major pharmaceutical, biotechnology, and regulatory agencies worldwide. For more information, visit our website at https://www.simulations-plus.com/. Follow us on LinkedIn | X | YouTube.

Environmental, Social, and Governance (ESG)

We focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our website to read our 2023 ESG update.

Forward-Looking Statements

Except for historical information, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties. Words like “believe,” “expect,” and “anticipate” mean that these are our best estimates as of this writing, but 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 successfully integrate the Immunetrics business with our own, as well as expenses we may incur in connection therewith, 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, market conditions, macroeconomic factors, and a sustainable market. Further information on our risk factors is contained in our quarterly and annual reports and filed with the U.S. Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240213145849/en/

Simulations Plus Investor Relations

Renee Bouche

661-723-7723

renee.bouche@simulations-plus.com

Financial Profiles

Lisa Fortuna

310-622-8251

slp@finprofiles.com

Source: Simulations Plus, Inc.

FAQ

What is Simulations Plus, Inc.'s ticker symbol?

Simulations Plus, Inc.'s ticker symbol is SLP.

What is the focus of Simulations Plus' corporate allocation strategy?

Simulations Plus is focusing on strategic investments and partnerships in early-stage technology companies to drive innovation and collaboration.

What are the key investment objectives of Simulations Plus?

The key investment objectives include enhancing innovation, growing the M&A pipeline, expanding revenue opportunities, and driving shareholder returns.

Who commented on the corporate development initiative at Simulations Plus?

Will Frederick, Chief Financial Officer and Chief Operating Officer, and Shawn O'Connor, Chief Executive Officer, commented on the corporate development initiative.

What technologies is Simulations Plus looking to explore through investments and partnerships?

Simulations Plus aims to explore artificial intelligence-driven drug design (AIDD) and other evolving technologies through investments and partnerships.