Slide 1: Investor Conference Call July 14, 2016
( NASDAQ:SLP ) Investor Conference Call July 14, 2016
Slide 2: Safe Harbor Statement
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 t
Slide 3: Highlights
3 Highlights Walt Woltosz Chairman and Chief Executive Officer
Slide 4: Software renewal rates and product development
4 • Software renewal rates: 88% (accounts); 96%(fees) • 16 new software client sites added • Product development • PKPlus™ Beta test version released this week • new software product for noncompartmental analysis and compartmental analysis for regulatory submissions • potential to become significant
Slide 5: FDA Office of Generic Drugs funded collaborations
5 • Completed first year of up to 3 - year, $200,000/year collaboration for improved ocular dosing simulations – contract renewed for 2nd year • Met all milestones during first full year • Established consortium of leading pharmaceutical companies • The global ophthalmic drugs market was valued at $
Slide 6: New FDA OGD Requests for Applications
6 • $250,000/year for up to two years to combine PBPK modeling with population statistical methods used in Phase 2 & 3 trial data analysis • Proposals submitted May 16 • Combined expertise of our Lancaster and Buffalo divisions – excellent synergy • “Up to two” contracts to be awarded • We believe o
Slide 7: Exploring Business Opportunities Outside of Pharmaceutical Industry
7 • AEROModeler™ • Application of our artificial neural network ensemble (ANNE) technology to: • Predict aerodynamic force coefficients for missiles • Classify missiles from radar tracking data • Discriminate between warheads and decoys from sensor data • Recent USAF contact (June) has identified an
Slide 8: Company and quarter highlights
8 • Major provider of software and consulting services for pharma R&D • Earliest drug discovery – when a chemist first draws a molecule • Preclinical development (lab and animals) through first - in - human trials • Phase 2 and 3 clinical trials • Beyond patent life to supporting generic companies •
Slide 9: Summary
9 • Continued Growth • Eight - year - plus profitable trend • Successful strategic acquisition • Customer base increased: • 16 new software customers in 3QFY16 • 96% renewal rate (fees) • Expecting continued compounded growth • 3rd Quarter earnings per share increased 2.1% • Year - to - date (9 mont
Slide 10: Financial Overview
10 Financial Overview John Kneisel Chief Financial Officer
Slide 11: Income Statement 3QFY16 Compared to 3QFY15
11 Income Statement 3 QFY16 Compared to 3QFY15 (in millions) Lancaster Buffalo 3QFY16 3QFY15 Diff % chg Net sales $ 4.664 $ 1.348 $ 6.012 $ 5.942 $0.070 1.2% Gross profit 4.023 0.794 4.817 4.809 0.008 0.2% Gross profit margin 86.26% 58.90% 80.12% 80.93% - 0.81% - 1.0% SG&A 1.131 0.550 1.681 1.607 0.
Slide 12: Income Statement 9moFY16 Compared to 9moFY15
12 Income Statement 9moFY16 Compared to 9moFY15 (in millions) Lancaster Buffalo 9moFY16 9moFY15 Diff % chg Net sales $ 11.722 $ 4.292 $ 16.014 $ 14.602 $1.412 9.7% Gross profit 9.935 2.538 12.473 $ 11.294 1.179 10.4% Gross profit margin 84.76% 59.13% 77.89% 77.35% 0.54% 0.7% SG&A 3.376 1.704 5.080 $
Slide 13: Consolidated Revenues, by Fiscal Quarter and YTD
13 Consolidated Revenues, by Fiscal Quarter and YTD (pro forma prior to 2012; in millions) 4.01 4.57 5.94 3.71 4.84 5.16 6.01 $0 $1 $2 $3 $4 $5 $6 $7 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 2014 2015 2016
Slide 14: Consolidated Gross Profit, by Fiscal Quarter & YTD
14 Consolidated Gross Profit, by Fiscal Quarter & YTD (pro forma prior to 2012; in millions) 3.09 3.45 4.83 2.64 3.76 3.9 4.82 $0 $1 $2 $3 $4 $5 $6 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 2014 2015 2016
Slide 15: Consolidated Net Income, by Fiscal Quarter and YTD
15 Consolidated Net Income, by Fiscal Quarter and YTD (pro forma prior to 2012; in millions) $0.53 $0.97 $1.85 $0.49 $1.11 $1.15 $1.91 $- $0.50 $1.00 $1.50 $2.00 $2.50 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 2014 2015 2016
Slide 16: Consolidated Diluted Earnings Per Share
16 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 Quarterly EPS FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Slide 17: Consolidated EBITDA, by Fiscal Quarter & YTD
17 Consolidated EBITDA, by Fiscal Quarter & YTD (in millions) 1.22 1.97 3.33 1.19 2.2 2.18 3.28 $0 $1 $2 $3 $4 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 2014 2015 2016
Slide 18: Returning Cash to Shareholders
18 Returning Cash to Shareholders (in millions) 1.6 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 13.2 12.9 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 8.9 $0 $1 $1 $2 $2 $3 $0 $2 $4 $6 $8 $10 $12 $14 Dividend Paid Cash on Hand Cash paid $2.5M
Slide 19: Selected Balance Sheet Items
19 Selected Balance Sheet Items (in millions, except where indicated) May 31, 2016 August 31, 2015 Cash and cash equivalents $ 7.280* $ 8.551 Cash per share ( in Dollars ) $ 0.43 $ 0.50 Total current assets 13.589 11.533 Total assets 28.798 27.344 Total current liabilities 4.028 3.613 Total liabilit
Slide 20: Marketing and Sales
20 Marketing and Sales John DiBella VP of Marketing and Sales
Slide 21: End-to-end M&S Solutions Provider
21 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 C linical COMING SOON: PKPlus™ KIWI™
Slide 22: Software Product News
22 • Version 9.5 scheduled for summer 2016 ‒ Intramuscular dosing model – optional add - on model ‒ Antibody - drug conjugate (ADC) models for biologics • Version 8.0 scheduled for summer 2016 ‒ Significant refresh of the graphical user interface ‒ New ‘MedChem’ module – optional add - on incorporat
Slide 23: QFY16 Sales Review
23 3 QFY16 Sales Review • Highlights: – Software revenue + 2 % – C onsulting ( - 1%) – 88% renewal rate (accounts) – 96% renewal rate (fees) – ( - 11%) decrease in license units – 8 new commercial clients – 8 new nonprofit groups 66% 10% 24% 0% Consolidated Sales Breakdown Renewal New Consulting Tra
Slide 24: 9moFY16 Sales Review
24 9 moFY16 Sales Review • Highlights: – Software revenue + 9 % – C onsulting +12% – 87% renewal rate (accounts) – 93% renewal rate (fees) – 10% increase in license units – 28 new commercial clients – 27 new nonprofit groups – Significant expansion of licenses at US FDA, US EPA, and China FDA 58% 12
Slide 25: QFY16 Software Revenue by Region
25 3 QFY16 Software Revenue by Region Europe 27% North America 52% Asia 21% South America <1% Japan = 56% India = 23% China = 15% Korea = 6 %
Slide 26: Marketing Activities – 3QFY16
26 Marketing Activities – 3QFY16 • Website redesign – Design finalized and new content being developed – summer launch • Conferences and scientific meetings – 16 scientific meetings attended; co - authors on 1 2 presentations – Invited speaker at FDA meeting on oral absorption modeling • Trainings a
Slide 27: Buffalo Division Update
27 Buffalo Division Update Re - imagining the future of science - based research and development Ted Grasela President
Slide 28: Consulting Services
28 Consulting Services • Strategic and synergistic benefits of the Buffalo (Cognigen) acquisition are being realized • 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
Slide 29: Status Report - Consulting
29 Status Report - Consulting • In FY2016 working with 27 companies on 48 drugs, 85 projects – 8 new companies in FY2016 – 11 new projects in FY2016Q3 – 8 projects expanded scope in FY2016Q3 – 2 projects delayed because of slow enrollment – 3 projects cancelled because of failed studies – 39 outstan
Slide 30: Behind the scenes in R&D: Coping with complexity and chaos
30 • Analysis in R&D can be messy • Data and inputs coming from many groups • Careful synthesis and communication is essential • The industry has enormous computing power • The industry lacks tools for harnessing that power Behind the scenes in R&D Coping with complexity and chaos
Slide 31: KIWI – A Software Platform for Validated Cloud Processing
31 KIWI™ – A Software Platform for Accessing Simulations Plus’ Validated Cloud Processing Capabilities
Slide 32: KIWI Update
32 • Signed a $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 enh
Slide 33: Summary
33 Summary Buffalo division is strong and growing • Consulting activities continuing to expand, and realizing synergies with Lancaster division for PBPK modeling in clinical pharmacology • Foundation contract to enhance the KIWI platform is a major step forward in our long - term vision for the prod
Slide 34: Final Summary
34 Final Summary Walt Woltosz Chairman and Chief Executive Officer
Slide 35: Summary
35 Summary 3QFY16 revenues were up by 1.2% compared to an unusually strong 3QFY15 3QFY16 net income was up by 3.1% Diluted EPS for 3QFY16 up 2.1% to $0.111 from $0.108in 3QFY15 Q9moFY 16 revenues were up by 9.7% QmoFY 16 net income was up by 24.2% Diluted EPS for 9moFY16 up 23.1% to $0.242 from $0.1