Simulation Plus: Adding Value to Vaccine Makers

10/23/2020 5:00 am EST


Tony Sagami

Editor, Weiss Ratings LLC's Weiss Ultimate Portfolio

There is a lot of truth to the adage that knowledge is power. This is especially true when it comes to developing new drugs — including a vaccine for the coronavirus, states Tony Sagami, editor of Weiss Ultimate Portfolio.

The need to accelerate drug development has never been more urgent than today because of the coronavirus pandemic. My latest recommendation is at the forefront of this endeavor; it is at the cutting edge of using big data and artificial intelligence to find cures for the world’s most pressing health challenges.

The company that many of the drug developers are using to help accelerate its vaccine development is Simulation Plus, Inc. (SLP), a bioinformatics software firm; its software is used for advanced modeling and simulations in drug and vaccine development.

The firm's main product is GastroPlus, which is used to simulate the mechanics and interactions of drug compounds. Drug companies can test new drugs in the virtual world before undergoing human or animal testing.

Creating a new drug is extremely complicated, time consuming and costly. The company's simulation software allows drug makers to experiment with thousands of variables, such as fine-tuning dosage levels.

This virtual testing shaves years off the development time and that’s why it’s used by major pharmaceutical, biotechnology, chemical and regulatory agencies.

The company's software is so respected by regulators that drug companies have been permitted to waive clinical studies and go straight into human trials. Just as important, its software can be used to identify unsuccessful treatments and harmful side effects. In short, Simulation Plus makes it possible to avoid deadly mistakes.

Its simulation software is so effective that it is the most widely used software of its type by pharmaceutical companies in the world and by the Food & Drug Administration and the U.S. National Institutes of Health.

That’s what I call an endorsement!

No wonder business is booming. In Q2, Simulation Plus delivered better-than-expected revenues and profits. Get this — the company smashed profit expectations by 77% last quarter! The company reports its Q3 results on Nov. 11 and the boost of new coronavirus business will result in another big beat.

One of the great things about Simulation Plus is that we don’t have to pick the winner of the vaccine race. SLP is essentially selling the pickaxes and shovels to the vaccine miners and wins no matter what.

Simulations Plus was founded by the husband and wife team of Walter and Virginia Woltosz in 1996. Both are still running the company today. Walter is the chairman and Virginia is the secretary and treasurer. Together, they own almost 28% of the company.

I love companies where the insiders are also major stockholders, which means they are highly invented to grow the company. By the way, the company has zero debt and 41 cents per share of cash in the bank.

The coronavirus pandemic is a public health tragedy and companies like Simulations Plus are ones that will make life safe again — and enrich its shareholders in the process.

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