Certara (CERT) FY Conference Transcript

Summary of Certara (CERT) FY Conference Call - June 04, 2025 Company Overview - Company: Certara (CERT) - Industry: Pharmaceutical Drug Development - Focus: Model-informed drug development and biosimulation to improve drug development efficiency and success rates Key Points and Arguments 1. Drug Development Challenges: Nearly 90% of new medicines entering clinical trials fail, with development costs ranging from $2 to $3 billion, primarily due to unsuccessful trials [3][4] 2. Impact of Improvements: A mere 3% improvement in drug development success rates could save approximately $300 million per approved drug [5] 3. Biosimulation Platform: Certara's biosimulation platform allows for modeling disease and drug interactions, helping clients save time and costs while enhancing scientific understanding [6] 4. Client Base: Certara serves around 2,400 customers, including all major pharmaceutical companies, with over 90% of FDA-approved drugs in the last decade utilizing their technology [7] 5. Financial Performance: The company operates with an EBITDA margin in the low 30s and is profitable, with ongoing investments in software growth [8] 6. Market Potential: Certara estimates a total addressable market (TAM) of approximately $4 billion for biosimulation services, with significant growth opportunities [16] 7. Regulatory Support: The FDA has increasingly recognized and approved the use of biosimulation in drug development, with a rise in guidance documents over the years [15] 8. Shift from Animal Testing: Recent FDA announcements to phase out animal testing, particularly for monoclonal antibodies, present a favorable environment for Certara's biosimulation models [17][19] 9. Product Suite: Certara's offerings include: - SimShip Simulator: Models drug kinetics across diverse human populations [22] - Phoenix: An analytics tool for fitting clinical trial data to models [28] - Pinnacle 21: A data standardization tool used by the FDA for clinical trial submissions [30] - ChemAxon: A chemical informatics platform acquired to enhance drug discovery processes [31] 10. AI Integration: Certara is incorporating AI into its biosimulation products, enhancing usability and productivity, with AI-related revenue already in the millions [32][33] 11. Acquisition Strategy: The company has made strategic acquisitions to bolster its capabilities, including Pinnacle 21, Applied Biomath, and ChemAxon [35] 12. Growth Strategy: Certara is focusing on increasing its software revenue, which has a high barrier to entry, while reviewing its services segment for potential restructuring [40][41] Additional Important Insights - Clinical Trial Efficiency: Certara's technology has enabled clients to avoid numerous costly clinical trials, demonstrating significant cost savings [26] - Market Trends: The increasing adoption of biosimulation in the pharmaceutical industry is reflected in the exponential growth of related publications over the past 25 years [14] - Regulatory Landscape: The FDA's evolving stance on biosimulation and data standardization is crucial for the future of drug development and Certara's business model [15][30] This summary encapsulates the critical insights from the conference call, highlighting Certara's role in transforming drug development through innovative technologies and strategic growth initiatives.