Friday, August 12, 2022

Certara Stock Is Key Biosimulation Play

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Biosimulation software and technology firm Certara (NASDAQ:) stock is granting pullbacks for prudent investors to gain exposure. The firm provides biosimulation for drug discovery, research, regulatory submissions, and market access utilizing its predictive . It enables clients to accelerate drug development and regulatory processes claiming 90% of their drug submissions have resulted in FDA approvals since 2014. In fact, the FDA is a customer of Certara in addition to over 1,650 customers across 61 countries with a 10-year average tenure for its top 30 customers utilizing its . Biosimulation can replace human trials in certain situations to speed up the time it takes for a drug to come to market, which has traditionally been 10-years and $2 billion. Biosimulation increases the probability of success in human trials, which is the most expensive factor in drug development. It’s immune-oncology simulator has correctly predicted therapeutic outcomes for various tumor and blood cancer types utilizing certain drugs. In essence, Certara saves significant time and costs in the drug discovery and development process improving efficiency. Prudent investors seeking an enabler in the biosimulation segment can watch for pullbacks in shares of Certara.

Q2 Fiscal 2021 Earnings Release

On July 21, 2021, Certara released its fiscal second-quarter 2021 for the quarter ending June 2021. The Company reported earnings-per-share (EPS) profit of $0.03 excluding non-recurring items versus consensus analyst estimates for a profit of $0.05, a (-$0.02) miss. Revenues grew just over 15% year-over-year (YoY) to $70.1 million beating analyst estimates for $69.52 million. The Company issued guidance for fiscal full-year 2021 for EPS in the range of $0.21 to $0.25 versus $0.23 analyst estimates and revenues to come in the range of $283 million to $289 million versus $282.7 million. The Company also disclosed it will be acquiring Pinnacle 21, a data standardization software leader in pharmaceutical clinical data, for $310 million in cash and stock closing in early Q4 2021.

CEO and CFO Comments

Certara CEO William Feehery stated:

“Our second-quarter results reflect continued momentum from increased adoption of our proprietary end-to-end platform and the launch of new software capabilities to expand use cases of biosimulation worldwide. Earlier today, we announced the strategic and accretive deal to acquire Pinnacle 21, our largest to date. This expansion of Certara’s quantitative tools and solutions will further help researchers and regulators answer critical questions throughout the drug development life cycle.”

Certara CFO Andrew Schermick added:

“In the second quarter, Certara’s differentiated portfolio of software and technology-driven services delivered strong financial performance. Looking forward, we remain well-positioned to achieve our stated long-term goals of mid-teens revenue growth and Adjusted EBITDA margin expansion. With reported trailing twelve-month bookings growth of 26%, we have a high level of visibility towards realizing our business and financial plans for the year.”

Conference Call Takeaways

CEO Feehery set the tone:

“Overall, we are pleased with our year-to-date performance, which is ahead of the expectations earlier in the year. In keeping with our goal to expand the use cases of biosimulation and grow adoption of our end-to-end platform, earlier today, we were thrilled to announce the acquisition of Pinnacle 21, the largest acquisition in our history, for $310 million in cash and stock. Pinnacle 21 is a privately held company with industry-leading data standardization software for pharmaceutical clinical data. Their SaaS-based solutions are used for managing compliance to the CDISC standards and increasing preclinical and clinical data quality. CDISC, also known as the Clinical Data Interchange Standards Consortium, has developed a set of global data standards for regulatory submissions. Compliance to these standards is required for regulatory submissions to the U.S. FDA and Japan’s Pharmaceuticals and Medical Devices Agencies, so that these agencies can efficiently make sense of the data they received and evaluated during the review process. The CDISC standards are also the preferred standards for electronic data submissions in China.”

Interestingly CEO Feehery also noted:

“Pinnacle’s software is used by the FDA and the PMDA to validate all incoming submissions data. This acquisition is an ideal fit for Certara on many levels. First, Pinnacle 21’s proprietary validation software perfectly complements our biosimulation and regulatory software. Global regulatory submissions require consistent and compliant data sets to minimize costly delays.”

Pinnacle 21 Synergy

CEO Feehery touched upon the synergistic significance of its Pinnacle 21 acquisition:

“Additionally, data standardization advances scientific research as data is collected and combined from increasingly more and more diverse sources and then organized and analyzed with biosimulation and other methods. Second, Certara’s drug development consultancy and regulatory sciences teams will be able to expand our data standardization and CDISC compliance service offerings powered by Pinnacle 21’s software, as we are already collaborating with our clients on gathering, integrating, analyzing, and preparing data. And last, but certainly not least, the culture fit is remarkable, as we are both passionate about driving innovation and efficiencies throughout the drug development life cycle using technology. Working together, we will integrate and expand features and tools to accelerate life-saving therapies to patients.”

“Pinnacle 21 has achieved incredible milestones with a top-notch team of software developers and CDISC experts that has built user-friendly software to help biopharmaceutical companies deal with complex data standards. Their Pinnacle 21 community open source software is used by more than 1,000 organizations and helps remove barriers to entry and promote innovation, especially among smaller biopharma companies and start-ups, while adhering to the complex data standards that can be daunting and consume significant time and resources. This broad user base also creates a robust community of engaged data scientists and biostatisticians who provide feedback that fuels the development of new features. As companies become familiar with the significant benefits that Pinnacle 21’s tools deliver, many find it valuable to upgrade to the enterprise version so that they get the most value from their data, ensure compliance to the standards and minimize the risk of regulatory delays.”

He continued:

“Pinnacle 21 has more than 130 enterprise customers, including 22 of the top 25 biopharmaceutical companies by R&D spend as well as the FDA and the PMDA. They have rapidly grown the number of customers with annual customer value in excess of $100,000 from 19 customers in 2018 to 44 in 2020. When we close, Pinnacle 21 will be immediately accretive to Certara’s revenue growth and adjusted EBITDA. We expect the acquisition to close in early fourth quarter.”

Certera Inc Stock Chart

Certera Inc Stock Chart

CERT Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the price action playing field for CERT shares. The weekly rifle chart has an uptrend with a rising 5-period moving average (MA) at $33.97 and rising 15-period MA at the $29.62 Fibonacci (fib) level. The weekly upper Bollinger Bands are at $37.81. The weekly stochastic is attempting a high band mini pup above the 80-band. The weekly has a market structure high (MSH) sell trigger on a breakdown below $33.25. The daily rifle chart is in a make or break set-up. The daily 5-period MA is at $35.07 and 15-period MA at $35.01. The daily stochastic has a mini inverse pup attempt. The bullish case is if the daily stochastic crosses up for a daily pup breakout towards the $40.26 daily upper BBs. The bear case is for the 5-period MA to crossover down through the 15-period MA as the stochastic mini inverse pup forms a full oscillation down towards the $27.38 daily lower BBs. The daily has a MSH sell trigger on a breakdown under $34.52 and a daily market structure low (MSL) buy trigger that formed on the breakout above $27.93. Prudent investors can monitor for opportunistic pullback levels at the $33.34 fib, $32.16 fib, $31.14 fib, $29.62 fib, $28.50 fib, $28.04 fib, and the $27.38 fib. The upside trajectories range from the $39.11 fib up towards the $48.58 fib level.

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