STOCK TITAN

Certara to Acquire Chemaxon to Strengthen Drug Discovery Software Portfolio

Rhea-AI Impact
(Neutral)
Rhea-AI Sentiment
(Positive)
Rhea-AI Summary

Certara, a leader in model-informed drug development, has signed a definitive agreement to acquire cheminformatics software provider Chemaxon. The acquisition is expected to close in the second half of 2024, pending regulatory approvals. This deal aims to enhance Certara's drug discovery capabilities by integrating Chemaxon's software, which is important for chemical structure drawing, property prediction, and analysis.

Chemaxon is projected to generate over $20 million in software revenue in 2024 and is expected to align with Certara’s EBITDA margin by the end of 2025. The combined entity will offer a comprehensive data and predictive analytics platform, expected to improve decision-making and reduce costs in drug development.

Certara has reiterated its full-year 2024 financial outlook, excluding Chemaxon, and will update its guidance post-transaction, maintaining an adjusted EBITDA margin of 31-33%.

Positive
  • Certara's acquisition of Chemaxon enhances its drug discovery software portfolio.
  • Chemaxon is expected to generate over $20 million in software revenue in 2024.
  • The combined entity will offer a comprehensive data and predictive analytics platform, improving decision-making in drug development.
  • The acquisition aligns with Certara’s long-term strategy of reducing drug development costs and risks.
  • Certara expects to maintain its adjusted EBITDA margin guidance of 31-33% post-transaction.
Negative
  • The acquisition is subject to regulatory approval and customary closing conditions, which may delay the transaction.

Certara’s acquisition of Chemaxon is a strategic move to bolster its position in the drug discovery space. From a financial standpoint, this acquisition is expected to enhance Certara’s revenue stream and improve its predictive capabilities, making the company more competitive. Chemaxon’s projected software revenue of $20 million for 2024 adds a significant boost to Certara’s top line.

Short-term implications include the integration costs and potential regulatory hurdles that need to be addressed before the transaction is finalized. However, the reiteration of Certara’s 2024 guidance suggests that the company is confident in its ability to absorb these costs without a material impact on its financial health. It’s also noteworthy that Chemaxon’s EBITDA margin is expected to align with Certara’s corporate average by the end of 2025, indicating a smooth financial integration and operational synergy.

Long-term benefits could be substantial. The combined predictive analytics platform can streamline drug discovery processes, potentially reducing research and development costs and accelerating time-to-market for new drugs. This could result in higher profitability and stronger competitive positioning.

The acquisition of Chemaxon by Certara is a significant technological leap for the company. Chemaxon’s software suite, known for its strength in chemical structure drawing and property prediction, will complement Certara’s existing biosimulation portfolio. This integration will create a comprehensive platform that can manage the entire DMTA lifecycle—design, make, test and analyze.

Technological synergy is evident here. Chemaxon’s tools can digitize early-stage drug discovery, while Certara’s biosimulation tools can optimize later-stage development. This unified platform will likely provide life sciences companies with enhanced predictive capabilities, improving decision-making from drug discovery through commercialization.

The combined use of biosimulation and generative AI is particularly noteworthy. This could lead to revolutionary advancements in predictive drug discovery, potentially reducing the time and cost associated with bringing new drugs to market.

From a market perspective, this acquisition strategically positions Certara to capture a larger share of the drug discovery biosimulation market. The combined strengths of Certara and Chemaxon offer a compelling value proposition to life sciences companies looking for comprehensive in-silico research solutions.

Market dynamics suggest that there is increasing demand for integrated predictive analytics platforms in drug development. By acquiring Chemaxon, Certara can offer a more robust solution, which could attract new clients and deepen existing relationships. The ability to provide end-to-end solutions from early discovery to later-stage development makes Certara a more attractive partner in the life sciences sector.

Competitive implications are also worth considering. This acquisition sets Certara apart from competitors who may only focus on specific stages of drug development. The enhanced capabilities could serve as a differentiator, helping Certara secure a leadership position in this niche market.

Combined organization brings broader predictive capabilities to drug discovery at scale

Reiterates full year 2024 guidance

RADNOR, Pa., July 09, 2024 (GLOBE NEWSWIRE) -- Certara, Inc. (Nasdaq: CERT), a global leader in model-informed drug development, today announced it has signed a definitive agreement to acquire Chemaxon, a leading provider of cheminformatics software. The transaction is expected to close in the second half of 2024, subject to regulatory approval and other customary closing conditions.

Chemaxon develops leading software products for chemical structure drawing, property prediction, search, and analysis. Used by research scientists globally, Chemaxon software helps to digitize the design, make, test and analyze (DMTA) lifecycle to discover the best new chemical leads. Certara and Chemaxon have had a long-term partnership spanning ten years, providing integrated solutions to the life sciences industry. The acquisition strategically positions Certara in the drug discovery biosimulation market at scale. It complements Certara’s existing biosimulation portfolio which is widely used in later phases of drug development. Together, Certara and Chemaxon will offer life sciences companies a comprehensive data and predictive analytics platform, improving decision-making from discovery through commercialization.

In 2024, Chemaxon is expected to generate software revenue greater than $20 million. Chemaxon has a revenue growth profile comparable to Certara’s software business and is expected to reach an adjusted EBITDA margin near Certara’s corporate average by the end of 2025.

“The combination of Chemaxon and Certara unites two complementary businesses with a shared mission of reducing drug development costs and risks to develop new medicines faster,” said William Feehery, CEO of Certara. “Together, we can enhance prediction and analytical capabilities in drug discovery by leveraging biosimulation and generative AI.”

“Certara and Chemaxon share a common vision of advancing science and innovation in life sciences,” said Richard Jones, CEO of Chemaxon. “Together, we will offer clients the ability to broadly conduct in-silico research to inform better decision-making at every phase of development. Our teams are motivated by accelerating breakthrough medicines to patients and reducing both time to market and the cost of research and development through our combined solutions.”

A “frequently asked questions” document regarding the transaction is available on the Company’s investor relations website.

2024 Financial Outlook
Certara, excluding Chemaxon, is reiterating 2024 revenue, adjusted EBITDA margin, and adjusted diluted earnings per share guidance consistent with the May 7th earnings call. Following transaction close, Certara will update its 2024 guidance to include contribution from Chemaxon and expects to maintain its 2024 adjusted EBITDA margin guidance of 31-33%

EBITDA, adjusted EBITDA margin, and adjusted diluted earnings per share are non-GAAP financial measures. Please see “A Note on Non-GAAP Financial Measures” for additional information.

About Certara

Certara accelerates medicines using biosimulation software, technology and services to transform traditional drug discovery and development. Its clients include more than 2,400 biopharmaceutical companies, academic institutions, and regulatory agencies across 66 countries. Learn more at certara.com.

About Chemaxon

Chemaxon is a leading cheminformatics company that provides platforms, applications, and solutions to handle chemical entities in life sciences, biotechnology, agrochemicals, new materials, education, and other research industries. Its products and services help the capture and processing of chemical information that increases its value and results in more efficient decision making for life sciences and other R&D environments. Learn more at chemaxon.com.

Forward-Looking Statements

This press release contains certain statements that constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding Certara’s acquisition of Chemaxon and Certara’s full-year 2024 guidance. These statements typically contain words such as “believe,” “may,” “potential,” “will,” “plan,” “could,” and “expects” or the negative of these words or other similar terms or expressions. Actual results may differ materially from those described in the forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and factors, which may be beyond our control, including the factors detailed under the captions “Risk Factors” and “Special Note Regarding Forward-Looking Statements” and elsewhere in the Company’s Securities and Exchange Commission (“SEC”) filings and reports, including the Annual Report on Form 10-K filed by the Company with the SEC on February 22, 2024. Any forward-looking statements speak only as of the date of this release and, except to the extent required by applicable securities laws, we expressly disclaim any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events.

A Note on Non-GAAP Financial Measures

This press release contains “non-GAAP measures,” which are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Specifically, the Company makes use of the non-GAAP financial measures adjusted EBITDA, adjusted EBITDA margin, and adjusted diluted earnings per share, which are not recognized terms under GAAP. These measures should not be considered as alternatives to measures of financial performance, or any other performance measure derived in accordance with GAAP. Please note that the Company has not reconciled the forward-looking non-GAAP guidance included in this press release to the most directly comparable GAAP measures because this cannot be done without unreasonable effort. For additional information, please refer to the Company’s first quarter 2024 earnings release, furnished with the SEC on Form 8-K on May 7, 2024.

Contacts:

Investor Relations Contact:
David Deuchler
Gilmartin Group
ir@certara.com

Media Contact:

Alyssa Horowitz
Pan Communications
certara@pancomm.com


FAQ

What company did Certara agree to acquire?

Certara has signed a definitive agreement to acquire Chemaxon.

When is Certara's acquisition of Chemaxon expected to close?

The acquisition is expected to close in the second half of 2024, pending regulatory approvals.

How will Chemaxon's acquisition impact Certara's drug discovery capabilities?

The acquisition will enhance Certara’s drug discovery capabilities by integrating Chemaxon's cheminformatics software.

What is the expected financial impact of Chemaxon on Certara in 2024?

Chemaxon is expected to generate over $20 million in software revenue in 2024.

What is Certara's expected adjusted EBITDA margin post-acquisition?

Certara expects to maintain its adjusted EBITDA margin guidance of 31-33% post-transaction.

How does the acquisition of Chemaxon align with Certara’s strategic goals?

The acquisition aligns with Certara’s goals of reducing drug development costs and risks by enhancing prediction and analytical capabilities.

Certara, Inc.

NASDAQ:CERT

CERT Rankings

CERT Latest News

CERT Stock Data

2.44B
160.84M
3.02%
99.26%
2.73%
Software Publishers
Information
Link
United States of America
PRINCETON