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Wednesday, July 05, 2006

Pharsight Corp (PHST)

PHST (sec) Pharsight Corp. They sell software and consulting services to drug companies to improve the efficiency of the drug development decision making process.

When I last looked (Jan 28, 2006), the stock was up to $1.80 from $1.60. It's now $1.50 on the ask.

10-Q for the period ending Dec 31, 2005:
Balance sheet is reasonable, but not strong. Revenues are down slightly (around 11%) due to an unexpected downturn in the drug industry. Profits evaporated for the quarter. Nine month cash flow from ops is good. Large capex way above depreciation (prior year was far lower). Some shuffling of finances. Some dividends paid to preferred shares.
1.9 million convertable preferred shares on Dec 31, 2005. Each is convertible into 4 common shares.
19.5 million common shares on Feb 9, 2006.

New CFO.

Q4 results:
Revenues drop slightly from Q3. Basically, some big customers slowed down while the others are picking up some of the slack (68% increase vs Q3). Gross margins are around 64% for the quarter and 66% for the year. They had a net loss for the quarter and for the year.

SOFTWARE: They released a validation suite for validating software installations (4 customers signed up for it). They added a new Japanese global drug company in their SW licensing (now 16). They expanded relationships with Altana, Vertex Pharm, Genentech, and Wyeth. New DMX licensing agreement with Altana. Hired a training conultant to work with customers.

CONSULTING: 47% revenue increase in Q4 over Q3. 17 new consulting agreements which include 5 new customers. Existing customers were Pfizer, Sepracor, Sankyo Pharma, sanofi-aventis, DebioPharm, Schering AG, TransForm, Altanta, Merck. Participated in several symposia. Hosted an industry seminar on modeling and simulation. Hired 2 senior scientists.

They're expecting 10% to 15% revenue growth for next year, somewhat weighted in the 2nd half.

Sr VP of consulting services resigned to devote more time to family etc.

Revolver extended and clarified.

10-K for the period ending March 31, 2006:
19.4 million shares. on June 22, 2006.
1.9 million preferred shares on Mar 31, 2006, convertible into FOUR common shares.
3.0 million options and warrants.
Assume 35 million totally diluted shares.

Balance sheet is about the same.

2004: $17.7 million
2005: $22.6 million
2006: $22.7 million

Cash flow from ops has been increasing each year, but that really means nothing because it's due to various unrelated factors. Overall, operating cash flow looks fine.

Capex has been increasing which isn't surprising. Around $2 million in 2006.

Financing seems like what I expected.

I figure the stock is worth maybe $1.00 per share.

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