Certara (CERT, Financial) is experiencing significant growth, with its stock rising by 33% last Thursday and Friday. The momentum continues as the company provides optimistic 1Q25 revenue guidance, reaffirms FY25 guidance, and reveals a $100 million share repurchase plan. The initial surge is linked to the FDA's April 10 announcement to phase out animal testing in monoclonal antibody therapy development, aligning with CERT's expertise in bio-simulation models, which boosts demand for its software.

• In Q1, CERT's software revenue increased by 18% year-over-year, surpassing last quarter's 17% growth and Q3's 16% rise. The growing adoption of CERT's bio-simulation software, particularly the Simcyp Simulator for pharmacokinetics modeling, is a key factor. The FDA's announcement supports the expansion of AI-enabled bio-simulation tools like Simcyp Simulator within the biopharmaceutical sector.
• CERT is enhancing its platform with AI to improve predictive modeling accuracy and streamline drug development. The latest Simcyp Simulator version features AI tools such as "Ask Simcyp" and chemical structure-based parameter predictors, enhancing drug modeling usability and precision. These innovations contribute to a strong customer net retention rate of 110% in 2024.
• The company also introduced the Non-Animal Navigator platform, supporting the FDA's move away from animal testing. This platform offers strategic regulatory advice and AI-enabled modeling toolkits, enhancing CERT's bio-simulation offerings and increasing adoption among biopharmaceutical firms focused on monoclonal antibodies and antibody-drug conjugates.

In summary, CERT's robust software revenue growth highlights its ability to leverage industry trends favoring AI-enabled bio-simulation in drug development. With regulatory support and AI integration, CERT is well-positioned for continued growth in the coming quarters.