Newton, Pa.-based contract research organization (CRO) Bio-Imaging Technologies has opened up a new book of business with the acquisition of eClinical company Phoenix Data Systems. Bio-Imaging, which specializes in running trials that require medical imaging management, purchased the King of Prussia, Pa.-based company for $24 million, including $17 million in stock and $7 million in cash.
Following the acquisition, Bio-Imaging raised its revenue guidance range from $42 to $45 million to $52 to $55 million. It boosted its earnings guidance from 21 to 23 cents per share to 22 cents to 24 cents per share. The company reported service revenues of $38.2 million last year.
Crosstree Capital Partners acted as financial advisors on the deal.
For the near-term, Bio-Imaging plans to manage the company as a separate entity while it finds ways to leverage its core CRO business. The company stated it will be looking for sales force, marketing and technology efficiencies. For now, Phoenix Data Systems will remain relatively unchanged. The company will keep its name and continue to be run by its current president, William Claypool, M.D. All 127 of its employees will remain part of the organization.
“We do see tremendous opportunity, probably in the next year time-frame, to start to look at how we can do things more efficiently and grow more revenues without growing as many people,” said Mark Weinstein, president and chief executive officer at Bio-Imaging stated during a conference call...
Ted Kaminer, chief financial officer at Bio-Imaging, stated that the electronic data capture (EDC) market was at a dramatic tipping point in terms of adoption.
“Most of the pharmaceutical companies believe that outsourcing EDC is the most cost effective and efficient option. [The industry] is expected to experience dramatic growth over the next four-to-five years to over a $1 billion,” stated Kaminer.
He added that Phoenix Data Systems will be poised to become an eClinical market leader now that it is part of a global organization.
Founded in 1997, Phoenix Data Systems currently has about 35 clients and is working on 80 different projects. The company stated it generated $12 million in revenue in 2007 and that it is profitable. In contrast, Bio-Imaging has 100 clients and is running 220 projects.
Although Phoenix Data Systems is primarily an EDC provider, the company has other eClinical offerings such as electric patient report outcome (ePRO) and interactive voice response (IVR) services. It stated that its comprehensive data management services are a large component of its success.
Although the adoption of EDC in early stage development has been slower compared with later phase studies, Phoenix Data Systems’ phase I business is a large part of the company’s success. It’s a vital revenue stream for the company, which stated that at any one time, half of all its ongoing trials are in phase I.
Claypool said that one of the reasons its phase I services are so “palatable” to its clients is because of its ability to put studies together much faster with full edit checks and validation.
“We’ve been very lucky in that we’ve had a great relationship with a couple of sponsors who have relied on us for phase I. Over the last four years, we’ve been able to jointly develop certain aspects of our technology that really appeals to them,” he said.
Bio-Imaging was founded in 1990 and went public just two years later. Although it was dropped from NASDAQ for four years for failing to turn a profit, it has had nearly seven years of steady growth. And it has built up its global operations with a heavy emphasis on non-organic expansion. The company has built its extensive imaging capabilities, the mainstay of its business, from several acquisitions of companies with different therapeutic expertise.
In 2004, the CRO acquired Netherlands-based Heart Core, a central imaging lab focusing on cardiopulmonary services for clinical trials. In February 2007, it acquired France-based imaging company Theralys. The company focused on central nervous system and neurovascular treatment areas such Alzheimer’s and stroke.
“In each case, management has been able to effectively retain and integrate the teams from these groups to expand the revenue and profitability of Bio-Imaging…we expect similar results from this acquisition,” stated Kaminer.
Medical imaging plays an increasingly important role in the development of drugs for a variety of disease processes, including cardiovascular disease, central nervous system disease, cancer, diabetes, osteoporosis and arthritis. Use of medical imaging within clinical trials offers the potential for more efficient and accurate evaluation of medical products and provides information not available by using traditional measurements such as quality of life.