Datatrak International, the eClinical specialist that has spent the last few years mired in financial losses and restructuring programmes, continues to show signs of pulling the business back into shape.

In the second quarter of 2009, the US-based company slashed its operating losses to US$36,181 from US$15.6 million in the same period last year, while its gross profit margin improved from 60% to 75%. Second-quarter revenues, however, fell by 18.6% to US$1.83 million.

Last-year’s second-quarter losses were inflated by asset impairment charges of US$12.8 million, a US$501,864 charge for depreciation and amortisation, and severance expenses of US$579,206. In the latest quarter, there were no impairment expenses, US$116,062 was levied for depreciation and amortisation, and severance expenses of US$154,000 were converted into a US$128,616 gain following a negotiated settlement with a former Datatrak executive officer.

The improved margins were helped by a sharp reduction in selling, general and administrative expenses, which dropped by 53.8% to US$1.42 million in the second quarter.

Datatrak recorded a backlog of US$8.55 million as of 30 June 2009, compared with US$9.70 million at 31 March 2009. Backlog comprised anticipated revenue from authorisation letters to start services, statements of work, and other signed contracts yet to be completed.

As Datatrack noted, the backlog as of 30 June did not include a previously announced letter of intent with a “leading global clinical research organisation” for services on a Phase III clinical trial awarded to the CRO in July by the European division of a global top 20 pharmaceutical company. This contract has an estimated backlog value of US$745,000.

“With three consecutive quarters of near break-even performance, we are pleased with the ongoing commitment of our team to execute our strategy to drive operating results,” commented Laurence Birch, chairman and interim chief executive officer of Datatrak.

“If you adjust for severance charges for the last three quarters and focus on the underlying operational performance of the Company, our net loss from operations was only US$153,000 and US$165,000 in the first and second quarter of this year, respectively, and was a slight profit of US$15,000 in the fourth quarter of 2008,” he said, adding: “While our progress to date has been substantial, we continue to keep our eye on the prize as we believe profitability and self sustaining cash flow will be key to Datatrak’s long-term success”.

Recent research published by IDC Health identified Phase Forward and Medidata as the dominant vendors of electronic data capture (EDC) solutions, Birch pointed out. But it also indicated that “smaller EDC vendors can be highly competitive with the major vendors by focusing on specific industry segments and successfully differentiating themselves in the market”.

This was the thinking behind the recent launch of the Datatrak One concept, which encompasses a unique, single platform technology for clinical trial management, Birch noted.