Datatrak International, the US company that recently struck the second multi-year Enterprise Agreement in just two months for its suite of eClinical software solutions, had a difficult year in 2007. Operating losses more than tripled to $11.0 million on revenues that plunged 40.3% against 2006 to $10.6 million.

According to Datatrak’s president and chief executive officer Dr Jeffrey Green, the clinical trials market during 2007 “was not as responsive or timely to our offerings as we had anticipated, despite the fact that the completeness and functionality of our technology platform has been recognised by groups such as Forrester, Gartner, NTT Data and multiple experienced clients”.

In response, the company has been shedding staff. In the fourth quarter Datatrak recorded severance charges totalling $192,000 in association with the loss of 21 employees. The redundancies are expected to cut annual direct costs by around US$800,000 and annual selling, general and administrative (SG&A) expenses by roughly $867,000. Taking into account the 28 redundancies from earlier in the year, annual direct costs should drop by about $1.59 million and annual SG&A expenses by $2.26 million in years to come, Datatrak believes.

In the fourth quarter of 2007 the company’s gross profit margin narrowed to 48% from 66% in the same period of 2006, with Datatrak blaming a “significant decrease in revenue partially offset by a 28% reduction in direct costs”. Fourth-quarter revenues were down by 53.9% to US$1.84 million and the operating loss was US$2.63 million compared with $1.36 million in the 2006 quarter.

The company’s current backlog from signed contracts or authorisation letters is around $12.6 million compared with $12.2 million as of 31 December 2007 and $12.2 million a year before that. “Historically, backlog has been a poor predictor of the company’s short-term revenue,” Datatrak cautioned.

Optimistic view
Dr Green took an optimistic view of the company’s prospects for 2008. As a result of cost-cutting and other initiatives undertaken last year, “we are seeing early signs of a building sales momentum and we look forward to returning the Company to a positive sales growth trend during 2008”, he commented.

During the fourth quarter of 2007 Datatrak signed contracts for around $4.1 million worth of new business, he pointed out, adding: “This represented one of the strongest quarters in our Company’s history, a testimony that the steps we put into place last year with the re-organisation of our sales and marketing efforts are yielding positive results.”

Dr Green also highlighted the multi-year Enterprise Subscription License agreement signed with Japan’s NTT DATA last December. “The drawing power and the name recognition associated with NTT DATA in Japan were clearly evident at a recent trade show in Tokyo, where at times potential clients were four to five rows deep within our booth,” he said.

Moreover, “signs abound” that the pharmaceutical industry will eventually gravitate to a broad set of eClinical offerings “and will even move beyond that with linkages to patient health information systems and the establishment of longitudinal registry information capabilities”. Dr Green claimed.

“Datatrak possesses the most seamless capabilities available in this market, and when coupled with our broad set of applications, we remain confident that we will be able to capitalise on these advantages as the market and the regulatory bodies mature in this direction,” he stated.