In a further sign of flagging revenues and consolidation in the eClinical space, eResearch Technology (ERT), the US-based supplier of centralised electrocardiograms, eClinical technology and electronic patient-reported outcomes (ePRO) services, has sold its electronic data capture business to EDC specialist OmniComm.
ERT is hanging on to its core cardiac safety and ePRO operations, and says it will continue to expand them. “We have been involved with our EDC business for many years and have a loyal customer and employee base,” commented president and chief executive officer Dr Michael McKelvey. “However, it is clear that a more significant and focused investment is required to be successful in today’s EDC market.”
Under the acquisition agreement, Florida-based OmniComm has issued 8.1 million shares of common stock and assumed certain liabilities, including deferred revenues, relating to ERT’s EDC business. In exchange, OmniComm gets ERT’s electronic data capture assets (primarily EDC software, applications and fixed assets) as well as a US$1.15 million cash payment.
The majority of ERT’s eClinical support team will be moved to a new US office that OmniComm plans to open in the New Jersey area, where they will provide ongoing support and maintenance to the acquired customer base, the latter noted.
ERT’s decision to offload its electronic data capture business, which generated revenues of US$5.9 million last year, comes hard on the heels of etrials Worldwide’s agreement to be acquired by health information technology specialist Merge Healthcare for around US$18 million.
Long-term growth
“We believe strongly in the long-term growth of the EDC and eClinical markets,” said Cornelis Wit, chief executive officer of OmniComm Systems. “We have positioned ourselves to be a leading provider of EDC solutions and expect this transaction to allow us to grow more rapidly. By combining the two EDC businesses, OmniComm extends and deepens its roster of EDC customers and gains several key technologies that can be added to the TrialMaster eClinical suite of applications.”
In a period of consolidation for the eClinical industry, “we believe that only those firms that can combine superior products and services along with a demonstrated ability to deliver a broad array of solutions will be able to effectively compete”, Wit added.
OmniComm’s expansion into Europe during 2007-08 was the first step towards expanding its portfolio of products/services and developing as diverse a client base as possible. “ERT has served several markets, including the governmental sector and Fortune 500 sponsors, that complement our focus on biotech and medical device clinical trial sponsors,” Wit observed.
In the first quarter of 2009, ERT’s net revenues fell by 29.4% year-on-year to US$23.8 million, while operating income dived 60.7% to US$3.3 million and earnings per diluted share (EPS) were US$0.04 versus US$0.11 in the first quarter of 2008. The revenue decline was largely due, though, to a sharp drop in contracts for Thorough QT cardiac safety trials.
The company, which undertook a corporate rebranding during the quarter, lowered its financial guidance for 2009 to reflect the more difficult operating environment. ERT does not expect the sale of its EDC business – excluding any impact from related one-time charges – to affect this revised guidance, which was for net revenues of US$100.0-US$115.0 million and EPS of US$0.20-US$0.35.
