Data analysis double play

Maaguzi and Covance acquisitions solidify Phase Forward’s leadership aims in the integrated clinical research suite market

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WALTHAM, Mass.—Together, the July 27 acquisition of privately held Maaguzi LLC for $11 million and the Aug. 20 acquisition of Covance Inc.'s interactive voice and Web response services (IVRS/IWRS) business for $10 million are key elements in the goal of Phase Forward to "extend its current leadership position" in the integrated clinical research suite (ICRS) market, according to Phase Forward Chairman and CEO Bob Weiler.

"Customers are increasingly looking for global end-to-end ICRS and we believe Phase Forward is the only ICRS vendor that can provide best-in-class solutions covering electronic data capture, safety analysis, interactive response technologies, data analysis platforms, patient reported outcomes and solutions that address Phase I clinical automation all the way through late stage studies," Weiler says.

Maaguzi, which has operations in Indianapolis and in Morrisville, N.C., brings to Phase Forward Web-based, electronic patient reported outcomes (ePRO) and late-phase solutions. This marks the entry of Phase Forward—a provider of data management solutions for clinical trials and drug safety—into the "increasingly important" ePRO and observational studies markets. This is attractive to the company in part because the Phase III trial market has flattened out, Weiler says, and forecasts say it will likely remain that way for the next couple years.
"What we did see and why I think we're also excited about Maaguzi is that we are seeing an increased interest from our customers and also other people looking at the markets that Phase IV, late-phase trials are actually going to be one of the areas of growth over the next two or three years," Weiler says.

Weiler believes that Internet-based ePRO is the emerging paradigm for ePRO studies, and expects it to "supersede the existing expensive and logistically challenging PDA-based eDiaries."

He adds that brining in Maaguzi's electronic data capture capabilities to address late-stage outcome studies will be a help in what he sees as an underserved in the marketplace.

"[Late stage] studies have quite different characteristics; user experiences are quite different compared to the Phase II and Phase III marketplace, and typically combine the collection of patient report outcome data directly from patients with information collected by sites," Weiler notes. "This is important, because we've seen more interest in late-phase studies, such as chronic disease trials like diabetes, that are coming to market, as well as a general increase in the number of mandated late-stage FDA studies."

"Phase Forward and Maaguzi share a commitment to the use of innovative technology for optimizing the clinical trial process," said Scott Dixon of Maaguzi when the deal was announced—he served as chief operating officer for Maaguzi and moved to Phase Forward to serve as vice president of its newly formed Outcome Logix Group. "We believe that Phase Forward's global presence, financial strength and brand awareness will prove valuable assets in providing customers with a comprehensive solution for integrating Web-based, patient-reported outcome data into their clinical trials."

As for the other acquisition deal, in addition to gaining Covance's IVRS/IWRS business, Phase Forward and Covance have entered into a multiyear marketing agreement to provide Phase Forward's InForm electronic data capture (EDC) solution and Clarix Interactive Response Technology (IRT) application as the preferred EDC and IRT solutions to Covance clients. This not only boosts Phase Forward's IRT efforts but solidifies it strategic relationship with Covance.

Both of these acquisitions will have a short-term dilutive impact on Phase Forward's profits, notes Chris Menard, chief financial officer for the company, but the long-term benefits are significant in terms of reinforcing Phase Forward's ICRS leadership.
Although both of these recent acquisitions are highly strategic on their own individual merits, Weiler says it's the combination of the two "that is extremely powerful for Phase Forward's long-term market leadership position," particularly when considered side-by-side with the acquisition of Clarix LLC, a provider of Web-based IRT technology, in September 2008.

"Our strong profitability and cash flow provided Phase Forward with the balance sheet and resources to do a comprehensive review of the marketplace and select the best of breed vendors in each category to round out Phase Forward's ICRS offering," Weiler says.

Looking even just at the IRT market alone, Weiler says that all of the reasons that led Phase Forward to acquire Clarix are playing out, and he has been pleased with the progress in bringing Clarix solutions to market in the "relatively short period of time since they have been part of Phase Forward." During the second quarter of this fiscal year, for example, Covance continued to drive orders related to Clarix, and Phase Forward added trials from other contract research organization partners and customers, such as Aptuit, Cephalon and Shire Development, as well as signing a multimillion dollar agreement with Genzyme related to both InForm and Clarix.

As a result of the recent acquisitions, "Phase Forward now has the broadest and deepest ICRS, and we are leading the charge in integrating this end-to-end suite, and we believe we can win on a point solution basis in any individual category," Weiler says. "There is a proven history of software categories evolving into integrated suites over time, such as desktop software and ERP software."

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