The British firm ClinPhone purchased DataLabs, a middle-tier provider of electronic data capture (EDC) software.

“The assimilation of an established EDC product with our leading suite of IVR, IWR, CTMS and ePRO solutions gives sponsors a choice that they haven’t previously enjoyed,” said Steve Kent, ClinPhone’s CEO. “We are already working with clients to manage all other aspects of their clinical trial and we can now collect submission data on their behalf, too.”

In an exclusive interview, ClinPhone director of strategic business development Patrick Hughes said only three EDC companies in the industry would have been out of ClinPhone’s price range. DataLabs, he said, was identified shortly after ClinPhone’s initial public offering generated cash to invest.

Currently supporting 470 trials, with nearly 1,800 completed since the firm’s inception, ClinPhone recognized its toolbox was missing at least one desirable implement. “We understood that there is a big piece of the technology jigsaw puzzle that ClinPhone was missing,” he says. Customers asked whether ClinPhone could do EDC.

The two companies feel that service-oriented ClinPhone and technology-oriented DataLabs have almost no overlap in their product lineups. Even in the clinical trial management system (CTMS) arena, apparently, the two companies will continue to sell their two existing products.

There was also a strong cultural affinity, Hughes said. “They employ clever, sensible practical people, the same way we do. We both shared the same sort of vision.”

Hughes politely brushed aside any possibility of heightened competition between the largest companies providing technology to the pharmaceutical industry. Major sponsors of clinical trials already require his firm to work closely with such competitors as Phase Forward, Medidata and Oracle Clinical, he noted. “We have healthy relationships with our clients. We have healthy relationships with our competitors. We don’t have a situation where there is sniping about our competitors. Lots of people move among competitors. You can’t be in a position where you’re burning your bridges because you want to dominate the world.”

Having specialized in randomizing patients to various arms of a trial, as well as in telephone-based interactive voice response (IVR) systems, ClinPhone now calls itself a clinical technology organization (CTO). Hughes says the “CTO” term (a rhyme with the far more familiar “CRO” phrase for contract research organization) encapsulates the company’s goal to provide, a la carte, whatever tools or services a customer needs. Over time, he says, the goal is to provide more of what customers require.

Hughes reluctantly conceded there could be other niche companies that ClinPhone might, in theory, be interested in acquiring. Such companies might occupy the area of its most glaring weakness, drug safety and pharmacovigilance, or provide image management and patient recruitment tools.

He and ClinPhone were clearly impressed by what DataLabs had built. “We saw the way these guys had developed a very intuitive product. The feature set was good and growing,” he noted. “It was clear that DataLabs were very clever, very in tune with their client base. They knew what they were doing. They had deep-rooted partnerships with CRO partners.”

In its news release, ClinPhone said it believes the deal will enable unprecedented combinations of applications and services available from no other company that is currently supporting clinical trials: “This unique combination of clinical trials software and services provides its pharmaceutical, biotech and CRO clients with a complete end-to-end clinical technology platform. Sponsors can take advantage of a ‘one-stop-shop’ technology transfer or a service, custom built to individual project requirements.”

Competitors are grumbling about that statement.

But the deal clearly transforms the clinical trial technology supplier landscape and may signal that other deals will begin to materialize. Only a few, elite companies are positioned to serve the elephant-sized accounts in the pharmaceutical, biotech and CRO universes. Perhaps five companies besides ClinPhone—Afferenz, etrials, Oracle, Phase Forward and United Biosource—are in a position to offer three or more major types of technology in clinical trials (see chart, below). Contract research organizations may offer any technology or service but are not considered to operate on the edge of what is possible or cost-effective in the industry.

Clinical Technology Suites & Features

The price of the DataLabs acquisition was not disclosed in the release, which only said the final amount could reach $70 million if several milestones are reached. One target for the DataLabs team to hit is $25 million in revenue during the 12 months ending June, 2007. DataLabs was closely allied with Microsoft and was especially successful in selling EDC to CROs, which are trying to offer new technology without reducing their own revenues or profits.

DataLabs said its technology was well-received but could not overcome concerns about the company’s geographic reach and financial strength. Merck was a customer in 2003 but is now hard to find on the DataLabs site, having since migrated to Phase Forward. Earlier this summer, DataLabs’s cash hoard was depleted by a legal settlement with Datasci, a venomous Maryland company that claims to have pioneered intellectual property used by nearly every company conducting clinical trials.

In an interview, DataLabs said the initial overtures from ClinPhone had arrived before the threat of litigation from Datasci. “The reason we chose to settle was that we needed to get it behind us,” president and cofounder James Langford told ClinPage. “We needed to go forward with the acquisition. If we had not been going forward, we might have taken another course of action.”

The EDC firm had decided against raising additional funds and gently rebuffed other inquiries about an acquisition. Langford says his company found a corporate soul mate in ClinPhone. “We all liked each other,” he says, even when the human resources departments at the two companies met. “We all had the same vision. We had the same sense of humor. We saw the world the same way.”

Chief operating officer Nick Richards sounds as excited as Hughes and Langford. “We are really putting top-notch, best of breed products together,” he says. Richards added that the integration tools that the company had already developed would now be focused on the task of uniting the various ClinPhone and DataLabs tools, and do so “in a robust manner, not with duct tape and baling wire.”

In California and Pennsylvania, it appears, all DataLabs employees but one will retain their jobs. (William E. Maya is now the former CEO of DataLabs.) But the new total of 710 ClinPhone employees is probably double the headcount at either Phase Forward or Oracle Clinical, the pharmaceutical division of the California database giant.