The acquisition of Vermont’s Green Mountain Logic by Phase Forward, for $5.3 million, is a surprising and fascinating development this week. Lab Pas CT, the flagship product at Green Mountain, is designed to manage samples and work flows in Phase I.
The Lab Pas software is designed to be used for all the trials at Phase I laboratories or clinics. That’s a departure from how Phase Forward (and other clinical trial technology firms) usually works, which is one trial at a time. Even so, the Green Mountain purchase could nicely position Phase Forward to win more Phase I business or manage larger quantities of lab data, especially for contract research organizations (CRO) now using Phase Forward’s other applications.
Phase Forward president and CEO Robert Weiler says the deal was explored by company founder Paul Bleicher, who had a meeting of minds with Green Mountain’s boss, John Rosenblum. ClinPage interviewed Rosenblum last month.
Weiler believes the cultures and software of the two companies will align well. “John shared our vision,” says Weiler, who met the Green Mountain staff after the deal was announced. “We thought they were the leaders in the space. Their people were extremely talented with a tremendous amount of domain expertise.”
Green Mountain employees will continue to work out of Montpelier, Vermont. (Phase Forward employees are already asking if they can join them, escaping the congested highways and overpriced real estate of Boston.) Weiler is mulling whether tapping other medically-savvy software talent in Vermont could be an unexpected bonus to the Green Mountain deal.
Weiler says quiet, informal conversations with Phase Forward customers uncovered a desire for more seamless handling of Phase I data and samples. “We started seeing last year a number of our large pharma companies, but particularly a number of CROs, struggling with this Phase I issue,” says Weiler. “How do we do this? How do we get this information into a central database?” Using Green Mountain’s system, samples are bar-coded and correctly associated with the patients who donated them—and the data is visible online, in real time, to whoever is running the trial.
Standalone Product Strategy
For the short term, key Phase Forward and Green Mountain products will remain separate, with selected functions from various applications cross-pollinating each other. The larger question is how Phase Forward will exploit Green Mountain’s knowledge of clinical trial laboratory data, and whether there will be new techniques that can be applied to later phases of research. Many CROs and electronic data capture (EDC) firms (like Nextrials and Covance) have long worked with electronic lab data, of course.
The merit of the acquisition may boil down to something simple. Can Phase Forward use both its own and Green Mountain’s assets to raise the bar on how Phase I data (from labs and other sources) is handled across the industry? If Phase Forward can also elevate the way clients visualize and report on lab data across Phase II, III and IV, it will possess a product lineup that will be quite difficult for rivals to match since it bought Lincoln Technologies’ FDA-blessed drug safety toolkit. Some of Lincoln’s visualization engines could be promising to turn loose on laboratory data.
Leveraging Lab Data
One potential risk to the strategy is that some CROs could begin to regard Phase Forward warily if their own contracts shrink because of additional lab-related work that Phase Forward is taking on.
And the execution of the merger could prove challenging. Green Mountain’s specialty, Phase I, is arguably one of the hardest places to demonstrate the benefits of technology. The needs of dedicated, company-owned Phase I facilities may or may not contain lessons for later phase research that unfolds in dozens or hundreds of locations around the globe, some using different central labs.
For now, Weiler says Green Mountain’s deep understanding of laboratory processes and data will be added incrementally into Phase Forward products. “Knowing how those labs work and having that expertise should carry over into a more generic understanding and discussion” at Phase Forward, Weiler says.
One twist to the Green Mountain deal is that Phase Forward will have to embrace four rivals in the EDC space as partners. Those firms earlier integrated their systems with that of Green Mountain. The companies include ClinPhone, etrials, Omnicomm Systems, and Phoenix Data Systems. Weiler notes that in a former life at Lotus, he supported competitors like Microsoft. He pledges to do the same after the Green Mountain purchase. Weiler concedes he cannot speak for the comfort level of his adversaries in the market, but predicts that the benefits of continuing to use Green Mountain’s software will take precedence over competitive worries.
“We certainly will honor the agreements that John and Green Mountain Logic have made,” says Weiler. “When markets start to consolidate, you have to have ‘co-opetition.’ You have to be able to open up and work with others. While it may be awkward, it is in everybody’s best interest that those relationships continue.” He says there will be no opportunity for Phase Forward to glean competitive intelligence about its rivals via the integration of their systems with those of Green Mountain. (It will be interesting to watch whether any new EDC companies desire and are allowed to integrate with Lab Pas CT in the future.)
Bulging Bank Account
Weiler says that the deal is especially likely to please CRO customers, which are seeking to minimize the number of contracts and suppliers on each trial. “We have a pretty good feel of the requirements and needs of customers before we do this,” Weiler says. He reports that some sponsors and CROs are asking themselves, “Wouldn’t it be nice if we could talk about all of our Phase I stuff with one company and at one time?”
Phase Forward’s cash hoard at the end of September, 2007 was roughly $200 million. The company has long hinted to Wall Street that it is on the prowl for new tools for its clinical technology suite, already the broadest in the industry. Weiler suggested that the Green Mountain acquisition had barely dented his war chest.
So it’s fascinating to speculate on what else Phase Forward might purchase. One obvious direction could be an electronic patient-reported outcome (ePRO) or interactive voice response (IVR) company. Beyond that, might the web-based collaboration and regulatory document management tool from Mission3 be appetizing? Trial design services and databases from Fast Track Systems? How about a modern clinical trial management system like Clinical Force? Or even a European-designed data repository like Entimo? We can only guess.
Critique of Best In Breed
Weiler will say that competitors built exclusively around point solutions will be pursuing a problematic strategy. The central question, for him, is not which software firm has the best electronic data capture solution. It’s how many problems a vendor can solve for its clients. “Every company that says they focus on their point product eventually has lost,” he says, naming once-prominent software packages for spreadsheets, word processing and desktop publishing that people under the age of 30 have never heard of.
“Those point product companies went away,” Weiler says. “The market wants integration from one company, one solution. The company that is the integrator and the leader can expand that lead. The companies that sit there and say we focus on one product tend to have difficulty.”