Phase Forward reported another apparently effortless quarter of double-digit growth. Revenues for the company’s fourth quarter were $30 million, up 28 percent. The company was profitable during the quarter, with GAAP income from operations pegged at $2.9 million, compared to a loss of $6.4 million during the same period in 2005.

CEO Bob Weiler was jubilant. “During the fourth quarter, we continued to gain traction in major market segments, with the selection of our Web VDME post-market [safety] signal detection and data mining product by a top 5 global pharmaceutical company. Additional wins included the selection of our InForm application service provider (ASP) offering by a major healthcare company and two medical device companies, among others. On the clinical research organization (CRO) front, our increased focus on building relationships with leading CROs has gained significant momentum as we continue to add new partners with some selecting Phase Forward as their standard EDC platform.”

Baxter’s Aboard

The company added 38 new customers during the year, including Baxter International. It is holding its own in the ranks of CRO customers and is also adding clients in the medical device arena, where CardioFocus and CardioDynamics recently joined the roster.

Breaking out its annual revenues, Phase Forward said that InForm “license, application hosting and other related revenues were $72.3 million, an increase of 29 percent from $56.0 million in 2005, representing 68 percent of 2006 total revenues.” Looking ahead into 2008, with all the usual caveats, the company is telling Wall Street its revenues will be between $124 and $129 million. There is no publicly traded e-clinical technology company with audited, open financial results of comparable magnitude.

Strength From Safety

License revenues were 38 percent of the mix, or $40.9 million for the year. Costs are rising: sales and marketing expenses for the year jumped 33 percent, research rose 16 percent, and general/administrative costs rose 23 percent.

The role of drug safety functionality in driving the growth at Phase Forward is fascinating. In his discussion of the topic, Weiler did not explicitly utter the name of a top 5 pharma spelled M-?-?-?-k. But it’s hard to think of another customer that a) is somewhat large-ish and b) signed on as a Phase Forward customer in the spring of 2006.

With new safety-related tools coming to the FDA over a glacial interval, others in the industry besides M-?-?-?-k may be obliged to invest in similar applications.  It will be interesting to watch the degree to which Phase Forward’s safety solutions, including WebVDME and Signal Management, may be driving both existing and new customers toward its electronic data capture (EDC) solution. Toward the end of the year, the company announced the availability of a new version of its Clinical Trials Signal Detection (CTSD) system, another safety product that can help customers detect, evaluate and track potential issues.