Once again, Phase Forward reported quarterly financial numbers of surprising strength. For its first quarter of 2007, the company logged a double-digit increase of 27 percent in revenue (to $30.1 million). Most of the firm is built around its InForm electronic data capture (EDC) product. License, hosting and other revenues related to that were up even more, rising 40 percent (to $21.3 million).

We seem to recall writing more or less the same story for the last few quarterly announcements. We are definitely repeating ourselves. But for a company of its size, with perhaps $120 million in revenues this year, Phase Forward’s persistent growth is impressive.

Happy Campers

“From a qualitative perspective, we were very pleased with the momentum of our business during the quarter,” CEO Bob Weiler said on the conference call with Wall Street. “Most contract research organizations (CROs) will choose a primary or preferred EDC vendor. We believe these trends are very positive for Phase Forward.”

In checking in with Weiler ourselves, after the earnings teleconference, it’s clear that the recent Quintiles decision was viewed as a watershed inside the company. Yes, the big CRO was already using Phase Forward. But Quintiles reevaluated the technology before announcing its intention to conduct the majority of trials on the platform. The press release notes that of its EDC-based trials, Quintiles is using Phase Forward for 90 percent of them.

Quintiles Win

“It was a very, very significant win,” Weiler told ClinPage. “[Quintiles] did a very comprehensive competitive evaluation. It had a whole lot of visibility. It was a validation of what’s really going on in the market. Wall Street was really focused on it.”

Looking ahead, Weiler sees his company as being a central component of the infrastructure at the world’s largest CRO: “They think in a year or two, eighty percent of their trials are going to be EDC. This becomes a core technology for running their business.”

Medidata Rivalry

On the fractious landscape of EDC vendors, in which Oracle is limping and Medidata and Phase Forward are battling it out with perhaps a dozen mid-sized competitors that still pose longterm and study-by-study threats, Weiler clearly understands the quest for market share is not over. “We do see competition,” he says. “We take competition extremely seriously.”

Having said that, he sounds a tad more confident than usual. Of his largest rival, Weiler notes: “Medidata had a nice run of some wins in the 2005-6 area. They have not had success with those customers. Because of that, we continue to win business and are doing trials for customers they used to have. You haven’t seen any announcements [from them] about new customers.”

We spoke to Medidata a while back; earlier this year, they did sign up Ireland’s Icon (which is also a Phase Forward customer). This ClinPage story has a top Medidata executive’s view of the market.

Product Freshness

We had to ask Weiler about whether InForm is as fresh as EDC products that were developed later, once the internet blossomed. He was quick to remind us of a factoid from his earnings call, which was that the company’s data centers handle 1.2 million transactions per day. “There just isn’t anyone anywhere near approaching that scale. Our product is not stale and old,” says Weiler. “We have a core of rich functionality.”

Some competitors, he allowed, may have “slick” web-based user interfaces. But what matters more to customers, he believes, is what happens at the back end of the data management process. Weiler contends customers want a reliable level of support across all trials—and customization that Phase Forward is equipped to roll out to the industry’s exacting specifications. Weiler launched into a riff on a hypothetical example of handling data about a Hungarian clinical trial patient who relocates from Hungary to Florida and back; he said Phase Forward’s system could handle that without missing a beat.

A New Tool

Weiler predicts that many companies in the industry will increasingly prefer hosted trials. They will not launch large IT projects to bring EDC technology in-house. “More and more companies are moving to the application service provider (ASP) model,” he notes. “They go in and say ‘I can buy these one trial at a time.’ You’ll see that more than the large enterprise deals.” Abbott Laboratories signed up as a Phase Forward ASP customer during the last quarter.

Weiler also alerted us that the company is developing a new trial-setup tool called Central Designer. We asked for details but learned only that it could be available to customers by the autumn of 2007. “That is going to change the way people think about building trials,” Weiler promises.

Editor’s note: We’ve also been talking about Phase Forward with Quintiles and the investment firm Needham & Co. Their perspectives, which include views on the broader EDC market, will be posted next week.