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CEOCFO Monthly Analyst |
No more papermaking clinical
trials paperless
Biotechnology & Drugs Data Trak International 20600 Chagrin Blvd.
Dr. Jeffrey A. Green Interviewer conducted by: Diane Reynolds CEOCFOinterviews.com Brief History and Background My name is Dr. Jeffrey Green and I
have been in the clinical trials industry for the past twenty years. I am a pharmacist and
graduated from Purdue. I received a Doctor of Pharmacy Degree in 1982 from the University
of Texas. I then went into performing clinical trials for the pharmaceutical industry as a
research investigator at Case Western Reserve University. I left the university to go on
the entrepreneurial and corporate side of clinical trials. CEOCFOinterviews: Data Trak International, it’s
not really a drug company or biotech company, explain this to my readers, it’s a
little unique. Dr. Green: It is and we are
actually quite proud of that. DATATRAK International is in a new market niche and a
developing market niche called “application service providers”. We provide
hosting and software applications to run clinical research data for the pharmaceutical
industry over the Internet. Why that’s important is, and this may shock some of your
readers, but the way that the data is collected for clinical trials in the pharmaceutical
industry and in national institute of health or anyone who does clinical research is data
is collected by people flying around in airplanes to pick up paper. We believe this
process should run electronically over the Internet. CEOCFOinterviews: I understand this will reduce the
clinical trial duration by 30%. Dr. Green: Yes it does, and
that has been proven. It also improves the quality of the data by 86% and although cost
were not evaluated in this published paper by Bayer Pharmaceuticals
it’s our projection that it will reduce the cost of clinical trial paper models by 50
to 70%. CEOCFOinterviews: You used to be a pharmacist. Do you
miss that end of the business? Dr. Green: Oh yes, at times I
do, when I was younger I could put in the 15 – 20 hours a day it needed to be done in
terms of patient care research and teaching, but it’s also exciting here on the
corporate side, because in a sense, it’s almost like academia because we’re
still breaking new ground. What we’re doing is not yet conventional, it’s not
yet well accepted, and 95% of the clinical trials run in this world are still run with
paper. CEOCFOinterviews: How are you getting your service
out there and how are you persuading them that this is a better solution? Dr. Green: Well, one answer to
that is we deliver a product that works, and that is obviously the first thing because
there have been many failures to this electronic data capture market. People have been
trying for about twenty years, this is not a new concept, but no one has gotten it right
yet. We are also creating metrics just like we just talked about in clinical trial
duration reduction with electronic technology and also improving data quality and reducing costs. We
are a publicly traded company so we get the word out during our routine press releases to
continue to try to create awareness and build a market. We speak at seminars. I am very
open to people calling me and talking to me and learning more of what the company is about
and what we are trying to do. An informed shareholder is the best shareholder to have. CEOCFOinterviews: Are you doing this on a global
basis as of yet? Dr. Green: Yes we are. We have
run with our software products in more than 47 clinical trials in 30 countries
encompassing more than 25,000 patients worth of data. CEOCFOinterviews: Security is a big issue. Especially
going through the Internet, people tend to panic a little bit…how are you addressing
the issue? Dr. Green: Well, they were
panicking more a year ago than what they are now. I know you are not familiar with the
clinical trials but let me make an explanation of what I mean by that. Currently the
clinical research process is handled with paper with three ring binders of the data forms
located at the doctors offices and hospitals in clinics where they do the research. You
could walk into the clinic at this date and time anywhere in the world and see on the
first row Pfizer clinical trial with the
three ring binder and paper and you could walk by and pick up that three ring binder and
walk away with it with no user ID, no password and you would have not only the template of
the questions they were asking on the forms, but you would have all the answers and it
would be gone. That in our opinion is a lot less secure than the Internet. Now let me
address how we are handling security on the Internet. The data is both encoded and
encrypted on both ends, according to international legal limits, and they differ from
country to country. The other advantage of our software is when the data is transferred
from a doctors office or hospital to a review center or data base that is collecting the
data, only the answers are transmitted, not the questions. If someone does intercept the
data, they only get a long string of answers with no relationship to what that means. It
would be impossible to interpret. CEOCFOinterviews: That’s good. Now you rely a
lot on business alliances. Who are your alliances and how important are they to the
company? Dr. Green: Alliances currently
are for our software, which has been picked as the best of breeds by Quintiles
TransNational, a large publicly traded CRO; by British Telecom, by Computer Sciences
Corporation and by Controlled Delivery Systems, which is a non-public medical device
company out of Boston, Massachusetts. We have other companies that have selected our
software as the prime route by which they are going to enter the automation of clinical
trial age but those are not announced yet. CEOCFOinterviews: All the software that you have is
that designed at the company or is it outsourced? Dr. Green: Our software has
been designed through our software development office in Germany and we do most of our
software development. We do out source certain pieces, but it’s not like we have
contracts with a large vendor that is responsible for controlling our product - we do that ourselves. CEOCFOinterviews: Is it easy to use? Everyone says
they have all this nice new software but some of it’s complicated. Dr. Green: Yes it is. It is a
windows based product so anyone who is comfortable with windows or Microsoft Word or Excel
or PowerPoint will have no trouble learning. It is very intuitive. We deliver service
levels with 99.5% availability and we adhere to that service level so that when you click
on and expect the application to work, it
runs 99.5% of the time. We also have a web-based training module that allows doctors and
nurses to train on the application on an auto tutorial with audio that tracks their
comprehension over the Internet from the comfort of their own home so that they can
connect to a tutorial and refresh their knowledge of the system or even learn how to use
the system very easily. CEOCFOinterviews: Is it in all the countries globally
or are there some areas you haven’t penetrated yet? Dr. Green: I’ll give you
some examples, it’s in 31 countries, the United States, Canada, Brazil, Chile,
Argentina, Australia, South Africa, France, Germany, Czech Republic, Russia , Spain, and
Italy. The only areas we have not penetrated on, in a consistent basis, are Japan and
China. CEOCFOinterviews: Do you still try to get into those
areas just a little bit more? Dr. Green: Yes, we are and our
software is able to be converted over to Cange with some minor development work but we
want to see a commitment of the Pacific rim in this direction and we feel it will come.
This is because they are very attracted to technology but we have with 95% of the trials
still being done with paper there is still a huge market out there in just North America,
South America, Europe and Australia at this
point and time. CEOCFOinterviews: I know by going- through some of your
numbers here do you have the money and credit to go on further with the research? Dr. Green: Yes the company has
at this current time approximately $13 million dollars in cash and we have no debt. We are
publicly traded so we have a mechanism for either a secondary round of capital raising or
a private investment in the public equity. All of that will be contingent upon our
progress and our ability to generate cash. Obviously, if we are generating cash there is
no need to raise additional funds. Our burn rate is approximating 1 1/2 million dollars a
quarter, which is going down with the business going up on a regular basis. So we have
plenty of cash to last us for the next couple of years without raising any. We are sitting
pretty stable in this situation. CEOCFOinterviews: You’re sitting in front of a
potential investor; this is the first time they are looking at your company. They’re
looking at this and wondering “Gee, do I really want to invest in a company like
this. What would you say to them? Dr. Green: Well, I think they
are wise to be cautious. I think the frenzy that has surrounded the dot com scenarios,
most of which has not panned out, have not been an appropriate business model to convince
anyone that they can be profitable. I think skepticism there is very healthy. I think
skepticism which regards to health care is very healthy because that is continuing to
undergo a metamorphosis in our county and will continue to do so probably for the most of
our professional lives as our population
ages, so that won’t stop either. What I would tell them is I would actually answer
their questions with a few questions. How long past the year 2000 do you believe that the
data will be collected by large, sophisticated pharmaceutical companies testing huge
pipelines of novel new drugs by flying people
around to pick up paper? My next question would be, that is after their answer to that is
“well, I don’t think that will continue since that’s a long term scenario” and I would agree with them. Then I
would say, you would need to investigate the companies that are out there, like ours that
have technologies that have delivered, that are able to reduce the time of drug cost and
has already proven that in close to 50 international trials. I would then add on the
economic answer to that and say we are trading below our cash value, which gives no asset
value to what we have already. We have no debt and I think they could probably make their
own conclusion after those three points. CEOCFOinterviews: There are other areas beside the
healthcare that they are trying to get rid of the paper. They’re trying to use the
computer to condense this and use it to the fullest capacity. Are there any other areas
you would like to cover with your company as far as beyond the healthcare industry? Dr. Green: People do ask that
question and there are certainly other areas we can grow into such as registry databases
or use of our tool for marketing collection of information about drugs and those are
actually being explored and begun at this point and time. They are a little bit different
than clinical trials but it’s along the same parallel pathway. We are really at this
point and time, focused on anything close to clinical trials as an extension of our
business. We are not looking at B to B use of our product from the standpoint of anything
but clinical trial work. We are not looking at electronic patient medical records or
hospital records that really takes us off of our focus. We estimate the market for
clinical trials of data processing and handling as close to 8-9 billion with no large
player. That’s a big enough sandbox for us to focus on right now. CEOCFOinterviews: You had said earlier that you are
trying to get the word out there about your company as much as possible by using different
media sources including ourselves, but there are other companies out there saying,
“Look what they’re doing, we could do this too”. You’re going to have
competition that is if you don’t already. What is it you feel makes this company
stands out in a crowd? Dr. Green: I have two answers
to that. The first is, the curse of this industry for us has been the conservatism of the
pharmaceutical industry. Many of them are making 30% after tax profits, they’re using
a very inefficient paper system and their question is “why should we take the risk of
changing?” which is a very good question. However, change is going to be important in
this industry and the conservatism that was once our worst enemy, once you prove you can
deliver then conservatism and the volumes of cash resources these pharmaceutical companies
have now become your best friend. This is because they are not price sensitive,
they’re delivery sensitive. No one is going to risk his or her career at a marker at
Pfizer on a new untested piece of software
when you have a product that has successfully performed around the world hundreds of
times. That’s how this industry makes its decisions. They do not make it on a
commodity basis, they make it on a value basis. The second answer I have to that is
large pharmaceutical companies like Merck , Pfizer , Glaxo , and Lilly have all over the past 5-10 years attempted to
develop their own product. They obviously know the pharmaceutical industry very well, and
they have collectively spent well over $70
million dollars trying to create their own internal product, most of which have failed.
Either they were out of their core competency or the Internet hadn’t grown to the
point where it really took off like the last year and a half. They weren’t able to
focus or adapt. However, actually, throwing a bunch of software developers in a closet
thinking they’ll come up with a product in this highly regulated area in the next six
months, I will tell you from experience it’s not a logical scenario. CEOCFOinterviews: How long has your company been
doing this? Dr. Green: Our company has
been in this business trying to move the electronic data markets since 1995. The German
developers, some of which have worked with this product for the past six years, know it
inside and out. CEOCFOinterviews: You are out there trying to prove
that this software does work. That it is better to use. How are you approaching them? Are
you calling them up on the phone, are you walking into their offices? Dr. Green: We did a lot of that
the last couple of years. As we say around the office “the dog wasn’t ready to
eat the dog food”. It was fresh, it looked good, it smelled good, but they just
weren’t ready to buy yet. That has all changed over the last year. They are now ready
to buy. We are running, by the end of this year, projecting to run 20 clinical trials at
one time. Last year we had one. So there is movement, they are buying, they are taking
action. A large amount of our growth in contracts is occurring mostly through referral and
growth within the same pharmaceutical company. This is remembering that some of these
pharmaceutical companies run well over 200 clinical trials per year. The person next to
the office of the one using DATATRAK is now
telling them they really like this and the word spreads. We are also doing a lot of
speaking at seminars but we haven’t spent a lot of money by design on marketing and
getting the word out because it was our focus to deliver first. Once we deliver we will
have something to say. As opposed to getting everyone excited and then not being able to
deliver and having spent a million dollars in some Madison Avenue marketing campaign was
conscientiously a decision that I made not to do. CEOCFOinterviews: Is there anything that you would do
differently? Are you pleased with the way things are running? Dr. Green: I’m relatively pleased with the way things are running. The market is growing. I would like people to be able to see the vision we see a little bit faster. We are trying our best to communicate that to them. There is only so much you can do to try and convince people without being obnoxious about it. And that works in reverse as you know. So we’re proving by example and that takes time to build. I’d like to add, that if anyone is interested in knowing more about our company they are encouraged to contact me either by phone or fax. |
