ClinPhone rejects Parexel offer

Feb. 19, 2008 - PRLog -- Clinical technology specialist ClinPhone (Nottingham, UK) has rejected a preliminary approach from Parexel International regarding a possible offer for the company.  The ClinPhone board said “the indicated value materially undervalues the company and its prospects.”

Parexel broke the news on February 15th in the light of recent movements in ClinPhone’s share price.  The price rose to 101.5 pence/share at the start of trading on February 18th from 51 pence/share at the beginning of 2008.  Parexel said it was “evaluating its options in relation to ClinPhone”.  Any offer would most likely be made solely in cash, but there could be no certainty that it would make one.

…difficult period for ClinPhone
Parexel’s move follows a difficult period for ClinPhone last summer.  It recorded an operating loss of £1.3 million ($2.6 million) for the first half (ended August 30th 2007), which it blamed on “operational issues, trend changes in the licensing market and adverse foreign exchange movements”.  
 
The operational difficulties, in its randomisation and trial supply management services, resulted in a high level of cancellations in June and July, amounting to 7.7% (£4 million) of its opening order book for the quarter of £52.4 million.  The weakening of the US dollar exchange rate increased its operating loss by £480,000.
 
These issues were compounded by a shift towards purchasing electronic data capture products as a software service - with amortised income, rather than a one-off licensing payment - thus significantly reducing EDC revenue expectations for the year.  ClinPhone acknowledged that its November 2006 Datalabs (EDC) acquisition was unlikely to be earnings-enhancing this year, but reiterated its strategic importance to the company.

In response to the problems, ClinPhone announced restructuring measures – mainly a reduction in supporting roles – resulting in a one-off charge of £465,000, most of which will be recognised in the second half.  The reductions followed lower-than-expected sales growth after a 31.3% increase in headcount.  In addition, the company’s senior management took an average 13% salary reduction for the rest of the year.  
 
In its interim management statement for the third quarter (ended November 30th), ClinPhone says it has made good progress since the summer, with revenues up 13% for the quarter (18% on a constant currency basis).  Its order book has increased by 7% in constant currencies to £51.3 million and its customer base broadened by 39.  It added 51 trials to its systems during the quarter (compared with 62 in the 2007 second quarter), increasing the average number of live trials to 531 (compared with 472).
 
“The operational issues that affected the business over the summer have been resolved and ClinPhone is working with the small number of customers that were affected to restore their confidence in the service provided,” the company says.  It recently appointed a chief operations officer to implement further improvements (see Biopharm Development News 7/1/08).
 
Despite the lower average order value, the overall volume of new business has been higher than anticipated and the annual results are now expected to be “materially ahead of management’s expectations”.  ClinPhone’s financial year ends on February 29th, with the results likely to be issued near the end of April.

Looking forward to next year, ClinPhone says that its customer base has grown and diversified to include a range of smaller clients with shorter duration trials who are capable of making faster decisions.  So it expects to be able to deliver a higher proportion of its order book in the next financial year.  “With 70% of the clinical trials market still using paper based systems, demand for clinical technology services is expected to continue to exhibit strong growth.” Article submitted by www.jobs4dd.com, a specialist online recruitment service for the clinical trial and drug development sectors. Latest news and jobs in the industry are listed on a daily basis.

# # #

www.jobs4dd.com is a specialist online recruitment service for the clinical trial and drug development sectors. Latest news and jobs in the industry are listed on a daily basis. Latest international clinical research jobs, CRM jobs, regulatory affairs jobs, data management jobs, statistician jobs, pharmacovigilance jobs and many more vacancies are listed on the www.jobs4dd.com website. Visit our news archive section at www.jobs4dd.com/news-archive.php

Website: www.jobs4dd.com