By: Tomas Ronolski - AllPennyStocks.com News

Tuesday, April 23, 2013

With continually rising costs of development, biotechnology companies and medical device manufacturers are constantly on the prowl for ways to shave expenses. As detailed by Avik Roy in a study published by the Manhattan Institute, the cost of research in development of a drug that reaches FDA approval skyrocketed from an equivalent of $100 million in today’s money in 1975 to $1.3 billion in 2005. That figure doesn’t calculate costs associated with other drug failures, with averaged research and development costs across 12 leading pharmas resulting in cost per drug approval pushing near $6 billion per drug, according to research of Forbes’ Matthew Herper cited by Roy in his research. Roy notes that FDA’s complex regulatory pathway for Phase III clinical trials is the “biggest driver” in the cost increases. It will take some major industry and FDA changes to curtail the exorbitant costs to bring a drug to market. Looking to harness the power of the web to chip-in on lowering expenses, Cleveland’s DataTrak International, Inc. (OTCQX:DTRK) offers clients cloud-based, unified eClinical® technologies and related services to the clinical trial industry.

In business since 1995 as a Software-as-a-Service company specializing in Electronic Data Capture, or EDC, the company has expanded its portfolio of products in its franchise called DATATRAK ONE™ that is meant to accelerate drugs or devices to market and contain clinical trial costs in addition to offering clinical and consulting services. Cumulatively, DATATRAK ONE and DCCS (DataTrack Clinical and Consulting Services) connect sponsors and contract research organizations utilizing cloud technologies in a single platform to better design and manage research from bench to bedside, effectively saving time and money.

Last month, the company reported that revenue in 2012 climbed 23 percent compared to 2011 to $9.72 million, including a 50 percent year-over-year increase in the fourth quarter to $2.8 million. Gross profit margin for 2012 was 83 percent.

For the year, the company still operated in the red with a net loss of $1.54 million, compared to a net loss of $1.01 million in 2011.

However, a transformation trend shift could be happening and will be a tell-tale for 2013. The year ended with the company having a backlog of $17.8 million, up 54 percent from the year earlier. New contract sales in 2012 were 60 percent higher than 2011. DataTrak ended 2012 with $3.1 million in cash, its highest level in four years. In the fourth quarter, net loss for the company contracted to $100,000, versus $426,000 in Q4 2011, another sign that lends impetus to positive change happening for the company if they can stay the productive course.

On Tuesday, DataTrak said that an Israeli biopharmaceutical company chose to standardize on the DATATRAK ONE™ clinical research platform for its oncology program. The unnamed company will utilize multiple products and modules within the software suite – uEDC, including medical coding and uIRT, including both Randomization and Clinical Supplies Management – to reduce the cost of their clinical trials.

"Our new client has an exciting history of developing novel immunotherapy drug products," stated Laurence P. Birch, chairman and chief executive at DataTrak. "Pairing our expansive technology with their innovative approach to drug development, we are able to reduce costs across their oncology drug program as well as accelerate their clinical trial timelines."

Shares of DTRK remain thinly traded, with a 3-month average volume of only 9,829, according to Yahoo Finance. But, as we often state, thinly traded stocks (only 15.4 million shares outstanding) can move very easily as demonstrated by DataTrak’s market capitalization climbing by nearly 60 percent in 2013. Even with the increase, the company still is only valued at $9.25 million with today’s trading price of 60 cents. If the company can continue to post increasing revenues and manage to swing into the black based upon momentum that seems to be building at its core, it could be an interesting year for DTRK. Proper due diligence is, as always, encouraged.

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