Phoenix Data Systems, Inc.

April 28, 2008 | Bio-Imaging Technologies Inc., a provider of medical image management for clinical trials, has acquired Phoenix Data Systems Inc., a privately held electronic data capture (EDC) company. Phoenix is now a division of Bio-Imaging.

At first glance, this looks to be an unusual pairing as the two outfits occupy different niches in the clinical trials sector. But each company had been looking to move to the next level within the industry by expanding their service offerings.

Mark Weinstein, president and CEO of Bio-Imaging, says that his company has had a tremendous interest in the EDC market, which it estimates as a $1 billion opportunity within five years. "We've been wanting to be a player in the EDC space, which we see as closer to the center of the clinical data universe," says Weinstein. To reach this goal, Bio-Imaging talked to numerous players in the EDC sector and discovered that more than a few were in precarious financial situations or lacked dedication to excellence in customer service.

In Phoenix, Bio-Imaging found a rapidly growing company with a very hands-on management committed to top-notch customer service. "Phoenix has a good, solid EDC system that has been used in over 500 clinical trials. Once we understood what Phoenix was trying to do, we realized we could leverage our core competencies to make more together than we could individually," Weinstein explained.

Bio-Imaging brings critical mass, financial stability, an international presence in the medical imaging market, and good business know-how to the table. Phoenix brings a strong client base of small to mid-size biopharmaceutical companies; nearly 200 new starts using the company's EDC solution, PDS Express, scheduled for 2008; and financial strength as the company has been built without taking in venture capital.

William Claypool, M.D., president of Phoenix Data Systems, was interested in the acquisition opportunity because he points out that more studies are using imaging data in the clinical trial process. "About one-third of all development projects are in oncology today and many are using imaging data as regulatory endpoints. For example, being free of cancer is demonstrated by imaging. In other areas such as neurosciences, cardiovascular, and musculoskeletal diseases, proof of concept is occurring in imaging," Claypool comments.

With expanded use of imaging in clinical trials and adoption rate of EDC growing rapidly, both companies see clear opportunities for entry into each other's markets. At this time, sales forces will remain separate but will look for synergies. Claypool says, "Because many of our clients are smaller companies, decisions about EDC and imaging may be made by the same people. Our relationships with those clients will help us introduce them to imaging."

In the short term, data sets generated by Bio-Imaging and Phoenix Data Systems will not be integrated, although in the long term that may change if data from medical images come together earlier in the process, particularly with the advent of adaptive clinical trials. To get started, Bio-Imaging and Phoenix Data will continue to function separately although Bio-Imaging will be handling many back-office management functions.

"We see Phoenix Data as creating our next foundation for growth," says Weinstein.

Crosstree Capital Partners was the exclusive advisor for Phoenix Data Systems, Inc.

Crosstree Capital Partners is a specialty advisory firm with a dedicated focus on select subsectors of the life sciences and healthcare industries, including drug and device outsourcing, diagnostic products and services, life sciences tools, medical technology, and healthcare information technology. Within these subsectors, Crosstree assists clients with corporate finance activities, including mergers and acquisitions advisory and growth capital financings. Crosstree's deep sector coverage offers clients unique industry insights, well-established strategic relationships across the globe and superior access to the capital markets. While Crosstree draws distinct industry lines of coverage, the firm has no geographic boundaries. Crosstree has advised clients throughout North America, Europe, India, China, Latin America and Australia. Crosstree Capital Partners, Inc. is an affiliate of Crosstree Capital Securities, LLC, which is a member of FINRA and SIPC. Crosstree’s website is http://www.crosstreecapital.com.