Medidata (MDSO), Clinical development solutions, NY, NY
Pluses
. Long string of increasing sequential quarterly revenues . Increasing gross profit margin, 63% for March 2009 quarter . $91mm backlog expected for the remainder of 2009 . Recurring revenue, high customer retention rate . Blue chip customer base
Negatives
. Only one quarter of profitability . High multiple of both book & tangible book value
Medidata (MDSO)	MDSO, 7, C+
Clinical dev systems				(*)		Post-IPO shrs: 22.4mm
NY, NY		2006	2007	2008	MarchQtr 09	IPO Mkt
Rev ($mm)		$37	$63	$106	$34	Cap (mm)
Gross profit %		23%	27%	52%	63%	$269
Operating income %		-50%	-37%	-15%	7%	@$12
Net after-tax income		$0.2	$9.2	-$1.0	$1.7
Net income %		0.5%	14.6%	-0.9%	5.0%
(*) On March 17, 2008, acquired Fast Track, a provider of clinical trial planning solutions.
Results of operations for the three months ended March 31, 2008 and for subsequent periods include
the operations of Fast Track since the date of acquisition
			2008 Quarterly Progression		2009
	March	June	Sept	Dec	March
Rev ($mm)	$20	$26	$28	$31	$34
Gross profit %	42%	48%	54%	62%	63%
Operating income %	-39%	-21%	-10%	2%	7%
Net after-tax income	-$8.6	-$5.9	$3.4	$0.4	$1.7
Net income %	-43%	-23%	12%	1%	5.0%
VALUATION RATIOS	IPO Mrkt	Price /	Price /	Price /	Price /	% offered
	Cap (mm)	Sales	Earnings	BookValue	TangibleBV	in IPO
Medidata (MDSO)	$269	2.0	39.5	179.2	-19.0	28%
SCORECARD		Mgt	Market	Market Do-	Proprie-	Total
1-5, 5 is high			Growth	mination	tary	rating
20 is perfect		2	2	2	1	7
Business
. A leading global provider of hosted clinical development solutions that enhance the efficiency of customers’ clinical development processes and optimize their research and development investments. . Customers include pharmaceutical, biotechnology and medical device companies, academic institutions, contract research organizations, or CROs, and other organizations engaged in clinical trials to bring innovative medical products to market and explore new indications for existing medical products.
Recurring revenue & high retention rate
. MDSO’s business model provides a recurring revenue stream that MDSO believes delivers greater revenue visibility than perpetual software licensing models. . Customer retention rate was 81.8%, 92.0% and 87.0% in 2006, 2007 and 2008, respectively. . MDSO did not lose any customers during the first three months of 2009.
Expanding customer base
. MDSO’s customer base has grown from 33 at January 1, 2006 to 153 at March 31, 2009 . Customer base currently includes 22 of the top 25 global pharmaceutical companies measured by revenue and many middle-market life sciences companies, as well as CROs through MDSO’s ASPire to Win program. . In 2007, 2008 and in the three months ended March 31, 2009, Johnson & Johnson, AstraZeneca, Amgen, Astellas Pharma and Takeda Pharmaceutical were the largest customers measured by revenue.
Principal Offering
. Medidata Rave, is a comprehensive platform that integrates electronic data capture, or EDC, with a clinical data management system, or CDMS, in a single solution that replaces traditional paper-based methods of capturing and managing clinical data. . In addition, MDSO’s on-demand, hosted technology platform facilitates rapid and cost-effective deployment of solutions on a global basis. negotiation through Medidata Designer, Medidata Grants Manager and Medidata CRO Contractor.
Benefits
. MDSO solution allow customers to achieve clinical results more efficiently and effectively by streamlining the design, planning and management of key aspects of the clinical development process, including protocol development, CRO negotiation, investigator contracting, the capture and management of clinical trial data and the analysis and reporting of that data on a worldwide basis. . Customers rely on MDSO solutions to safely accelerate the clinical development process and maximize the commercial life of their products.
Try one before committing
. MDSO derives a majority of application services revenues through multi-study arrangements for a pre-determined number of studies.
. Also offers application services on a single-study basis that allows customers to use a solution for a limited number of studies or to evaluate it prior to committing to multi-study arrangements.
Backlog
. As of January 1, 2009, MDSO had full year backlog of approximately $116.7 million.
. Also tracks, quarterly, the remaining amount of revenue to be recognized from backlog in the current year, or remaining backlog, which as of March 31, 2009 was approximately $91.6 million.
Competition
. In the electronic data collection (EDC) market, in addition to internally developed solutions, MDSO competes with firms such as BioClinica, etrials Worldwide, Inc., eResearch Technology, Inc., ClinPhone, Datatrak International, Omnicom Corporation, Oracle Clinical and Phase Forward Incorporated.
. In the clinical trial authoring tool market, MDSO competes with internally developed protocol tools, commercially available software offering structured environments for creating protocols such as Microsoft Office and SharePoint solutions and providers of XML authoring tools using Microsoft Word to create protocols such as Invision Research.
. In addition, MDSO faces competition at the clinical data product level from smaller independent companies such as TTC LLC and ClearTrial, LLC.
Use of $64mm in IPO proceeds
. General corporate purposes, including working capital, capital expenditures and potential acquisitions.
. May also repay all or a portion of $14.6 million (as of March 31, 2009) senior secured credit facility, plus accrued interest and any fees relating to any prepayment, in the event that MDSO is unable to restructure the credit facility or obtain alternative debt financing on more favorable terms