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I am perplexed by BioClinica (NASDAQ:BIOC).

  • Cash flow positive.
  • Recently signed a big deal with Sanofi (NYSE:SNY).
  • 51% institutional ownership. Bullish buying all year.
  • Share price up around 50% in 2012.
  • The company buying back shares. Later explained.
  • But one very major draw-back: extremely low daily trading volume.

In contrast to beleaguered competitor Merge Healthcare Inc. (NASDAQ:MRGE) that is carrying a huge debt-load and is rumored to be up for sale, BioClinica is in an excellent financial position. It is also a firm that has been expanding its services portfolio and is on the fore-front of what major pharmaceutical companies like Sanofi need in order to manage clinical research data as one prong of its business model.

BioClinica is a biotech-tech firm defined on their own website as:

BioClinica is a global clinical trials service organization, providing medical image management and eClinical services. This includes electronic data capture and clinical data management solutions to pharmaceutical, biotechnology and medical device companies and other organizations, such as contract research organizations (CROs) engaged in clinical trials.

Take A Good Look

1. In June's 2012 10Q, BioClinica reported only 15,588,803 common shares. The company's market cap is just shy of $100M so that may be why it's flying below the market's radar. Since December 2011, BioClinica has reduced its common share count by 36,435 common shares. In 2010, the company announced a buy-back program of up to $2M of common shares. In May 2012, BioClinica expanded and extended that buy-back program:

On December 15, 2010, our Board of Directors authorized $2 million in funds for use in our common stock repurchase program
over the following 18 months. On May 16, 2012, our Board of Directors extended our common stock repurchase program through
December 31, 2013 and increased the authorized funds to $4 million.

Given that the company's daily 3/mth average volume is below 16,000 shares, a bullish move by the market into the stock could trigger a significant jump to the upside.

2. BioClinica recently announced a very lucrative coup for the tech serving biotech firm. That announcement has by and large gone unnoticed by the market. On 24 September 2012, pharma giant Sanofi selected BioClinica's OnPoint technology platform as their own standard clinical trial management system [CTMS]. Translated that means:

With this decision, Sanofi plans to utilize OnPoint CTMS for all clinical trial management activity.

Again, read the above quote very carefully: "...for all (bold-type added) clinical trial management activity." I suspect it will be a strong positive for BioClinica's bottom line for years to come. In fact, the Sanofi coup is the biggest among many other 2012 contracts as the press release reveals:

Sanofi is the largest in a growing list of companies that includes other top ten pharmaceutical and medical device manufacturers to embrace BioClinica's innovative clinical trial management system, making OnPoint the leading CTMS solution for forward-thinking companies.

Who are some of these other firms joining BioClinica for its technology? There's Isis (NASDAQ:ISIS) Pharmaceuticals that stated:

"Above all else, we are most impressed with the software itself," said Kevin Nichols, Director of Drug Development Information Systems at Isis Pharmaceuticals. "BioClinica's Express EDC meets all of our needs, yet is still easy to use. It creates well-organized workflows based on the data that is entered at doctor sites. Beyond its standard features, it is highly customizable and configurable both in the user interface and the way it operates. Unlike other systems, it's even easy to customize the system after the study starts."

In 2012, BioClinica has reported numerous new customers such as: Luitpold, ClinPlan, Grünenthal, and Harrison Clinical Research. Also in 2012, BioClinica has announced many new partnerships such as: Paragon Solutions, Mirada Medical, and NextDocs. That list also includes Amarin (NASDAQ:AMRN) for a phase IIIB cardiology clinical trial as well as securing Sanofi's business. This confirms that BioClinica is a growing firm that continues to add to its bottom line. In fact, earlier this year the company's back-log (documented under #3) was over $135M.

3. Speaking of BioClinica's bottom line, let's look back at 2011 compared to 2010 then bring ourselves into 2012:

Financial highlights for the quarter ended December 31, 2011 include:

  • Service revenues were $18.3 million as compared with $16.5 million for the same period 2010.
  • GAAP operating income was $1.8 million as compared with $1.2 million for same period 2010.
  • GAAP net income was $1.2 million, or $0.07 per fully diluted share, as compared with $831,000, or $0.05 per fully diluted share, for the same period 2010.
  • Non-GAAP operating income was $2.4 million as compared with $1.8 million for the same period 2010.
  • Non-GAAP net income was $1.5 million, or $0.09 per fully diluted share, as compared with $1.2 million, or $0.08 per fully diluted share, for the same period 2010.
  • Backlog was $123.1 million as compared with $110.7 million for the same period 2010.

Financial highlights for the year ended December 31, 2011 include:

  • Service revenues were $68.0 million as compared with $62.7 million for the same period 2010.
  • GAAP operating income was $4.4 million (after a restructuring charge of $1.7 million) as compared with $4.3 million for the same period 2010.
  • GAAP net income was $2.8 million, or $0.17 per fully diluted share (after a restructuring charge of $1.1 million, or $0.07 per share), as compared with $2.8 million, or $0.17 per fully diluted share, for the same period 2010.
  • Non-GAAP operating income was $8.2 million as compared with $6.8 million for the same period 2010.
  • Non-GAAP net income was $5.3 million, or $0.32 per fully diluted share, as compared with $4.3 million, or $0.27 per fully diluted share, for the same period 2010.

Now let's look at BioClinica's financial achievements in 2012 such as Q1 reported in May:

Financial highlights for the quarter ended March 31, 2012 include:

  • Service revenues increased 14.9% to $18.6 million as compared with $16.1 million for the same period 2011.
  • GAAP operating income was $1.6 million as compared with $567,000 including a restructuring charge of $679,000 for the same period 2011.
  • GAAP net income improved year-over-year to $994,000, or $0.06 per fully diluted share as compared with $351,000, or $0.02 per fully diluted share. First quarter 2011 results included a restructuring charge of $426,000 or $0.03 per share.
  • Non-GAAP operating income increased 17.1% to $2.2 million as compared with $1.8 million for the same period 2011.
  • Non-GAAP net income increased 17.8% to $1.4 million compared with $1.2 million; this equated to $0.08 per fully diluted share, as compared with $0.07 per fully diluted share in the same period 2011.
  • Backlog increased to a record $125.8 million.

Next, take a look at BioClinica's Q2 results in August 2012:

Financial highlights for the quarter ended June 30, 2012 include:

  • Service revenues increased 12.8% to $19.1 million as compared with $16.9 million for the same period 2011.
  • GAAP operating income was $1.7 million as compared with $1.5 million for the same period 2011.
  • GAAP net income was $1.0 million, or $0.06 per fully diluted share as compared with $924,000, or $0.06 per fully diluted share in the year-ago quarter.
  • Non-GAAP operating income increased 14.3% to $2.3 million as compared with $2.0 million for the same period 2011.
  • Non-GAAP net income increased 11.4% to $1.4 million compared with $1.3 million; this equated to $0.09 per fully diluted share, as compared with $0.08 per fully diluted share in the same period 2011.

These are stellar numbers and no wonder the share price is up around 50% for 2012. But the company's extremely low daily trading volume (less than 16,000 shares) against a very low common share count (15,588,803) suggests to me that increased market visibility could send its $6.40 share price much higher (speculation).

Charting The Course

BioClinica is a tech firm serving the biotech sector. It may also be one of the most ignored stock-buying opportunities out there for no valid reason given its strategic accomplishments such as signing Sanofi and its Q/Q profitable and growing bottom line. However, just remember its low trading volume could make more difficult to buy and sell for day-traders. However, I'm seeing longer-term value here especially since the company is buying back shares and just signed Sanofi.

The distinct advantage for SA readers is that if you decide to get into this company, you could be ahead of the market. I rate BioClinica a speculative BUY because of its very low daily trading volume. I am undecided about entering this stock, but I thought SA readers might find it interesting.

Source: BioClinica: A Stealth Stock For Savvy Buyers?

Additional disclosure: Investors buy and/or sell at their own risk. I declare that I may trade any stock at any time mentioned in this article. For me "long" is until I sell. I do not "short" stocks. This article is for entertainment purposes only, so seek the advice of a licensed market professional.