As America salivates over Google stock, another offering is causing a stir among vendors serving the pharmaceutical industry.

In a financial filing this northern spring, Phase Forward, the leading name in electronic data capture (EDC) software, noted it has collected US$170 million in revenues since 1999. The number is found in an S-1, of which the company has now filed several with the US Securities and Exchange Commission. Phase Forward's net cumulative deficit during the same period: $103 million. That implies the company's expenses have been a hefty $273 million.

In its S-1 statement, Phase Forward stated: "Our top five customers accounted for approximately 37 per cent of our revenues during 2002 and approximately 32 per cent of our revenues during 2003. Moreover, sales to one customer, Eli Lilly and Co, a holder of approximately 1 per cent of our outstanding common stock, accounted for approximately 10 per cent of our revenues."

What isn't in black and white? Private backers of Phase Forward, impatient after five years of losses, are apparently eager to reclaim their capital. They seem to have decided a public offering is more attractive than an outright sale. One money manager speculates that these private investors may be "fatigued", in financial parlance, and restricted by their own charters from giving Phase Forward additional funds.

If Phase Forward can go public, other biotech or clinical trial software companies may follow its lead. But a sale of stock in a wobbly market is not a certainty. A number of recent tech offerings have been withdrawn due to lack of investor enthusiasm. That is possible in the case of an unprofitable company like Phase Forward, which (despite its technical merits and market leadership) may not easily be understood by pension funds.

The company's going public could be a dark development for customers. To become profitable in a year or two, Phase Forward could be required to cut costs significantly. Typically, that means skimping on new product development, on research, on supporting older products, and on customer support -- anything that is not as visible as marketing and sales.

There was some technology news in the company's May filing of its latest S-1. Of its adverse event-tracking software, Phase Forward says: "We are developing a new version of the Clintrace software using Microsoft's development platform. This product, which will be web-based, is now in beta testing and is currently planned for release during 2004." Phase Forward is plainly borrowing an idea from the Microsoft-friendly playbook of a much smaller company, DataLabs.

If the first quarter of the year is any guide, it appears Phase Forward will lose $6 million in 2004, or roughly 10 per cent of anticipated revenues. There's cash on hand to weather several years of such results. And Phase Forward's $143 million order backlog grew by more than 50 per cent last year, split evenly between software licensing and services. Thus the company resembles the contract research organisations (CROs) with which it both frequently collaborates -- and also competes.

Phase Forward faces additional competition from pharmaceutical companies developing their own clinical software; from several dozen small, nimble companies specialising in software for clinical trials; and even from paper, a 2000-year-old technology that most pharmaceutical companies, nurses and physicians prefer. To quote Phase Forward's May stock filing: "If entities engaged in clinical trials do not shift from traditional paper-based methods of collecting clinical trial data to electronic systems, we may not achieve the market penetration necessary to obtain or maintain profitability."