John Cline's new company, Clinical Trials of the Americas, plans to seek contracts from drug companies and others to conduct clinical trials -- tests involving humans -- of experimental drugs, according to documents filed with the Securities and Exchange Commission.

The company initially plans to conduct trials in Central America "because the costs of drug development are significantly lower, and the clinical quality is that of the U.S."

In May, Cline resigned as chief executive of etrials, a publicly traded Morrisville company whose software is used in drug trials. He said that the company needed an experienced leader to guide it through its next phase. At the time, etrials had about 150 employees, including 120 in the Triangle.

The Triangle is a hotbed of contract research organizations, or CROs, that conduct drug tests. Local companies include Quintiles Transnational, which has nearly 20,000 employees worldwide.

Cline couldn't be reached for comment about his new venture.

His Clinical Trials has filed documents to become a penny stock whose shares are traded over the counter. The plan is for those shares to be listed on the OTC Bulletin Board rather than a major exchange.

Clinical Trials is starting out on a relative shoestring: It raised about $124,000 from private investors in October. The company cautions in its SEC filing that based on the company's current finances, an auditor "has expressed substantial doubt as to our ability to continue as a going concern."

Given its thin financing and the costs of running a publicly traded company, securities lawyers speculate that Clinical Trials may move quickly to raise capital by selling stock to the public. Alternatively, they say, Clinical Trials could seek to merge with a privately held CRO or another privately owned business, offering an inexpensive way for that company to go public.

Cline is familiar with that process. Etrials became a publicly traded company by merging with CEA Acquisition, a Florida company whose game plan when it was founded was to find a business it could acquire or merge with. CEA didn't have an operating business.

Clinical Trials has filed a registration statement with the SEC that calls for selling as much as 1.4 million shares of stock at 10 cents a share.

Any proceeds from the sale of those shares, however, will go to existing shareholders who bought stock in the company in the fall. So Clinical Trials would have to sell additional shares later -- it's called a secondary offering -- to bolster its capital.

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