PharmaNet Sees Profits Sink in Q1 due to Cancellations

By Stephen DeSantis

Princeton, N.J.-based contract research organization (CRO) PharmaNet Development Group dropped out of the black with a reported net loss of $10.1 million for the first quarter of 2008, primarily due to canceled contracts. PharmaNet cut its guidance for 2008 and its stock plunged 28% on May 1 to $17.10, far off its 52-week high of $43.05.

The company reported relatively flat revenue growth, recording a 2.4% increase to $86.8 million in its first quarter of 2008.

Operating margins sank to 8.6% in the first quarter from 10.2% last year as a result of higher expenses in anticipation of a larger volume of projects.

PharmaNet reduced its 2008 guidance to between $390 million and $399 million from its previous estimate of $401 to $409 million. It also slashed its estimated earnings by more than half to 53 cents to 63 cents from $1.42 to $1.57 a share.

Responding to an analyst’s suggestion that the structure of the company may not be well suited to handle sudden swings in project cancellations, Jeffrey McMullen, PharmaNet’s president and chief executive officer, said in the conference call: “I’m not sure this is a particular reflection of our size or the way we are configured. The impact was significant and concentrated. I think for any company that would be difficult to absorb. We have reacted...we’ve started cost saving measures, but they don’t happen overnight.”

To bring the company back to profitability, it is embarking on a series of cost cutting measures to “right-size its later stage business,” including closing offices and reducing staff.

PharmaNet will reduce and reposition its workforce, saving the company $7.1 million in 2008. Part of its strategy is to allow late stage development staff to be home-based to minimize office expansions. In addition, PharmaNet will be closing its offices in Australia and Washington, D.C. Some employees from these offices will become home-based. Closing the offices is expected to cost the company $1.5 million in the second quarter of 2008...

Veeda Expands Global Capacity with New Oncology CRO

By Stephen DeSantis

Ahmedabad-based CRO Veeda Clinical Research, launched a new division, called Global Oncology CRO, to concentrate on cancer research while leveraging Veeda’s operational capacities in the United States, Europe and India. The oncology subsidiary will be led by its president and chief executive officer, Matt Bowman. The new business will be headquartered in Columbus, Ohio. Kathy Squillace was named to the position of vice president of clinical operations and Dave Colborn was made vice president of data management and information technology.

“Since July 1, 2007 we have been establishing the infrastructure for a global oncology CRO and today we are pleased to announce that both the personnel and technical infrastructure are in place, validated and tested,” said Binoy Gardi, Group Managing Director, Veeda Clinical Research.

The company stated it expects to expand its global capacity with targeted acquisitions in the coming months. Veeda bought a 40-bed phase I facility in Gorlitz, Germany last May. The facility is located in eastern Germany on the border of Poland and the Czech Republic. The unit was established in 1992 and has 15 staff.

Veeda was created in 2005 from the merger of the 18-year-old UK-based CRO, Phase I Clinical Trials Unit and two-year-old Clinsearch, an India-based phase I unit founded by Binoy Gardi and Apurva Shah.

In December 2006, Veeda acquired DICE, a Brussels-based CRO founded in 1989. The firm focused on data management, biostatistics and medical writing and provided Veeda with a European presence outside the United Kingdom.

Parexel's Josef von Rickenbach On Phase I Activity

Parexel recently expanded its early phase operations in three of its phase I facilities. The move brings the company’s global phase I bed capacity to one of the largest in the industry, at 550.

Parexel also has phase I services in India through a partially owned venture with Synchron Clinical Research’s Ahmedabad-based facility, which has 86 beds. Last month, Parexel increased its ownership stake in that venture from 19.5% to 31% at a cost of $5 million. At the same time, Parexel sold its France-based bioanalytical and biomarker testing laboratory facility—owned since 1999—to a subsidiary of Synchron for approximately $6.7 million. The unit will now be called Synexel Research International and will stay within Synchron’s operational network.

ClinicalTrialsToday recently asked Josef von Rickenbach, Parexel's chairman and chief executive officer, to provide some additional insight into the CRO's recent moves within the burgeoning  phase I market.

Parexel Buys Larger Stake in India Venture and Expands Phase I Business in U.S., Europe

By Stephen DeSantis

Waltham, Mass.-based contract research organization (CRO) Parexel has grown its early phase operations with an expansion of three clinical pharmacology units (CPUs), located in Baltimore, London and Berlin.

The expansion brings the company’s total worldwide phase I bed capacity to 550, one of the largest in the industry, the company stated. Parexel also has CPUs in San Diego and Los Angeles, and two facilities in South Africa. Each of its phase I facilities uses its clinical trial management and electronic data capture (EDC) technology, ClinBase. The company’s early phase services include bioanalytical services, data management, biostatistics, medical writing, pharmacokinetic services and consulting.

Averion Sees Fruits of Acquisition

Southborough, Mass.-based contract research organization (CRO) Averion showed signs that its recent acquisitions and operational changes are paying off. Averion reported that 2007 net service revenue was up an impressive 163% to $34.8 million, due primarily to its acquisition of Swiss-based CRO Hesperion. Averion paid $36.2 million for the company in November. That acquisition doubled the size of Averion’s staff to 400 and expanded its operations into 14 countries.

“With our broader geographic base, expanded client relationships, and added capabilities for managing full-service, large global clinical trials, we are well-positioned to capitalize on the growing trend favoring clinical trial outsourcing,” said Averion’s chief executive officer, Markus Weissbach, M.D., PhD.

And Although Averion’s income from continuing operations was still in the red with a loss from of $3.9 million, it is inching closer to profitability. Its loss is down from $4.6 million in the year prior. The company is getting more efficient as well. Direct expenses during 2007 increased to $20.7 million versus $8.2 million during the prior year; however, those expenses as a percentage of revenues decreased to 59% in 2007 from 62% the year prior.

The company reported a research backlog of $74.7 million last year compared to $35.6 million in 2006. Again, its backlog of business was due to Hesperion’s strong contribution. In October 2007, the company sold its staffing services business to members of that division’s management. That move resulted in a loss from discontinued services of $1.4 million during 2007 compared with $500,000 during the prior year.

Averion went public in July 2006 in a reverse merger with San Diego-based company IT&E International, a regulatory compliance and validation services firm.

Quintiles to Partner with Japanese Lab Company Medca

Research Triangle Park, N.C.-based CRO Quintiles inked an agreement with Medca Japan, a laboratory testing and nursing care services company based outside Tokyo in Saitama, to use its lab to support clinical trials in the country. Medca Japan’s facility and staff are College of American Pathologists (CAP)-certified and its data will be available on Quintiles’ QNET database. Quintiles stated that Japanese regulations are changing in a positive way and are now allowing pivotal clinical trials to be conducted outside of Japan into the greater Asia region.

The challenge has been finding laboratories in the region that are “harmonized” with the same standards, the company stated. Quintiles now has central lab coverage in the Asia-Pacific region through a network of CAP-certified labs in Beijing, Singapore, Mumbai and now Japan.

Founded in 1974, Medca reported $340 million in revenue in 2007 and is also a medical supply manufacturer and distributor. It is also a leading pharmaceutical importer and seller in the country. The partnership is headed by Alan Ong, vice president and general manager, Quintiles Labs Asia, and Yoh Narimatsu, president, Quintiles Japan.

“We have established excellent systems for providing high-quality central laboratory services based on Quintiles’ global standard. We are determined to continue to increase clinical trials in Japan and provide superior services for our customers through this strategic business alliance,” said Narimatsu.

Progenitor Grows Organically in Latin America, India

By Sara Gambrill

The opening of the Progenitor International Research’s new office in Buenos Aires, Argentina, a year ago signaled the beginning of a fundamental change to the company’s business model. Previously, Progenitor had worked exclusively as a CRO composed of teams in emerging markets who worked under a coordinated platform to deliver global development services. Progenitor’s office in Argentina represents the first organic growth of the company in an emerging market.

Progenitor International Research is an emerging market contract research organization (CRO) founded in 2005 with headquarters in Deidesheim, Germany. The company’s global management functions reside in Europe, and clinical research is conducted in 12 countries—Argentina, Chile, Peru, India, China, Korea, South Africa and countries in Southeast Asia.

Progenitor conducts clinical research in South Africa and in countries in Southeast Asia through partnerships, but the company is growing organically in the other countries in which it operates. The company has 800 clinical research professionals working together with Progenitor in emerging markets who have experience on more than 500 clinical trials.

CenterWatch caught up with three key members of the operations team at Progenitor International Research at the DIA EuroMeeting in Barcelona to find out how the new model was working and what plans the company had for growth in 2008 and beyond...

Bio-Imaging Technologies Acquires Phoenix Data Systems

By Stephen DeSantis

Newton, Pa.-based contract research organization (CRO) Bio-Imaging Technologies has opened up a new book of business with the acquisition of eClinical company Phoenix Data Systems. Bio-Imaging, which specializes in running trials that require medical imaging management, purchased the King of Prussia, Pa.-based company for $24 million, including $17 million in stock and $7 million in cash.

Following the acquisition, Bio-Imaging raised its revenue guidance range from $42 to $45 million to $52 to $55 million. It boosted its earnings guidance from 21 to 23 cents per share to 22 cents to 24 cents per share. The company reported service revenues of $38.2 million last year.

Crosstree Capital Partners acted as financial advisors on the deal.

For the near-term, Bio-Imaging plans to manage the company as a separate entity while it finds ways to leverage its core CRO business.  The company stated it will be looking for sales force, marketing and technology efficiencies. For now, Phoenix Data Systems will remain relatively unchanged. The company will keep its name and continue to be run by its current president, William Claypool, M.D. All 127 of its employees will remain part of the organization. 

“We do see tremendous opportunity, probably in the next year time-frame, to start to look at how we can do things more efficiently and grow more revenues without growing as many people,” said Mark Weinstein, president and chief executive officer at Bio-Imaging stated during a conference call...

inVentiv Clinical Moves into Latin America

By Stephen DeSantis

inVentiv Clinical, the contract research organization (CRO) division of Somerset, N.J.-based marketing, communications and staffing firm inVentiv Health, has expanded its clinical services to Latin America with a new central hub in Sao Paulo, Brazil. The company stated it plans to bolster its operations in other countries throughout the region as well.

inVentiv Clinical has placed Ana Paula Ruenis, Ph.D., in charge as director of clinical operations in Latin America. Ruenis has more than eight years of experience managing trials in Latin America and has worked for top pharmaceutical companies in South America.

"Having already established full off-shore operations in India, the expansion of our clinical operations into Latin America is an important next step in our goals to become a global clinical services provider," said Mike Hlinak, inVentiv Clinical’s chief executive officer.

Latin America has proven to be an emerging market of choice of late. It poses less of a logistical challenge than do more remote regions such as China and India. The six major markets—Argentina, Brazil, Chile, Colombia, Mexico and Peru—have 425 million people, or 80% of the region’s population. That is equal to the population of the entire European Union but less than half the size of India or China.

PRA Relocates to Larger India Office

Raleigh, N.C.,-based PRA International has expanded its Mumbai, India, presence by moving into a larger facility. It is located in a new development in the Andheri East area of Mumbai. The new space can hold more than 20 clinical staff and allow for PRA to bring its total to 50 employees there by the end of the year. The company said this would potentially increase its service capacity by 150%. As the office grows, PRA will increase services in protocol development, medical writing and clinical consultation services in the region.

"This is an exciting time for PRA," said Dr. Sue Stansfield, executive vice president, Product Registration, Europe, Africa and Asia-Pacific. "The Mumbai team is a great example of PRA's global experience and therapeutic expertise.  Their success in earning client trust and delivering service excellence has been key to the growth we are experiencing in India."

AbCRO Opens Two Offices in Russia

By Sara Gambrill

Sofia, Bulgaria-based, American-owned contract research organization AbCRO opened two offices in Russia.

The St. Petersburg office has three employees and will be in charge of operations, while the Moscow office has one person and runs regulatory affairs. AbCRO has one active oncology clinical trial in Russia now and is bidding on others.

“Russia is the biggest country in our region. We had an existing client base that was interested in working with us if we had operations in Russia, so we decided that it was time that we did,” Dana Leff, chief executive officer of AbCRO, told CWWeekly at the DIA EuroMeeting in Barcelona. 

AbCRO was founded in 1999 and had two employees with an office in Sofia, Bulgaria, and a marketing office in Stamford, Conn. From 2001 to 2006, the company grew strongly, nearly doubling its employees between 2005 and 2006. “Between 2006 and 2007, our revenues more than doubled and our staff increased by about 60%. Our projections for revenue growth this year are about 60%,” said Leff.

AbCRO currently has 170 employees. AbCRO also has offices in Bucharest and Cluj, Romania; Zagreb, Croatia; and Belgrade, Serbia. In addition, the company opened an office in Warsaw, Poland, last year.

The company also has a clinical research associate in Kiev, Ukraine, with plans to open an office there soon. AbCRO has always had a business model that required clinical research associates to be full-time employees, which differentiates the company from some other CROs in the region.

Leff added that the company is planning to conduct feasibility studies in Azerbaijan. That country´s capital city, Baku, has a population of about 4 million and has good infrastructure. Azerbaijan’s average income levels are also a bit higher than those of neighboring countries.

Sara Gambrill, senior editor at CenterWatch and author of The Emerging Markets of Clinical Research.

PharmaNet 2008 Outlook Cut Amid Strong CRO Growth

Contract research organizations (CROs) had a great run in the past year, but PharmaNet Development Group’s weak guidance for 2008, issued on Feb. 28, sent its shares tumbling more than 30%. That raises concerns about a possible pullback for the clinical trials industry following a strong year.

PharmaNet’s shares closed down 31% at $28.62 on Feb. 28 after the company said its direct revenue for 2008 would be in a range of $401 million to $409 million with earnings of $1.42 to $1.57 a share.

Both fell short of analysts’ expectations of $1.76 in earnings on sales of $414.8 million.

Princeton, N.J.-based PharmaNet’s quarterly financials were positive and the company continues its turnaround story after going through a tough transition in 2006.

The company reported it returned to profitability with net earnings for its fourth quarter of $4 million, or 21 cents a share, compared with a $11.9 million loss for the same period last year. Revenue for the quarter increased 16.7% to $92.3 million compared with $79.1 million during the same period in 2006.  PharmaNet doubled its full year net earnings in 2007, reporting $12.1 million, or $0.63 per diluted share compared with $6.1 million or $0.33 per diluted share, the year prior.

“Since the end of 2006, we have made significant strides in improving our financial metrics with respect to earnings, direct revenues, backlog and the balance sheet," Jeffrey McMullen, PharmaNet’s president and chief executive officer, said in a conference call.

PharmaNet, which was acquired by SFBC in late 2004, took the company lead after a series of serious legal and financial issues engulfed the company in 2005 and 2006. It shed its early phase I operations in Florida – once one of the industry's largest – and now offers early stage work through its Anapharm subsidiary in Canada. Its been slowly, but successfully, rebuilding its operations.

Yet other companies across the clinical trials industry continue to report strong financial gains in early 2008, including CROs and eClinical firms.

Fourth quarter revenue for Cincinnati-based CRO Kendle rose 31% to $154.6 million from $118.1 million a year earlier. Analysts had estimated revenue of $102.9 million. Profit was reported at $6.4 million, or 43 cents a share, from a year-earlier loss of $4.7 million, or 32 cents a share.

Dublin-based ICON reported nearly a 40% increase in year-over-year net revenue for its fourth quarter. Income from operations was $19.8 million compared with $13.8 million last year. In January, ICON expanded its presence in Central and Eastern Europe with the addition of three offices located in Prague, Czech Republic; Kiev, Ukraine; and Bucharest, Romania. The offices were sized to staff 75, 60 and 75 employees respectively.

In its second quarter reported Jan. 23, Waltham, Mass-based Parexel said net income jumped 27% to $11.5 million, or 40 cents a share, from $9.08 million, or 32 cents a share, in the year ago period. Revenue increased 29% to $284.3 million. For its fiscal 2008, Parexel boosted guidance to $1.78 to $1.83 a share from $1.75 to $1.81 a share and its revenue range to $935 million to $955 million, from $890 million to $920 million. In February, Parexel made a surprise bid for eClinical company ClinPhone. ClinPhone rejected that preliminary takeover offer saying it considered it too low.

Princeton, N.J.-based CRO Covance reported a nearly 20% jump in fourth quarter net revenue to $411 million compared with $343 million in the prior year. Net income jumped 22% to $47 million. Within the CRO’s early development services, its central lab business saw fourth quarter revenue jump by 11%. For the full year 2007, Covance’s total revenues were $1.55 billion, up 15.4% compared with 2006.
Wilmington, N.C.-based PPD has had a solid run. For its fourth quarter, PPD reported revenue of $375 million, an increase of 15% compared with the same period in 2007. Income from operations was up slightly for the quarter at $56 million.

CROs weren’t the only companies to report strong numbers.

Waltham, Mass.-based electronic data capture company Phase Forward reported stellar results as well. Revenue was up 25% for the fourth quarter at $37.8 million compared with $30.2 million during the same period last year. Net income nearly tripled to $15.7 million, or 36 cents a share, from $5.48 million. Revenues for the full year were $134.3 million, a 26% increase from $106.6 million in the previous year.

And eResearch Technology recorded a 45% gain in its fourth quarter revenue, with $28.9 million reported. Its net income rose 129.9% to $5.2 million compared with $2.2 million the year prior. In November, eRT entered into a deal worth potentially $50 million, with the acquisition of the cardiac safety business unit of Princeton, N.J.,-based CRO and central laboratory Covance. The newly acquired unit is expected to generate $20 million in additional revenue in 2008.  In February, Datatrak inked an enterprise agreement for at least $800,000, depending on the extent of services required by the client. The agreement is a three-year subscription license with an unnamed pharmaceutical company in Europe.

Datatrak was one glaring exception this cycle with reported quarterly revenues of $1.8 million, down 54% from last year and a net loss of $2.48 million. The company is taking a number of cost cutting initiatives and plans to bolster sales operations this year.

Encorium Appoints New CEO, Replaces Borow

Wayne, Pa.-based Encorium Group has appointed Kai Lindevall, M.D., Ph.D., as chief executive officer, replacing president and CEO, Kenneth Borow, M.D.

Borow, who ran the company for seven years, will assume the role of chief medical officer and strategic development officer.

Lindevall was Encorium’s president of operations for the company’s Europe and Asia business. He was the founder and former CEO of Remedium Oy, and joined Encorium when it acquired that company in November 2006. The company stated it made the changes to allow Borow to focus on expanding its consultancy business and international business development.

"In my position as CEO I shall oversee the implementation of the strategy that our entire senior management team anticipates will lead to success in terms of predictable growth and improved financial results.  With Ken now able to focus more of his time on building our consultancy services and delivering on new business development opportunities, the team should be well positioned to achieve our targets for global growth and profitability,"stated Lindevall.

Encorium also stated it plans to expand into the emerging markets of China, India, and Latin America.

"Expansion into new therapeutic and geographic areas through both organic growth and acquisitions will be essential in achieving our strategic targets. My expertise bringing CRO services into emerging markets will be very helpful in accomplishing our goals," said Lindevall.

Parexel Courts ClinPhone with Takeover Bid

UK-based eClinical company ClinPhone rejected a preliminary takeover offer from Parexel International,  a contract research organization (CRO) based in Waltham, Mass.

Although financial details were not disclosed, ClinPhone said it considered the offer too low.

“The board believes the indicated value materially undervalues the company and its prospects and the board therefore rejected this approach,” ClinPhone said in a statement.

Shares of the eClinical company’s stock, listed on the London Stock Exchange, shot up 16% to $1.93 immediately on the news. Parexel’s shares closed up 3.7% on Feb. 19 at $57.88.

In a statement, Parexel confirmed that it had made the initial offer for all of the shares issued by ClinPhone to be paid in cash. With its initial offer rejected, the company must now decide its next move. 

“Parexel is currently evaluating its options in relation to ClinPhone. A further announcement will be made in due course. However, there can be no certainty that an offer for ClinPhone will be forthcoming,” Parexel's statement said.

ClinPhone has about 730 employees. The company is valued at about $127 million. Parexel had 2007 revenues of more than $900 million.

In an interview with Reuter’s John Bowker, ClinPhone chief executive Steve Kent stated: "We are extremely confident about it (rejecting the bid),” adding that the firm had not consulted shareholders about the approach. We have very substantial plans (for growth). We have a clear business plan," he said. According to Kent, ClinPhone’s directors have not yet consulted with shareholders regarding the offer.

In September 2007, UK-based clinical trials technology company ClinPhone was forced to reduce its estimated 2007 revenue by roughly $20 million and its earnings by $1.98 million. The company blamed the drop in estimated financials to an increase in sales of its electronic data capture (EDC ) software at the expense of licensing the product, telephone outages and a weak U.S. dollar.

ClinPhone said it had an “exceptionally high rate” of contract cancellations during June and July, primarily due to “operational” issues.

Ketek Hearing Winners and Losers

By Steve Zisson

After listening to the Feb. 12th hearing by the House Energy and Commerce’s Subcommittee on Oversight and Investigations probing study fraud and the antibiotic Ketek, one thing is clear: PPD, which monitored the study in question sponsored by Aventis (now Sanofi-Aventis), took the least hits from Congress. And it is also quite clear that many in Congress, including committee staff, don’t seem to understand much about the research process.

Outside of the FDA—which the committee would like to hold in contempt of Congress for failing to respond to a subpoena— taking the toughest criticism from the committee was Sharon Hill Price, founder and chief executive officer of Copernicus Group, the institutional review board (IRB) which oversaw the study.

Price, who admitted to being a bit nervous, was hammered by Michigan Democratic Rep. Bart Stupak, chairman of the oversight and investigations subcommittee, and House Energy and Commerce Committee Chairman John Dingell.

Stupak was upset that Copernicus didn’t provide in a timely fashion a call log of a phone call from Ann Marie Cisnernos, the former PPD study monitor and whistleblower, who reported the fraud that led to the conviction of Anne Kirkman-Campbell, a clinical investigator on Study 3014. Price told committee members she doesn’t recall talking to Cisneros.

Visibly frustrated with Price’s answers, Stupak at one point asked Price, “Why do you exist?” Presumably Stupak was referring to the IRB and not Price herself. Many of Stupak’s and Dingell’s questions showed a clear lack of understanding of clinical research. At one point Stupak was baffled at what “GCP” stood for. He was told Good Clinical Practices, the research standard. Ouch.  Dingell seemed lost when trying to figure out where in the research process an IRB figured in.

Revolutionary Public-Private Partnership for Early Phase Trials Established in France

By Sara Gambrill

The Centre Hospitalier Universitaire (CHU) de Caen, a university teaching hospital and the largest hospital in the West of France, and Therapharm, a large, private contract research organization founded in 1980, have joined forces to form the first public-private partnership to conduct early phase clinical research in France. The clinical research center is called Centre de Recherche Clinique-Basse Normandie (CRC-BN). The center conducts phase I and II clinical trials that are industry-sponsored, investigator-initiated and government-sponsored.

Antoine Cournot, who is president of Therapharm and spearheaded the partnership, said, “The objective of the clinical research center is to be able to perform early phases, phase I and II, with a high level of international quality but with a professional approach.”

The impetus for the unique partnership was to attract more industry-sponsored clinical research to France. Creating a public-private partnership clinical research center in a large hospital has been a dream of Cournot’s for 20 years, when he first attempted to establish one in Paris, where Therapharm’s headquarters are. Ten years ago, when Therapharm moved its phase I unit from Paris to Caen—in close proximity to CHU de Caen—Cournot approached the hospital about his idea.

But, it wasn’t until 18 months ago that the hospital and Therapharm met for a serious discussion about plans for building CRC-BN...

Veritas Medicine Restructures Business, Drops Trial Listing Service

By Stephen DeSantis

Cambridge, Mass.-based Veritas Medicine, a clinical trial services company, has discontinued its patient recruitment services and laid off a number of employees.

According to Veritas, it is restructuring the company to focus solely on its clinical trial disclosure business. The company’s clinical trial listing service and patient screening business will be terminated.

Veritas stated it ceased providing patient recruitment services on Feb. 8.

The company’s clinical trial listings service had been a major part of its business since its inception. One of its main patient recruitment services asked for potential subjects looking to enroll in trials to fill out medical and geographic information, which could then be matched with studies posted by sponsors. That service also contained a trial notification message to be sent to potential subjects via email.

“There have been reductions of staff who were directly related to the patient recruitment business, but the clinical data disclosure team is intact,” said Andrew O’Brien, Veritas’ president and chief executive officer, in a statement to CWWeekly.

The company is responding to the evolving landscape of the industry’s transparency requirements. That business consists of Veritas’ clinical trial registry system, its sponsor registry web site development and its patient response service.

“Historically, this has been a smaller part of our business, but it certainly is where we see the best growth prospects today,” said O’Brien.

The company’s web-based platform allows clients to post trial listings and results to different registries. Veritas’ web site development service helps its clients develop their own corporate registry sites in a branded environment.

“We’re focusing Veritas Medicine on the clinical data disclosure business because there is a terrific market opportunity and we are very well positioned there...the disclosure requirements for our biopharmaceutical customers are growing more complex,” said O’Brien.

In the last year, Veritas has been through some significant changes. After seven years as Veritas’ chief executive officer, Joe Avellone, M.D., left. In May 2007, Parexel, a Waltham, Mass.-based contract research organization, named Avellone to the position of corporate vice president of clinical research operations for both North and Latin America. Avellone remains on the company’s board of directors. He previously served as chief operating officer for BlueCross BlueShield of Massachusetts.

Veritas was founded in 1999 with an initial investment of $8 million from Burrill & Company, BioAsia’s Biotechnology Development Fund II, Cambridge Incubator and Seaflower Ventures. Three years after launch, Veritas had raised a total of $16 million in funding. Its current list of investors includes Burrill & Company, Vivo Cambridge Innovations, Seaflower Ventures and MDS Capital.

Stephen DeSantis is the Senior Associate Editor at CenterWatch.

Clinical Data, Affymetrix in Marketing Deal

Newton, Mass.-based analytical services company Clinical Data signed a service and marketing agreement with Affymetrix, a diagnostic technology company based in Santa Clara, Calif. The agreement allows Clinical Data’s two subsidiaries, Cogenics and Epidauros Biotechnologies AG, to sell Affymetrix’s drug metabolizing enzymes and transporter (DMET) solution. DMET is a method for analyzing the genetics of drug metabolism. It allows sponsors to gain valuable data on pharmacokinetics compared to a patient’s genetic profile.

“We believe that Cogenics’ and Epidauros’ expertise in genetic biomarker discovery and history with ADME studies will greatly enhance the DMET offering by making it more attractive, comprehensive and valuable to pharmaceutical customers seeking to address drug metabolism issues that arise in drug development,” said Pratima Rao, senior director of product marketing at Affymetrix.

Cogenics and Affymetrix collaborated on the development of DMET, which just became available in January.

Parexel Builds Momentum, Boosts 2008 Outlook

Parexel, a global contract research organization (CRO), continues on a nice roll with its shares up another 1.7% yesterday to $57—just off its 52-week high.

Last week when Parexel reported strong earnings, its shares got a hefty pop. That good news came after Mad Money host Jim Cramer gave the contract research sector a thumbs up on Jan. 14, noting Parexel’s strength in late phase work.

In its second quarter reported Jan. 23, Parexel said net income jumped 27% to $11.5 million, or 40 cents a share, from $9.08 million, or 32 cents a share, in the year ago period. Revenue increased 29% to $284.3 million.

Josef H. von Rickenbach, Parexel’s chairman and chief executive officer, noted, "During the second quarter, very strong revenue growth was driven by increases across all business and geographic reporting segments. The quarter's operating performance further validates our strategy and tangibly demonstrates that the initiatives we have been focusing on over the past few years are bearing fruit. In combination with the current favorable outsourcing market, our proven capabilities to compete for and win significant levels of new business leaves us well-positioned to further improve operating margins and drive profitable growth.”

For its third quarter, the company expects earnings of 42 cents to 44 cents a share on  revenue of $240 million to $250 million.

For  fiscal 2008, Parexel boosted guidance to $1.78 to $1.83 a share from $1.75 to $1.81 a share. Parexel also adjusted upward its revenue range to $935 million to $955 million, from $890 million to $920 million.

Parexel’s backlog rose 41% year-over-year to $1.778 billion as of Dec. 31, 2007.

LabCorp to Acquire Tandem Labs

Burlington, N.C.-based LabCorp has signed an agreement to acquire the bioanalytical services company Tandem Labs for an undisclosed amount. Tandem performs analytical lab work for drugs in all stages of development including discovery, preclinical, and clinical. Founded in 1981 as Northwest Toxicology Consultants, the company initially operated as a clinical toxicology reference laboratory.

LabCorp is the second largest reference laboratory testing company in the U.S., but its client base is primarily hospitals, clinics and government agencies. It offers tests ranging from routine blood analyses to HIV and genomic testing. Tandem Labs will join the Esoterix clinical trials group at LabCorp and maintain both its name and management.

LabCorp has revenues of $3.5 billion and 23,500 employees. The company has a network of 36 laboratories and 1,300 service sites.

The bulk of LabCorp’s testing business involves performing quick routine tests on more than 360,000 patient specimens daily, serving hospitals, clinics, doctor’s offices, law enforcement agencies and medical testing centers. As with most reference labs, its most frequently requested tests include blood chemistry analyses, urinalyses, blood cell counts, Pap, HIV, and substance-abuse tests.

LabCorp’s central laboratory business generates 2% of its revenue. The company has a 4% share of the central labs market, holding steady since 2003. Its clinical testing headquarters is located in Raritan, N.J., and its European headquarters, in Belgium.

The deal is expected to close in the first quarter of 2008.

Pharm-Olam Growth at Record Pace in 2007

Houston-based contract research organization (CRO) Pharm-Olam International reported record revenue growth in 2007, signing $100 million in new contracts signed in the 12 months.

According to Iain Gordon, vice president of global business development at Pharm-Olam, the company saw increased demand for its data management and biostatistics services. He attributed much of company’s revenue growth to that demand.

The company also reported record geographic coverage and services additions. It established regional offices in Princeton, N.J. and Novosibirsk, Russia in 2007.

“Our global coverage continues to grow, however, our decentralized business model remains the same, allowing us to start studies quickly and manage them efficiently”, said Gordon.

In the past three years, the company has been expanding its international presence at a rapid pace. It has more than 20 offices in 40 countries across North America, Western Europe, Central and Eastern Europe, Latin America, Asia, and Africa. In June, Pharm-Olam announced plans to expand its Latin American presence by opening offices in São Paulo, Brazil and Buenos Aires, Argentina. The company also has a presence in Mexico City.

In August 2006, the company expanded its India operations and tripled its staff there. In late 2006, it opened a new office in Pretoria, South Africa.

Kendle Looking to Grow Phase I Business

Cincinnati-based CRO Kendle is expanding its phase I business with the appointment of Phillip Davies, a 20-year industry veteran in early stage research, and made another key hire to grow its Asia-Pacific operations.

The company stated that Davies will provide the leadership needed to grow its phase I units, which include a clinical pharmacology unit in The Netherlands and a bioequivalence facility in West Virginia. Kendle said Davies will focus on expanding its capabilities worldwide.

Prior to the appointment, Davies had roles within Kendle’s pharmacology business in Germany and the UK. Before joining Kendle, he spent six years with Eli Lilly in its pharmacology operations. Most recently, Davies was director of global exploratory and program phase medical operations. Davies, as vice-president of phase I, will report directly to Kendle’s chief executive officer, Candace Kendle, PharmD.

“Phase I is a rapidly growing area of opportunity and is an integral part of Kendle’s business plan, with the market to grow between 13.4 and 16% annually through 2010,” said Kendle.

Kendle also hired Ross Horsburgh, M.D. as vice president of global clinical development for the Asia Pacific region. Prior to joining Kendle, Horsburg was regional medical director for AstraZeneca’s Asia Pacific region. He will be based in Singapore and report to Martha Feller, senior vice president of global clinical development for phase I through III operations.

Going Mad for CROs

By Steve Zisson

Public, global contract research organizations (CROs) are having a great run with stock prices soaring and their global growth story intact. The sector got additional validation Jan. 14 when “Mad Money” host Jim Cramer featured the niche. In general, star stock picker Cramer got the story straight on CROs, even though a few times he mispronounced company names. That happens, but at least he got the stock symbols right. And that is what counts. You can watch a replay of the episode here.

Here’s the story that CenterWatch has been covering since the beginning of time, or sometime around 1994:

Pharmaceutical companies are continuing to outsource their clinical trials in a greater percentage to CROs. And now many of those trials are going overseas. The handful of global CROs, including the largest (private, but formerly public Quintiles)  have the infrastructure in place worldwide to handle those large trials. It isn’t an easy thing to build quickly so there is a barrier to entry.

Cramer said the sector is a good defensive play in a tough overall stock market. CROs, he said, would continue to grow because pharmaceutical companies desperately need to bring more drugs to market. And CROs can do the job much more cheaply than pharma companies that develop drugs in-house. We have always said that clinical research is hard work and Cramer made a good point that CROs do it better than pharma and biotech companies because they are doing it every day. Hard work done every day creates expertise.

Cramer’s picks? His favorite is Covance (CVD for you home gamers) because of its strength at opposite ends of the pipeline—in both preclinical and late phase. He also gave a thumbs up to Parexel with its expertise in late phase. Charles River got the Cramer nod as a pure-play preclinical company.

There’s always a bull market somewhere…

Steve Zisson, managing editor of CenterWatch.

PPD Completes New Leadership Appointments in Global Move

By Stephen DeSantis

Wilmington, N.C.-based contract research organization (CRO) PPD continues revamping its global operations with the appointment of Sebastian Pacios, M.D., hired to lead—as a senior vice president—the CRO’s European, Middle East and Africa operations.

Pacios has experience running trials in those regions, having served at PRA International as vice president of the company’s clinical research and project management in Europe, Africa and Asia-Pacific.

Last year, PPD set out to break its phase II-IV operations into four separate territories: North America; Latin America; Europe, Middle East and Africa; and Asia. PPD has been steadily appointing new leaders to these regions since then.

PPD’s move is more evidence of the emphasis CROs are now putting on global expansion, as more sponsors push for overseas trials. 2007 saw significant CRO expansions into emerging markets as companies worked hard to keep up with pharma and biotech.

PPD had been criticized by analysts in July, including Jefferies & Company’s David Windley, for not capitalizing enough on trials outside the U.S. Windley changed his rating from “Buy” to “Hold” at that time.

“At this point, we are cautious about PPD’s disproportionately small percentage of revenue outside North America,” Windley had said in an analyst note last summer.

According to PPD, about one-third of its revenue is generated outside of the U.S.

The criticism apparently resonated. The CRO’s global restructuring began in October 2007 when PPD appointed Paul Colvin as senior vice president of clinical operations for North America and Simon Britton as vice president of operations for Asia. Colvin joined PPD after 14 years with Eli Lilly, most recently he oversaw clinical operations and global patient enrollment optimization. Britton served seven years at GlaxoSmithKline. For a time he was head of international clinical operations, managing the company’s global clinical operations group across 25 countries.

One month later, Jose Luis Viramontes, M.D., was hired to head the company’s drug development services in Mexico, Central America and the Caribbean. Viramontes came to PPD after 14 years with Merck Sharp & Dohme Mexico. He was most recently clinical research associate director at the company.

In December, Philip Mathew, M.D., was hired to lead all operations and expansions in India. The company has also launched a second office in Mumbai, located in the Dynasty Business Park in the Northern part of the city. Prior to PPD, Mathew was associate medical director at Covance and had served as a principal investigator with MDS Pharma Services...

PRA International Completes Buyout

Genstar Capital, a private equity group based in San Francisco, has completed its acquisition of PRA International, paying $797 million for the Raleigh, N.C.-based contract research organization (CRO).

During a conference call in July, PRA executives said that Genstar will invest in the company to accelerate plans for expanding the firm’s service offerings and broaden its geographic footprint.

In response to an analyst’s question during the call, Terrance Bieker, chief executive officer of PRA, stated its board of directors came to the conclusion that the right course of action was to provide its shareholders with an immediate premium on their investment.

“This decision is driven by value and reward, and it was determined that this is a right price for the shareholders. So, the decision for doing this is not so the company can perform better in a different venue, it was done because it is a very good return to the shareholders,” Bierker said.

Shareholders will receive a cash buyout of $30.50 per common share. That would be a 24% premium over PRA’s average closing price for three months prior to the July announcement.

Genstar was an early investor in PRA and already owned 12.8% of the company. In June 2001, PRA’s executive management team completed a buyout of the company, partly with financial backing from Genstar. The company went public in November 2004.

Premier Consolidates Expertise into One Consulting Unit

Philadelphia, Pa.-based Premier Research Group has consolidated its experts, including therapeutic leadership, medical device development, adaptive clinical trials design, and clinical trial informatics, into a single consulting group called Strategic Product Development (SPD) that will be led by Samer Kaba,M.D., vice president of SPD and global medical affairs.

Premier's operations group structure has not changed and continues to be led by Philip Butler, President, Global Operations.

ClinTech Relocates To Scotland

ClinTec International, a CRO based in the UK, is moving it global headquarters to Scotland from its current offices in Windsor. The office will be in Glasgow, Scotland.

The headquarters will house all of the company’s corporate functions including sales, human resources, IT, finance and marketing as well as clinical operations. The move is being assisted by a $2.7 million Regional Selective Assistance Grant from the Scottish Enterprise—an economic development agency funded by the Scottish government.

ClinTec has pledged to create 240 new jobs over the next three years. The company stated one of the incentives to relocate to the region is its highly skilled talent pool available due to the many universities and academic research institutes. More than a dozen CROs maintain operations in Scotland, including Quintiles, Aptuit, Charles River Laboratories and BioReliance.

In August, PPD obtained a $9.1 million RSA grant to the construction of a 34,000-square-foot office in Lanarkshire, Scotland to support its late-stage services.

etrials Becomes Sixth EDC Company to Settle Datasci Patent Dispute

By Stephen DeSantis

Morrisville, N.C., based-etrials has agreed to pay $1.75 million to Maryland-based technology firm Datasci LLC to settle a long running EDC technology patent infringement suit. The settlement includes an upfront licensing fee  for three of Datasci’s eClinical legacy products. By licensing the original technologies, Datasci has agreed to dismiss its claim against etrials, giving up any future royalty rights.

“Obviously we are eager to see more companies in this whole marketplace obtain licenses and start to use this technology. We hope there will be many more,” Marc Kozam, Co-founder of Datasci told CenterWatch.

He stated that the majority of companies from the original lawsuit have either settled with or are close to doing so.

The products in the agreement include ASFlash–offered by etrials in 2002 through 2003–and QSCapture and Webcapture, which aren’t current offerings.

“The settlement limits any future exposure and allows us to focus all of our attention on improving etrials' core operations and expanding our market share within the rapidly growing market for eClinical technologies and services," stated Chip Jennings, etrials’ chief executive officer.

Datasci filed similar lawsuits against eClinical companies Phase Forward, Datatrak, DSG and DataLabs. Phase Forward settled for $8.5 million. In August 2006, DataLabs, which was acquired by ClinPhone in October 2006, settled its suit for an undisclosed amount and a nonexclusive licensing arrangement.

DataLabs cited the primary reason for its settlement agreement was because of the possibility of its customers getting sued, which Datasci was exploring. DataTrak settled their case this year for undisclosed amount. DSG's suit was dismissed in March 2007. The terms of the agreement between Datasci and DSG were confidential.

According to Kozam, Datasci is an ongoing venture that is presently developing new innovations to address some of the challenges in the eClinical Marketplace.

“We don’t have end user products at this point, but there are several areas of development that are occurring," he stated.

In 2002, the U.S. Federal Patent and Trade Mark Office awarded Mark L. Kozam, founder of Maryland-based MLK Software a patent— 6,496,827—for the “methods and apparatus for the centralized collection and validation of geographically distributed clinical study data with verification of input data to the distributed system.” The patent was filed in January 2000 and patent office records show the company began the process of obtaining the patent by filing a Patent Cooperation Treaty (PCT) in May 1998.

Stephen DeSantis is the Senior Associate Editor at Thomson CenterWatch.

Indian CRO Manipal AcuNova and ECRON GmbH Merge

Manipal AcuNova, a Bangalore, India-based CRO has acquired ECRON GmbH a of CRO based in Frankfurt, Germany. The new company will have a combined staff of 265 and will be known as ECRON AcuNova. It will provide services for phase I through IV global studies, including project management, data management, biostatistics, medical writing, central lab and BA/BE.

The new company will maintain both headquarters as well as operate a U.S. hub in Princeton, N.J. Kohkan Shamsi, M.D., will become chief executive officer of ECRON AcuNova and will be based in the U.S.

ECRON’s founder, K. D. Wiedey, M.D., will act as the company’s president in Europe. D.A. Prasanna, M.D. will lead the CRO’s Asia operations. “We are able to strengthen our expertise in clinical trials and data management from our Indian counterparts with faster patient enrollment in clinical trials, timely database lock, high quality early phase development as well as unique features like access to the central lab,” stated Wiedey.

Parexel Reports 26% First Quarter Revenue Increase

Boston, Mass.-based Parexel International reported service revenue increased 26.1% to $208.1 million for its first quarter of 2008 compared with $165.1 million during the same period of last year. The CRO ended the quarter with operating income of $16.5 million and margins of 7.9%. That compares with $11.3 million for the same period last year and a 6.9% margin. Net income for the quarter was $13.9 million compared with net income of $7 million.

Parexel’s Clinical Research Services (CRS) business constituted $159.3 million, or more than 75% of the company’s total revenue. Perceptive Informatics, the company’s technology division, contributed $18.3 million to the CRO’s top line and Parexel’s Consulting and Medical Communications Services unit brought in $30.5 million. The company is expecting full year’s revenue to be in the range of $890 to $920 million.

It completed its purchase of APEX Clinical Research, a CRO based in Taiwan that has operations throughout the Asia Pacific region. The company paid $50.9 million in cash for the remaining 20.3 million shares of APEX. The newly acquired company will become a wholly-owned subsidiary and will be named Parexel APEX International. Parexel had already purchased a minority interest in the CRO in April 2003.

Finally Out with the Old at PharmaNet?

By Steve Zisson

Some equity analysts remained on edge about PharmaNet Development Group’s recent personnel changes during its third quarter conference call on Nov. 1. But should they be?

Some wondered if it was a case of the remaining higher ups from the former SFBC finally leaving or was if there were more to it and another shoe was going to drop. Late last week, PharmaNet Chairman Jack Levine and Director David Lucking resigned from the board.  And Chief Accounting Officer David Natan and the company agreed to a mutual separation, the company said.

The resignations were announced on Thursday, Oct. 22 and Jefferies & Company analyst David Windley followed up with a downgrade of PharmaNet to “Hold” from “Buy,” citing unexpected risk from the surprise announcement. In the conference call, analysts pressed PharmaNet president Jeffrey McMullen for more, but he was about as forthcoming as he could be given the nature of the personnel moves. The three who left were part of the old regime, the former SFBC.

After the downgrade, on Monday, Oct. 26, shares of PharmaNet fell $1.82, or 5.3%, to close at $32.42.

But shares were back up big time Thursday, jumping 13% to $35.95 after PharmaNet beat analysts’ expectations with earnings of $10 million, or 52 cents a share, more than double last year’s 20 cents a share, excluding items. The company also raised 2007 guidance to between $1.22 and $1.29 a share from the prior $1.12 to $1.24 a share.

For the quarter, overall revenue rose 20% to $124.4 million with direct revenue at nearly $100 million. The company also boosted 2007 guidance for direct revenue to $361 million to $365 million compared with its previous forecast of $342 million to $352 million.

It’s been a good year for PharmaNet and its investors with the stock up more than 60%, and with the old SFBC finally behind it, 2008 looks promising.

Steve Zisson, managing editor of Thomson CenterWatch.

NEJM Takes Shots at CROs

By Stephen DeSantis

A recent New England Journal of Medicine (NEJM) Perspective piece criticized the clinical trials industry for its reliance on contract research organizations (CROs). The piece describes the rapid growth in the CRO industry, questions the quality of research data it generates and cites various clinical trials that have shed some negative light on CRO-run studies.

The article “Commercializing Clinical Trial–Risks and Benefits of the CRO Boom” was written by Miriam Shuchman, M.D., a NEJM national correspondent.

“Given the steady dominance of CROs in the clinical trials domain, the current flaws in the model will need to be remedied. This will require some shift in focus–less single-minded attention to ‘deliverables’ and ‘billable hours’ and greater concern with the discovery of new knowledge,” concluded Shuchman.

Shuchman was unable to be reached for comment at the time of publication.

In the article, Shuchman references two now well-known examples involving CROs: the TeGenero monoclonal antibody study conducted by Parexel in England and the Aventis (now Sanofi-Aventis) trial for the antibiotic Ketek performed by PPD. In both cases, the CROs were found to have acted appropriately and well within regulatory requirements.

Another major point of contention with Shuchman is the industry’s apparent focus on speed and cost-efficiency as opposed to quality data. She notes that CROs have gradually taken over much of the role formerly done by academic institutions.

Doug Peddicord, director of the Association of Clinical Research Organizations (ACRO), strongly disagreed with Shuchman’s criticism of CROs compared with academic centers.

“There is certainly no research that we are aware of that suggest that the number of 483s [FDA Form 483–Notices of Inspectional Findings] or other indicators of difficulties with GCP [Good Clinical Practice] compliance are any different between those two settings,” said Peddciord.

She cites a Tufts Center for the Study of Drug Development report that found CRO-managed projects showed fewer delays than projects that did not use CROs. The 2006 Tufts report also found that those studies did not show a decrease in research quality.

Schuchman went on to question that premise. ACRO’s Peddicord found her argument puzzling.

“To cite a sourced article that says that CROs usage improves the speed of the development process without diminishing the quality of the research and then to go on, in essentially the same sentence, with an unsubstantiated statements from anonymous ‘others’ doesn’t follow basic standards of evidence and is problematic,” he said.

Among myriad of other issues she cites in the piece is that CROs have a high staff turn-over rate during clinical projects, causing the their workforce to be “younger, less skilled, less experienced and less educated” than at pharma companies or within academia.

“Actually, pharmaceutical, biotechnology and CRO employees are drawn essentially from the same personnel pool. And we’re seen a high degree of cross-sector movement all around in recent years,” stated Peddicord. He said the personnel turnover is due to a severe shortage of clinical professionals in both industry and academic institutions, putting experienced workers in high demand.

“There are fewer skilled investigators, skilled monitors and skilled research coordinators than the whole drug development enterprise needs,” he said.

Shuchman suggested that although an alternative model, academic research organizations (AROs), “avoid some of the workforce and qualification problems,” they must compete with CROs for contracts which add pressure to the institutions to conform to sponsor study designs.

According to CenterWatch data, there are few AROs of any size and only one, Duke, that has some ability to conduct the kind of large global clinical trials that are required today. While there are more than 1,000 CROs worldwide, only about a dozen of the largest can conduct trials globally.

“One of the things that we certainly reacted to, in terms of the perspective piece, is the assertion that this kind of specialized expertise has begun to ‘kill clinical research.’ It was absolutely unwarranted and there is no empirical data provided within the article to support that claim,” said Peddicord.

CenterWatch Monthly October 2007 Issue

Pfizer Reverses Course for Big Savings with Auctions

Pfizer is using reverse auctions within its development and medical organizations to support contract research organization (CRO) sourcing decisions. Pfizer has run reverse auctions to help select providers for many services such as site monitoring, data management, clinical programming, clinical laboratory services, study management and project management. During the past three years, Pfizer has seen substantial savings as a result of its reverse auctions. Not surprisingly, CROs and other service providers are less enthusiastic about the use of reverse auctions. Some see the process as an example of how pharmaceutical companies are turning their complex business model into a commodity.

Informed Consent: The Dual Role of the Physician-Investigator

Federal regulations in the United States do not define or offer guidance on how to handle the conflicting role of physician versus investigator. In seeking informed consent, physicians should understand the possibility of therapeutic misconception. This article presents some practical approaches to this physician-investigator conflict. There are several ways that an institutional review board (IRB) can improve the informed consent process when the treating physician is also the investigator. Each involves some form of added oversight a third party seeking the informed consent, a stepped consent process, or other measures that fit the individual situation. The question that the IRB should first ask is when this extra protection may be deemed necessary.

Vienna School of Clinical Research Offers Courses in India, Africa

The Vienna School of Clinical Research (VSCR) recently gave its first workshop in New Delhi, India, a new milestone for the school. The school is also working on multiple projects in sub-Saharan African countries, and most recently offered training to future members of the Gabonese National Ethics Committee.

Eye On: Breast Cancer

In the United States in 2005, 212,000 new cases of invasive breast cancer were diagnosed, and there were approximately 40,870 deaths, making breast cancer the second leading cause of cancer death. Despite earlier diagnosis through mammographic screening, about 20%-89% of those diagnosed with early breast cancer develop metastases within five years. CenterWatch has identified a pipeline of 20 drugs in various stages of development for treatment of breast cancer. Many target specific pathways in the cancer cell cycle to interfere with tumor growth; some enhance the effects of traditional chemotherapy, and some represent new formulations of standard chemotherapeutic agents.

To read the full articles for this issue or for more information on these and other breaking stories, please click here or contact us at cw.sales@thomson.com.

Standard Recruiting Practices in the People’s Republic of China

By Dr. Diana Anderson, president, CEO and founder of D. L. Anderson International

Excerpted from Anderson's book International Patient Recruitment Regulatory Guidelines, Customs and Practices.

Based on information gathered from several sources, it appears that clinical trial subjects in China are recruited in a limited number of ways, starting with heavy reliance on the investigator to tell appropriate patients about the study, followed by the use of posters and fliers in waiting rooms at accredited clinical trial sites.   

Hospitals in the major cities, such as Beijing, Shanghai, Ghangzhou, Chongqing, and Nanjing, tend to be very large by Western standards, many with more than 1,000 beds, reflecting the centralized nature of healthcare delivery in China. As a result, doctors in those institutions are extremely busy, seeing as many as 50 patients most mornings. 

Yet, while working at that harried pace, some doctors, especially those seeking to increase their clinical trial workload, remember to discuss clinical trials with patients. Yue Wei, vice president and medical director of Beijing MedSept Consulting Co., a CRO, says, “Doctors generally discuss the opportunity to participate with patients. That is the common way.”

Stefan Astrom, Ph.D., CEO of Astrom Research International, adds, “[Doctors] recruit patients from their regular patient pool. There is an abundance of patients and it's very attractive for them to participate in trials as they may receive new treatment, extra patient care and free medication.” In addition, patients generally do not see the same physician each time they visit a clinic, so the promise of seeing the same physician over the course of a clinical trial may spur interest...

Averion Sells Clinical Staffing Services Unit

Massachusetts-based contract research organization (CRO) Averion International has sold its clinical staffing services unit to members of the company’s management. The new owners are Harvey Greenawalt and Philip Clark.

The company will be called IT&E Inc.The unit sold for $2.3 million, which includes some contingencies based on the buyer’s ability to generate certain revenue goals from the unit. Averion is due an upfront cash payment of $455,000, deferred payments totaling $250,000 and unsecured promissory notes of $1.6 million. Averion stated the decision was made so that the company could focus on its core CRO business. Averion’s chief executive officer Phillip Lavin called that segment“a financial burden on our operations.”

For the first half of 2007, staffing services’ net service revenues decreased $3.2 million from the same period in 2006. Averion reported a net loss of $2.6 million for the first six months of 2007.

“Our strategy is to enhance our ability to capitalize on the trend toward increased clinical trial outsourcing that is driving industry growth, while taking measures to reach sustainable profitability,” said Lavin.

The clinical staffing unit became part of Averion when the CRO was acquired by IT&E International last August. To complete the reverse merger, IT&E changed its name to Averion International shortly after.

In August, Averion inked a deal with Brazil-based SMO and research center BIOCANCER. The non-exclusive agreement called for the companies to sub-contract and jointly market in their respective markets.

Averion stated the agreement provided it with an expanded patient population, leading investigative sites and access to the South American trial arena. A

verion also announced it has signed a deal with Albuquerque, N.M.-based Biomoda, a cancer diagnostic technology company. The agreement calls on Averion to provide clinical services such as protocol design and study management for Biomoda.

PRA Moves Headquarters To North Carolina

PRA International plans to relocate its corporate headquarters from Reston, Va., to Raleigh, N.C. by the end of 2007. The move is to facilitate the CRO’s plans to grow the business. Presently only 37 employees are expected to be affected.

It stated the new location is closer to potential clients, has cost reduction benefits and the area has a strong talent pool of professionals. Starting in October, PRA stated it will begin increasing its staff levels in N.C. and hopes to hire 500 administrative and operations employees in the next five years.

PRA expects to take a charge of about $1.7 million due to the relocation.

"North Carolina has one of the fastest growing workforces in the United States and we are pleased to take advantage of the low employee turnover rate and the quality of life. We believe this move to Raleigh will position us well to achieve our future growth targets," stated Terrance Bieker, chief executive officer, PRA.

In a move that took PRA off the public market, the company was purchased in July by Genstar Capital, a private equity group based in San Francisco. The deal was valued at $790 million.

Synergy Creates Alliance With Indian CRO Neeman Medical

Russian CRO Synergy Research Group (SynRG) has made its next move to create a global CRO alliance, forming a partnership with Neeman Medical International, an India-based CRO. The alliance will focus on providing international sponsors with monitoring and site and data management services. Neeman Medical was founded in 2001 and is headquartered in New Delhi.

The CRO has about 70 investigative sites in 17 locations across the country, with access to more than 600 trained investigators. In August, SynRG formed a similar alliance with Costa Mesa, Calf.-based Promedica International.

“Our next target is to find a partner in China. We’ve recently taken part in the Russian- Chinese Forum on Biotechnological and Pharmaceutical Industries, and have established a number of good promising contacts,” said Igor Stefanov, director of business development at SynRG.

Quintiles Launches Patient Website iGuard for Drug Safety Service

By Stephen DeSantis

In an unusual move for a contract research organization (CRO), Research Triangle Park, N.C.-based Quintiles has created a new service specifically for consumers of prescription drugs. The free service is called iGuard, a drug risk monitoring and personalized safety alert online site, and it’s a significant step toward patient-directed research.

Using secure methods through iGuard, patients anonymously provide demographic, disease treatment and medical history information to the site, along with contact information. If there is an issue with a consumer drug, such as a change in its prescription label, a side effect warning, or other warnings from the manufacturer or a medical journal, the system sends patients a form to take to their doctors.

And the site offers patients a simpler way to determine a drug’s general risk. The system uses a series of alert levels, such as ‘Low Risk,’ ‘Guarded,’ or ‘High Risk’ so patients know when to seek more information or ask a doctor more questions. iGuard can also poll the patients online for the occurrence of adverse events or for other useful information.

Where does all that patient data go? Quintiles is banking on sponsors seeing the raw information as a valuable post-approval data windfall, and the CRO believes it can sell the data to clients as a unique service offering.

In the U.S., doctors can voluntarily submit safety monitoring data to the Food and Drug Administration (FDA) through a program known as MedWatch. But according to Quintiles, not many of them do. In addition, patients do not often report adverse events to their physicians.

According to the president of the program, Hugo Stephenson, M.D., phase IV research and post-approval safety studies have been costly and time consuming, and the trials often deliver inadequate data...

Medidata Inks Multiple Contracts in August

New York, N.Y.-based eClinical company Medidata Solutions inked a multi-year contract with Copenhagen-based pharmaceutical firm H. Lundbeck to manage more than 10 psychiatric phase II through IV trials. The studies will use Medidata Rave 5.6, set to launch this month. H. Lundbeck stated it chose Medidata’s electronic data capture (EDC) system based on feedback from clinical research associates and site managers.

“More and more, Medidata Rave is serving as the ‘backbone’ of the clinical research process – and we are pleased Lundbeck will benefit from Rave’s ability to easily integrate with other systems, meet the requirements of both large-and-small scale studies and enable them to rapidly conduct multiple studies in their strategic area of research,” said Tarek Sherif, chief executive officer of Medidata Solutions.

Recently, Boston-based electronic patient reported outcomes provider PHT announced it has integrated its LogPad ePRO system with Medidata Rave’s EDC technology. The companies have landed a deal with Sucampo Pharmaceuticals to manage its pediatric studies for the treatment of gastrointestinal disorders.The trial will enroll 120 patients throughout the U.S.

"By integrating multiple data streams, sponsors are able to take advantage of real efficiencies gained by using reliable electronic systems," said Phil Lee, president and chief executive officer of PHT.

Premier’s Management Makes Preliminary Bid for Company

Some of Premier Research Group’s top management made a preliminary approach to its board, exploring an offer to buy the contract research organization (CRO), according to Thomson Financial.

London-based Premier said that there can be no guarantee that this initial approach will lead to an offer being made for the company.

Premier has been on acquisition spree by buying six CROs since it went public in London in 2004. In July, the company purchased its latest two CROs. Premier bought ARS Inc., based in Boston, and D-TARGET SA, located in Switzerland.

Premier expects ARS will strengthen its presence in the New England biotech market while D-Target's medical device focus will bring expanded expertise in that area to customers in the United States and Europe. The acquisitions continue Premier’s strategy of building an international business both organically and through strategic acquisitions.

Since January, Premier’s shares in London have fallen significantly, but closed up 13.6% on August 29.

Averion Reports Second Quarter Loss

The Boston-based contract research organization (CRO) Averion International reported a net operating loss of $577,253 for the second quarter of 2007 on total revenues of $9.81 million. That compared to a loss of $912,140 during the same period last year from just $4.92 million in revenue. For the first half of the year – ending June 30th of 2007 – Averion reported $19.1 million in revenue and a net loss of $2.47 million compared with $9.88 million in revenue and a net loss of $1.94 million during the same period in 2006.

The drop in profit margin was due to the company’s operation expenses nearly doubling this year, from $11.8 million in 2006 to $21.5 million in 2007. The increase in costs was stated to be due to the reverse merger of Averion with holding company IT&E International last year and “expenses associated with supporting a larger organization.”

Averion’s chief executive officer Philip Lavin stated: “Our backlog continues to increase with $27.5 million in gross new business awards for the first half of 2007, primarily in our targeted oncology and medical device sectors. We also continue to gain additional operational efficiencies through consolidation of our organization and are pleased with our progress toward our goal of achieving sustainable profitability.”

Kendle Service Revenue Jumps

By Stephen DeSantis

Cincinnati-based CRO Kendle reported nearly a 60% jump in service revenue during the second quarter of 2007 compared with last year’s same period. The company had net revenue of $97.8 million for the quarter compared with $62.1 million in 2006. Kendle reported second quarter earnings per share of $.29 and total income from operations of $10.9 million.

Net income remained flat over last year, however, with $4.3 million reported in the second quarter of 2007 compared with $4.29 million during the same period in 2006.

In 2006, Kendle snatched up the clinical services business of pre-clinical research powerhouse Charles River Laboratories of Wilmington, Mass., for $215 million in cash. The relatively modest net profits for the second quarter were primarily due to interest the company paid on the debt—$4.3 million—it incurred with the financing the Charles River Clinical Services acquisition. In contrast, Kendle paid only $51,000 in interest expense during the same period last year.

“Kendle delivered a strong performance for the second quarter,” said chairman and chief executive officer, Candace Kendle, PharmD. “Revenues, backlog and new business awards were all record highs, demonstrating the continued strength of our growing global organization. Our ability to build strategic relationships is being increasingly recognized as a key differentiator, with Kendle recently being named the ‘Top CRO to Work With’ in the Thomson CenterWatch 2007 survey of U.S. investigative sites.”

Dr. Kendle continued, “Our completion of the recent convertible note offering further enhances our financial position. Kendle has never been stronger and we look forward to the remainder of 2007 with great confidence.”

Recenly Kendle closed a $200 million offering of convertible senior notes, which would become due in 2012. The notes would be converted into a combination of cash and common stock.

Stephen DeSantis is the Senior Associate Editor at Thomson CenterWatch.

PRA International Agrees to Genstar Capital Buyout

By Stephen DeSantis

In a move that will take Reston, Va.-based contract research organization (CRO) PRA International off the public market, the company has entered into an agreement to be purchased by Genstar Capital, a private equity group based in San Francisco. The deal is valued at $790 million.

If the deal is completed, shareholders would receive a cash buyout of $30.50 per common share. That would be a 24% premium over PRA’s average closing price for the last three months.

During a conference call, PRA executives said that Genstar will invest in the company to accelerate plans for expanding the firm’s service offerings and broaden its geographic footprint.

In response to an analyst’s question, Terrance Bieker, chief executive officer of PRA, said its board of directors came to the conclusion that the right course of action was to provide its shareholders with an immediate premium on their investment.

Some analysts on th call questioned the current buyout, stating that PRA was already on course to surpass its premium buyout offer of $30.50 per share, especially given the company’s last few quarterly earnings.

-Read more on the acquisition in this week's issue of CWWeekly.

Kendle Raises $200 Million Through Convertible Senior Note Offering

Cincinnati, Ohio-based Kendle International has closed a $200 million offering of convertible senior notes, which would become due in 2012. The notes would be converted into a combination