June 9, 2008
CTI: Focussing On Hepatitis
June 09, 2008
Every two weeks or so, Tim Schroeder gets a call from a fund manager or private equity group wanting to buy Clinical Trials and Consulting Services , the liver and transplant-focused contract research organization (CRO) he founded in Cincinnati almost a decade ago.
“They say, ‘Hey, we want to buy you,’” explains Schroeder, “And we say, ‘But we’re private—we can’t disclose numbers,’ and they say, ‘That’s okay, we hear good things about you and I’m sure your numbers are great.’ ” To which Schroeder laughs, thanks them and hangs up.
Happy Status Quo
For one, he’s already been through the IPO wringer with a biotech he helped start – SangStat Medical, which was bought by Genzyme. And two, he likes his busy, medium-sized CRO just the way it is. If he sold it, he’s afraid integrity would be lost.
“Lots of medium-sized CROs get acquired and they lose focus,” he says. “I don’t want that to be us.”
So the firm continues on as is, 100 people specializing in what would seem like disparate therapeutic areas, but really aren’t: hepatitis, transplant (stem cell, organ and bone), infectious diseases, hematology, immunology and end-stage organ disease (heart, liver, lung and kidney).
“A really sick population is the common denominator of our disease areas,” Schroeder says. “We work in areas where, often, most other things have failed. And the studies are complex. Clinical research associates always say, ‘My gosh, these are the most complicated studies I’ve ever worked on.’”
Though the CRO’s studies tend to be on the small side—500 to 1,000 subjects they are intense, with lots of data and a long duration.
Hep is Big
Hepatitis in particular is booming. The company tends to have eight to 16 hepatitis trials up and running at any one time; it recently forged a service agreement with a 10-year-old group of hepatology experts to help with all the research. SC Liver Research Consortium, based in San Diego, boasts physicians at 50 centers in the U.S.
Paul Pockros, founder and director of the consortium, as well as director of the Liver Disease Center at Scripps Clinic, says the space is hot because new molecules for hepatitis C have evolved rapidly and are ready for testing in humans.
More Complete Treatment
The two main drugs on the market for hep C have been pegylated interferon, made by Roche, and ribavirin, made by Schering. Now, suddenly, a host of new compounds—protease inhibitors, polymerase inhibitors, anti-fibrotics, immunomodulators—are coming along. The new development strategy is to combine a new drug with the current standard-of-care to improve response rates and possibly shorten the duration of therapy.
“Many biotechs and a number of big pharmas have interesting compounds at this time,” says Pockros. “This will be a new era of therapy. The field is really more wide open than we have seen in the last 10 years.”
A number of industry experts project the hepatitis C drug market to surge from $1.5 billion today to $10 billion by 2015. If CTI’s growth is any indication, those numbers look about right. Schroeder said the company’s revenue grew by 58 percent last year, while new projects grew by 55 percent. And that wasn’t even a stand-out year. Over the last six years, the company revenue has consistently grown by between 40 and 75 percent, Schroeder said.
Schroeder, formerly a professor of immunology at the University of Cincinnati Medical College, started the firm out of frustration he felt while working on research projects through the university and then through SangStat. “You could always really find talented people to work for you, whether in clinical research or marketing,” he recalls. “But they never knew the disease areas we worked in. There was always this steep learning curve that lasted six to eight months.”
Last year, the company worked with 41 different sponsors. Seven of them were among the 10 biggest pharma companies.
Bigger Not Better
But bigger isn’t always better, says Schroeder. “We used to think (big pharma) was a better fit for us, but now we have found that smaller companies fit us better,” he says.
That’s because, since the CRO sticks to the same therapeutic areas, they frequently meet with the regulators that focus on those disease areas.
A relationship is there, and that can be really valuable to small drug developers.
“I can say, ‘I don’t think they’ll accept this endpoint. My recommendation is based on the last three times we met.’ That tends to give small companies the leg up they need.”
Big companies, on the other hand, may have someone in house doing that though, says Schroeder, “they may not have the depth in a niche area like ours.”
A few of the large, publicly traded CROs compete for various trials, but no other CROs focus expressly on the specialty areas that it does. A few small ones had been focusing on transplant studies, but they were acquired and ceased to be a force in the space, Schroeder says.
To work on trials in Western Europe, the CRO has a partnership with Harrison Clinical Research in Munich, another medium-sized CRO. The firm also has partnerships in Australia. But how about India, and South America, and Eastern Europe, where every other CRO has established a presence in recent years? Not CTI. It doesn’t make sense for them.
“Our trial populations are really critically ill. The infrastructure to treat and pay for these diseases doesn’t even exist outside of the Western world,” Schroeder said.
Even with the big hepatitis C drug boom on the horizon, the company plans to stay what it is: a medium-sized CRO in Cincinnati, with a fiercely dedicated staff, many of whom came from larger CROs.
“People here are so motivated and engaged,” Schroeder says. “Here, they are making a difference. Our areas of focus are life-saving. The patient’s quality of life improves, their chance of survival improves. That keeps us all very excited. It’s hard to get that feeling if you’re working on the tenth hypertension drug in a class,” he added.
—by Suz Redfearn
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