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A Case of Delayed Gratification

eClinical 2011: Remedies for the Clinical Trials Machine
The Vendor Mark Weinstein (CEO, BioClinica)

February 1, 2011 | BioClinica CEO Mark Weinstein’s career started out at Andersen Consulting before moving to Thomson Healthcare in the early 1990s. He joined Bio-Imaging Technologies in 1997, later rebranding the firm as BioClinica as the company grew and diversified. Weinstein spoke to Bio•IT World chief editor Kevin Davies about his company’s rapid growth in particular and the trends for the eClinical space.

What is behind BioClinica’s recent activity in acquiring various eClinical technology companies?
Weinstein: Providing technology-enabled services for clinical research is a business for mature individuals because it is delayed gratification. Through the years we’ve done quite a few acquisitions based on where we believe the industry is going. We constantly ask: how can we align ourselves to not only take advantage of it now—being a publicly traded company, I can’t disappear for five years and come back on the scene—but also figure out how does that position us for the future?

I’m just amazed—everything we see in terms of patent cliffs, economic issues and big pharma mentality, has been known as long as I’ve been involved with BioClinica, which is 13 years. There was so much excess in so many of these companies, I don’t know of any big pharma that’s made truly substantive changes as far as how they do research. But with that said, they are asking more questions than they ever have before—and they’re the right questions.

BioClinica originally specialized in imaging technology, correct?

In 1997 I heard about Bio-Imaging Technologies, which was a small company getting ready to take off. The FDA was on the front end of accepting non-clinical endpoints to prove that drugs or devices work. But, it wanted the data centrally reviewed. They didn’t want 1,000 radiologists’ opinions for 1,000 patients. In 1997, it was just starting to formalize ideas about how the data were going to be centrally reviewed. Bio-Imaging Technologies was on the front edge of that. We worked with FDA, some of the first submissions were on rheumatoid arthritis (TNF inhibitors), and we were centrally reviewing the images.

While we were strong in musculoskeletal and oncology, I could see pharma using more imaging endpoints across additional therapeutic areas, but they want to work with fewer vendors over time. We made several acquisitions to round out our therapeutic offerings. Ultimately, pharma would want a preferred provider that could service their needs in all therapeutic areas. Therapeutic expertise is absolutely key on the imaging side.

Pharma doesn’t buy from very small companies—they have so much risk in their compounds, they’re not willing to take any vendor risk. We saw that back in the ‘90s. In 2007, we saw CNS disorders taking off—very high value scans, but images come from all over the world that need to be standardized. So we found a small French company with nine employees located in Lyon. Theralys had tremendous knowledge and world-class software. But they couldn’t get a Phase III study from a major pharma, because they were nine people in Lyon, France! We brought them in, made them part of Bio-Imaging Technologies, and suddenly, they’re part of a 300-person company with global reach. That’s now the fastest growing piece of our business.

How did that imaging experience help in other eClinical areas?

What we did in imaging is what we’re looking to do in the clinical technologies area. Imaging is a great space, but that whole area is maybe $350 million. It’s not a bad market if you’re small, privately held, but we’re looking to extend. From a public company’s perspective, we want the next thing.

There is a technology solution for every pharma department. The systems mirror the siloed mindset that is pervasive in large pharma. Somebody might be doing EDC (one of the first systems to take off), others were doing clinical supply optimization, CTMS, etc. You had all these pieces going on. We said, we think this is a big opportunity here that will play out over a number of years. Pharma wants to do things better, but is still buying point solutions, because that’s the way it buys things.

So we set out to find an entry point into the eClinical arena. We saw Phase Forward/Oracle and Medidata as the two 800-pound gorillas that were focused on technology transfer to major pharma. Additionally we saw that all other pharma companies (1,400 or so) were busy evaluating their core competencies and proactively determining what they should and should not be doing internally. Big pharma’s started many years ago and historically had so much money; they’d spend tens of millions of dollars developing software and often never use it! Back in the day, people didn’t even have budgets on the clinical research side, it was like a bottomless pit. But the lack of new blockbuster drugs has forced the entire pharma industry to evaluate how they can do more research for less dollars, which equates to less internal development and more outsourcing.

We think the magic sauce is various technologies with the right services wrapped around it. Pharma wants to own nothing in the end: ‘I don’t want 150-person IT staff, you can do that for me. I want you to show up before a study starts, help me run it, then leave when the study is complete.”

So your next entry point was EDC?

In 2007 we found an EDC company with a twist—Phoenix Data Systems (PDS). There were many companies of that size, but their geographic [location], the fact that they were profitable and that they had a more comprehensive offering than most others in the space (EDC and data management) helped us make the decision. PDS was founded in 1997 and over the years had established an interesting twist by providing data management services off the back of their EDC offering. This was a differentiator and allowed them to grow a $15-million profitable business. Because of their small size, PDS did not have a great deal of market recognition, but by becoming part of a 350-person company, we put PDS on many people’s maps and reduced the risk to pharma for selecting them for projects.

That was the starting point for our venturing beyond medical image management in March 2008. Little did we know the world would change in the fall of 2008. Given the fact that we had money in the bank, no debt and remained profitable, we began looking for other acquisitions approximately six months after the PDS acquisition. As we looked beyond medical image management we realized that we needed to rebrand the company. If we were going to be a global company involved in many aspects of clinical research services, we can’t have a name like Bio-Imaging Technologies, so we renamed the company BioClinica in spring 2009.

What other acquisitions have you made since then?

We’ve made two other acquisitions: The first acquisition was Tourtellotte Solutions (TS). TS had a clinical supply optimization solution and a development group that has gone on to develop our newly-announced IWR [interactive web response] product, Trident. Prior to the acquisition, TS was viewed as one of the industry leaders in clinical supplies distribution and optimization but couldn’t sell a major enterprise-wide IWR solution because of their 40 person size (see, “Vertex Views Trial Supplies,” Bio•IT World, Dec 2006). Within a month of the acquisition, we were sitting in a top 5 pharma executive’s office, talking about what we could do for them.

We have already begun work on our next offering associated with this—Enterprise Demand Aggregator (EDA). This product aggregates clinical supplies across studies, so at the compound level, companies can do the same powerful optimization.

The second acquisition was Transenda. Transenda has a world-class Clinical Trial Management System (CTMS) and once again because of their size, 20 people, had issues with selling into the industry. As part of BioClinica, we have already secured several large contracts for major organizations, both pharmas and CROs. Historically in the CTMS area there have been $1+ million solutions—Impact, Siebel, etc.—but there is nothing credible for small companies. They’ve used some Outlook, Excel spreadsheets, Word, nothing in a controlled environment. Our CTMS solution, which came from Transenda, is “Office-smart”—and you can report the results using Microsoft SharePoint.

Another positive of the Transenda acquisition was the relationship we now have with Microsoft. As a Gold Certified Partner we get a tremendous amount of support from Microsoft from both the technology and marketing perspectives.

Do you try to sell BioClinica as providing a holistic eClinical solution?

The development and selling of a unified solution will be evolution not revolution. At the highest level, you make sure the senior executives know you have a vision, but probably the people you’re selling to don’t care. They have a job and want a specific solution. We view every sale—Optimizer, CTMS, Trident—as “entry points”. If we go in and provide excellent service with that entry point, we’ll get another shot at another part of the business. We currently provide services or technology to 19 of the top 20 pharma companies. This exposure creates a tremendous number of entry points from which to expand our business.

Cephalon is the #43-ranked pharma—they’ve outsourced all their EDC and data management to us. They want a higher mixture of service to technology. Technology by itself becomes commoditized very quickly. The question is how do you wrap services around it? I can offer a service level, because it’s the fabric of my business, that an Oracle or Medidata might have trouble doing.

There are still about 100 companies in the EDC/IWR space, but they’re thinly capitalized; and most don’t grow beyond where they are today. We have an obligation to our shareholders to maximize the long term value of the stock that they own. This obligation forces us to continue to find ways to grow our revenues and profits.

What other niches would you like to expand into?

A couple of other evolving areas. One is patient-reported outcomes (ePRO). While we’re happy with our core offering, my personal vision is that we’ll see more and more post-approval work, signal detection studies. Pharma is more and more sensitive to safety issues in drugs. Pharma wants to know the answers to the question before the Wall Street Journal does. ePRO will morph into acquisition methodology for post-approval studies and signal detection.

Also, safety systems—how do you monitor situations when there are potential safety issues. Currently there are an amazing number of disparate safety systems in the market and trying to make intelligent decisions is very costly and difficult.

What do you see as the positive impact of eClinical research technology on drug pipelines?

The more data you can bring in and make it electronic, the more you can understand relationships between compounds, symptoms, and disease states. A bed of intelligence is being created by all these data. Ultimately, though, my gut feeling is that big pharma will do far less primary research. I think they’re going to buy results. I deal with 19 of the top 20 pharma companies every month, and I watch how fast a small company can get a study up and running—it’s amazing compared to a big pharma, they’re that nimble. Time is money to them. In many ways, big pharma will get more efficient, because they’ll do less research and buy results. That’s a much less expensive way of operating.

When we deal with smaller pharma companies without a commercialized product, they’ll say, ‘I have to get to the end of a Phase II study with my milestones and then someone will buy it from me.’ Big pharma has the network to run global studies. The more work that transitions to smaller pharma will accelerate the number of studies being done, which will increase the probability of success. That’s a different way to look at it.

As an example, we currently work with a large pharma who runs 200 studies per year on an ongoing basis. Most of their studies are small and only last a few weeks. They approached us on how we could help them become more efficient. By utilizing our technology platform and standard forms that we developed with the pharma client, we have had a very positive effect on productivity and efficiency.

What about patient stratification using genomic technologies?

On the science side, we don’t get involved in Phase I studies or early Phase II. Our value comes in larger studies. By having better inclusion/exclusion criteria (results of genomics is one way to do this) statistically powered results should be obtained with less subjects on a per study basis. Fewer subjects should reduce the overall cost and time it takes to conduct a study. We see an interest in that. From a vendor perspective, you need to be the low cost producer to ensure that you can maintain profitability in smaller studies. We do believe this will happen, and pharma won’t conduct nearly as many large, monolithic studies in the future. We are putting a great deal of investment in our operational infrastructure and technologies to ensure that we can be the most efficient partner for pharma in the future.

What geographic trends do you see in clinical trials?

About four years ago, we crossed over so more than 50% subjects are now rest of the world (ROW), outside the United States and Western Europe. That will continue to accelerate, which helps us. It used to be that you could find 500 subjects in the East Coast of the United States for a study. Now, for that same study, to find the same 500 subjects you might need to go to 20-30 countries and hundreds of principal investigators (PIs). It’s easy to find drug naïve populations [in the ROW] and you’re recruiting in developing countries where subjects are being offered world-class health care for free. These trends lead to more PI sites that have less experience in doing clinical research, which means that, as a vendor, we have to make it as easy as possible to work with our systems. The increased geographic dispersion of the studies combined with the fact that 50% of PIs involved in a clinical research project will never run a second study, leads to constant inflow of new PIs that need additional technologies and services. We don’t anticipate these trends to change for the foreseeable future. •

This article also appeared in the January-February 2011 issue of Bio-IT World Magazine. Subscriptions are free for qualifying individuals. Apply today.
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