The top 10 bio­phar­ma CROs in the world—mid-2017 edi­tion

Huddled with five employees in a tiny Chapel Hill house, Quintiles Transnational founder Dennis Gillings began breaking down the many things drug companies needed done when testing in humans and started doing them much more reliably than his clients could, and with that, gave rise to the modern CRO industry. The year was 1982 and the company has dominated clinical outsourcing for the 35 years since.

Now, after a wave of consolidation in the CRO space has transformed countless smaller competitors into a handful of big public players, the company is still out front, but it no longer enjoys a vast gulf between it and the rest of the pack vying for a piece of biopharma’s massive R&D budget.

To keep pace and stay in front, Quintiles engineered a big M&A deal of its own, but it had nothing to do with typical CRO work. QuintilesIMS is the brand now thanks to last year’s merger with IMS Health — the largest vendor of physician prescribing data, which biopharma companies use to price and market drugs.

Ari Bousbib is QuintilesIMS’ CEO, the position he held at pre-merger IMS Health. Bousbib was not a shoo-in choice to lead the combined firm. Tom Pike had been the CEO at Quintiles since 2012, successfully taking the reins of the company from an enigmatic founder and ramped up its main Research and Development Solutions business. In 2016 the workhorse division accounted for 65% of the combined company’s revenue, yet IMS insisted Bousbib — a highly regarded executive who made his name over a 14-year stint at aerospace and building giant United Technologies Corp — be installed as CEO and chairman as a condition of the merger. Pike retired rather than take a diminished role at QuintilesIMS.

Bousbib’s emergence at the top is a sign pointing where the industry is headed. “Traditional CRO services have become commodities,” says Jason Monteleone, president of Pivotal Financial Consulting, who has advised CRO boards on M&A transactions. So big players are looking for new ways to stand out.

QuintilesIMS wants to compete in what it describes in regulatory filings as a $130 billion market opportunity completely outside of clinical development. It ranges from collecting so-called Real-World Evidence to sales force training, while mining billions of healthcare transactions for lucrative signals. In these areas and the traditional clinical work it has a sizeable but shrinking advantage against the only other truly global, can-do-pretty-much-everything CROs in the world: PPD, Parexel, Icon, PRA Health Sciences, Covance, and the soon-to-be rebranded INC Research/inVentiv Health.

The payoff comes from following a drugmaker’s molecule from early clinical R&D on through to commercialization, selling ever more expensive arrangements each step of the way — without assuming the risk endemic to drug development. The promise of the new CRO services — which grew as Big Pharma and a booming group of biotechs looked to outsource the clinical work — is that the harmonization of disparate data is finally possible, leading to clients’ clinical trials recruiting faster,  their drug products positioned better for both regulators and the commercial opportunity that might come later. And if it reaches market? Collect, analyze, and act on even more data.

It’s a tall order. Lab testing giant LabCorp turned heads by acquiring Covance in 2015. It added Chiltern earlier this summer for $1.2 billion in order to expand its clinical offerings. INC Research, founded in 1998 with roots in neurology trials, closed their $7.4 billion merger with the commercial-focused inVentiv Health this month.

Is there more M&A in the works? Monteleone is leaning towards no — at least at the top end of the market — unless a non-traditional player comes in like LabCorp did with Covance.  “Most likely we’ll see strategic deals like PRA Health Sciences’s acquisition of Symphony Health,” he adds, where the Raleigh-based CRO acquired a healthcare data and analytics provider. The mid-tier market, a few of which we name in our list below, is always ripe for action.

Two CROs in the top 9 — PPD and BioClinica —  are private, making a definitive ranking here impossible, so our proxy is the valuation paid recently by their primary owners.

There are no comparable metrics for the CROs listed in the #10 position, but after asking several industry sources their opinions who belonged there, we’ve added a few contenders.

We’ll update this entire list again in the fall, when surely, the names and places will have changed.

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Mi­no­ryx and Sper­o­genix ink an ex­clu­sive li­cense agree­ment to de­vel­op and com­mer­cial­ize lerigli­ta­zone in Chi­na

September 23, 2020 – Hong Kong, Beijing, Shanghai (China) and Mataró, Barcelona (Spain)  

Minoryx will receive an upfront and milestone payments of up to $78 million, as well as double digit royalties on annual net sales 

Sperogenix will receive exclusive rights to develop and commercialize leriglitazone for the treatment of X-linked adrenoleukodystrophy (X-ALD), a rare life-threatening neurological condition

Vas Narasimhan (AP Images)

UP­DAT­ED: Still held down by clin­i­cal hold, No­var­tis' Zol­gens­ma falls fur­ther be­hind Bio­gen and Roche as FDA asks for a new piv­otal study

Last October, the FDA slowed down Novartis’ quest to extend its gene therapy to older spinal muscular atrophy patients by slapping a partial hold on intrathecal administration. Almost a year later, the hold is still there, and regulators are adding another hurdle required for regulatory submission: a new pivotal confirmatory study.

The new requirement — which departs significantly from Novartis’ prior expectations — will likely stretch the path to registration beyond 2021, when analysts were expecting a BLA submission. That could mean more time for Biogen to reap Spinraza revenues and Roche to ramp up sales of Evrysdi in the absence of a rival.

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David Berry (Flagship)

Flag­ship's next big tech­no­log­i­cal bet? The cloud

Earlier this month, Flagship announced their big bet on the software half the industry is talking about, launching the AI and machine learning startup. Now, they and a couple other investors are gambling $100 million on a software that much of the public generally thinks of as a cool, IT afterthought: cloud computing.

The idea, says founder and Flagship partner David Berry, is one of scale: The sheer magnitude of biological data that you can store on cloud technology is unprecedented. And that size, when leveraged properly, can allow you to ask questions and form insights that are similarly unprecedented.

Jim Roberts and Brian Finrow (Lumen Bioscience)

With a $4M fed­er­al grant, Lu­men jumps in­to the Covid-19 treat­ment race

It’s been less than a month since Lumen Bioscience announced a $16 million Series B to engineer spirulina — a nutrient-packed super food — for diseases like traveler’s diarrhea, norovirus and C. difficile colitis. And now, the biotech has pulled in another $4 million to do the same for Covid-19.

The approach is quite similar to other gastrointestinal targets the company is pursuing, co-founders and Brian Finrow and Jim Roberts said. The Seattle-based company is working on a camelid antibody cocktail to combat GI infection common among Covid-19 patients. In a study published in the American Journal of Gastroenterology, a majority of Covid-19 patients showed GI and respiratory symptoms, and 25% had only GI symptoms.

CEO Markus Warmuth (Monte Rosa)

Monte Rosa rakes in $96M Se­ries B as it pre­pares 'mol­e­c­u­lar glue' plat­form for IND-en­abling stud­ies

About four months after completing an extension to its Series A, Monte Rosa Therapeutics is putting its next foot forward with another heap of cash.

The Boston-based biotech is back with $96 million in Series B financing with a goal to get its lead program ready for IND-enabling studies by the end of the year. Though Monte Rosa is keeping its specific target a secret for now, the company has been researching how to utilize its protein degradation technology in breast cancer and non-small cell lung cancer, among other areas.

FDA commissioner Stephen Hahn at the White House (AP Images)

Un­der fire, FDA to is­sue stricter guid­ance for Covid-19 vac­cine EUA this week — re­port

The FDA has been insisting for months that a Covid-19 vaccine had to be at least 50% effective – a measure of transparency meant to shore public trust in the agency and in a vaccine that had been brought forward at record speed and record political pressure. But now, with concerns of a Trump-driven authorization arriving before the election, the agency may be raising the bar.

The FDA is set to release new guidance that would raise safety and efficacy requirements for a vaccine EUA above earlier guidance and above the criteria used for convalescent plasma or hydroxychloroquine, The Washington Post reported. Experts say this significantly lowers the odds of an approval before the election on November 3, which Trump has promised despite vocal concerns from public health officials, and could help shore up public trust in the agency and any eventual vaccine.

PhII Alzheimer's fail­ure deals new blow to Roche, AC Im­mune — but the tau hy­poth­e­sis is far from dead

The leading anti-tau antibody has failed its first Phase II testing, casting a shadow on a popular target (just trailing amyloid beta) for Alzheimer’s disease.

Roche and AC Immune are quick to acknowledge disappointment in the topline readout, which suggested that semorinemab did not reduce cognitive decline among patients with early Alzheimer’s disease, who are either just starting to have symptoms or have mild manifestations.

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Covid-19 roundup: J&J be­gins piv­otal Phase III tri­al for vac­cine; Con­tro­ver­sial hu­man chal­lenge tri­als to be­gin in Lon­don — re­port

Johnson & Johnson announced it’s beginning a pivotal Phase III trial for its Covid-19 candidate, JNJ-78436735 — the first single-dose vaccine in this stage.

The Phase III trial, dubbed ENSEMBLE, will enroll 60,000 patients worldwide, making it the largest Phase III study of a Covid-19 vaccine to date. J&J said the candidate achieved positive interim results in a Phase I/IIa study, which will be published “imminently.” There’s a possibility that the first batches will be ready for potential emergency use in early 2021, according to the company.

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Patrick Enright, Longitude co-founder (Longitude)

As its biotechs hit the pan­dem­ic ex­it, Lon­gi­tude rais­es $585M for new neu­ro, can­cer, ag­ing and or­phan-fo­cused fund

The years have been kind to Longitude Capital. This year, too.

A 2006 spinout of Pequot Capital, its founders started their new firm just four years before the parent company would go under amid insider trading allegations. Their first life sciences fund raised $325 million amid the financial crisis, they added a second for $385 million and then in, 2016, a third for $525 million. In the last few months, the pandemic biotech IPO boom netted several high-value exits from those funds, as Checkmate, Vaxcyte, Inozyme and Poseida all went public.

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