Episode Transcript
[00:00:00] Speaker A: Foreign.
[00:00:05] Speaker B: Welcome to the bioraassi Few and Far between podcast. I'm your host, Melissa Alice.
So where do CROs currently sit in the biotech industry? How have funding reports revised study and protocol design? And is AI poised to become the backbone of clinical trial execution?
Well, today's guest is here to provide us with an in depth look at the latest CRO trends. Joel White joins us on the podcast and we are excited to have him as the owner of Market Cap Consulting. And with over 20 years of CRO experience, he has his finger on the pulse of the industry.
In this episode, we'll dive into the latest in biotech funding developments, explore program pricing in a perfect world, and enter the debate on FSP solutions and CRO strategy.
Also, be sure to stick around for the lightning round for great tips on improving efficiency, great reads, and uncovering the biggest news in biotech. Okay, let's start the podcast.
[00:01:03] Speaker A: Well, Joel, welcome to the podcast.
[00:01:06] Speaker C: Hello. Hello. Great to be with you.
[00:01:08] Speaker A: Thank you. I'm delighted to have an opportunity to catch up with you and in particular as the first of my episodes, in few and far between, being able to focus on a topic that I'm pretty excited about. So thank you so much. Let's get started talking about the state of the industry. Everybody loves to understand where the trends are and what's happening in pharma biotech. Ma, what are you expecting for 2026 in terms of the implications for CROs and for sponsors?
[00:01:36] Speaker C: Yeah, yeah, quite a bit. First of all, congratulations to you on this being your first episode and your new role. So very happy to see that.
[00:01:45] Speaker A: Thank you.
[00:01:46] Speaker C: Congratulations.
Yeah, so 2026, you know, this is today's Friday. I think it was Wednesday or maybe, or maybe before that that my QVA released its kind of industry overview report. And the headline when I first saw it was that biotech funding is down 20%. But that was for last year. That was all of last year compared to 2024. If, and I have not read the whole thing yet, so. But if you. If you broke that down into the first half of the year versus the second half of the year, I would pretty much guarantee you that the first half of the year was far more than 20% down compared to the first half of the year before. Whereas a rebound undisputably started to occur in Q3 and accelerated in Q4 of last year.
Some of the funding numbers I've seen so far this year show that we should not be down 20% this year and what the increase will be. I don't know, but I'd be surprised if it's a decrease of any time.
So it's looking good on that.
I can't remember the name of the company, but I saw a $400 million biotech financing arrangement hit the wires. It was either this morning or last night.
The news is good.
Last year I was seeing a lot of news around bankruptcies and everybody was talking about Runway. Just, just all the signs are much more positive for this year.
That's in terms of biotech funding, the value of equities and such on biotech and pharma. It's a little bit more of a mixed story.
The entire market, not just our industry, is under significant distress right now because it's late March and the Iran war is ongoing and things like that. And that's putting stress on valuations. But on a relative basis, you know, biotechs and pharmas, they're, they're holding up well and they're outperforming a lot of other industries. That was not the case last year for the first half of last year at all. So overall, you know, looks very positive to me. And that is showing through in CRO results. And again, I started seeing that in Q3 of last year, really picked up in Q4. And we won't know what it's like in real time right now for another couple of months.
[00:04:05] Speaker A: Sure. Without your crystal ball, of course.
It's really relevant too to compare to other industries because we do get a bit myopic in terms of what we're living in within life science and clinical trials in particular. And it's an important point in that comparison.
So let's zero in now on the CRO space in particular. Are we at max CRO? In other words, do you think we're going to see non organic growth from the majors? What's your view there?
[00:04:31] Speaker C: Yeah, I don't think we've ever been at max CRO since CRO started. Started forming, what, in the 80s and 90s?
CROs are growing as we speak, for the most part. I say that without having a view into Icahn's performance. We still won't know that for another month or so because of accounting issues. But just about everyone is reporting positive revenue growth and have been for a couple quarters now and several were even during those dark times, first half of last year and in 2024. So you. We are not at Max CRO until CROs stop growing. And as a.
In aggregate, as much as you can say, CROs and aggregate, you know, they are growing whether you're looking at top six or a, you know, wide collection of small midsize where there's not a lot of public visibility into that. So yeah, so I don't think that we are at max CRO.
Are we at Max Large Croat?
That's a different question. You know, we'll see.
We've got six, you know, six CROs who in terms of size are much larger than the seventh and below. So will we have six forever? I don't know. But you know, CROs as an ecosystem, I guess you could say we're not, we're not at max.
[00:05:56] Speaker A: Well, it's, we're starting to see now the blur of site networks. This week ICON and Bara spoke about their arrangements with regards to optimizing site relationships. I'm curious how a CRO owning sites actually benefits the sponsor and your view on that evolution?
[00:06:16] Speaker C: Yeah, yeah, there are benefits, there are challenges.
I'm not going to get too company specific but I think that you would be hard pressed inside or outside of ICON to be able to say that who probably owns the most sites of any CRO to say that they are gaining some enormous benefit from site ownership. Is it a detriment? I don't know about that. I don't know about that. You just get really mixed messages on it.
Case in point. You know, up until about two years ago, Icons former CEO Steve Cutler was saying that at that time up to 10% of all their clinical trial activity as ICON to CRO was being run through their wholly owned sites. My guess is that he just meant infectious disease research. I don't know if it extended beyond that. And he said our goal was 30%.
[00:07:08] Speaker A: Right.
[00:07:09] Speaker C: This was roughly 2022, 2023 timeframe. Our goal is 30% and our number one M&A focus is acquiring sites and site networks. After he said that they never bought another site.
[00:07:22] Speaker A: Never ever.
[00:07:24] Speaker C: And you don't hear about it anymore. It's not an M and A priority. You don't hear it at all. Whereas I, QVA has continued making some acquisitions including a decent sized early phase oncology SMO last year.
And for the first time In I believe 20 plus years, IQVIA now owns a phase one site.
So, so you know, there is there, there seem that iqvia wouldn't do that unless they had and foresaw a benefit going into the future. So, and they acquired sites before. So you know, overall is it, is it a plus or a minus? I definitely don't see it as a necessity. It's definitely not a necessity. And whether it's a plus or a minus depends on how well you operate it after you acquire it.
Yeah, last thing I'll say on that is that if you spend too much time on LinkedIn, you would think that Dro's owning sites is a new thing. It's not.
People tend to think that early phase, phase one, healthy volunteer sites aren't real sites. Those are real sites who see real patients. I've been able to visit a couple of them over the past couple years.
CROs owning sites, that's not a new thing.
That's been the case for decades.
There used to be some publicly traded CROs who, who owned significant numbers of sites back in the 90s and early 2000s. So yeah, not a new thing, not inherently a bad thing, definitely not inherently a conflict of interest or anything like that in my view and in the views of folks like the owners of Velocity and such who have publicly said I don't care if CRO's own sites. So, yeah, not inherently a good or a bad thing.
[00:09:07] Speaker A: Yeah, well, and that's the nature of it too is we're always looking for mechanisms for efficiency and these consolidations intentionally are seeking to deliver that. So we'll have to watch that space. Indeed.
So it wouldn't be a relevant conversation if we didn't introduce AI. And this is about the right time to do it at this point. And the AI backbone in particular.
This is ever present, this conversation, you framed it as that AI is becoming the backbone of trial design in 2026. So what happens in the mid tier CRO space? Perhaps if they can't afford to build their own proprietary ecosystem, will we see tech driven consolidation?
[00:09:47] Speaker C: Yeah, I don't know if it's a backbone yet.
It seems to be under consideration by just about everybody and there is some actual real adoption by a number, by a number of CROs.
And then when it comes to AI, several of the predominant technology providers in the space, metadata, viva, you know, they've got some real products around it though it's just not as widespread as you would think. You know, viva, by far the dominant player in the TMF space.
Their agent isn't out there yet, you know, in March 2026, it's not, it's not, you know, it's not out there in full real time production with wide adoption.
So. And that tells you, I mean that just tells you about how long some of these things take, even from tech companies who you would think would be working on this full time, all hands on deck. That's Not a criticism of them by any means. It just shows how much time and effort and validation and privacy concerns and things like that have to be accounted for when rolling these things out. So where, from my own vantage point, you know, where CROs have adopted it so far, it is through, you know, automating certain repetitive labor tasks and things like that. I do, I do a lot of benchmarking work, Melissa and I still just kind of chuckle a bit if I see a CRO has a unit where you know, they're, they're pricing in two to three hours per meeting for meeting minutes. It's just like, you know, we could have an AI recording this and provide a good, you know, overview of our call and you just wait on it, you wait five minutes and it's there and you have to, you don't have to do anything. So you know, there's, there's some low hanging fruit there and, and you know, there are plenty areas of CRO operations where there is a lot of repetitive human tasks that are ripe for automation. So whether that comes from AI or just, you know, smarter programming, you know, we'll see. But I wouldn't put it in backbone status yet. It's just opportunistic to find efficiencies here and there.
[00:12:06] Speaker A: Well, and this will be the challenge for service providers like Bayarasi in that tech driven efficiency, how we can continue to take cost out of clinical development for sponsors and really operationalize the promise of these technologies.
[00:12:20] Speaker C: Yeah, I mean where would you say it's at from a biorrosi standpoint?
[00:12:23] Speaker A: Well, it's certainly in exactly the repetitive attributes where, you know, quite frankly meeting minutes is a great example. Other attributes of either communications or documentation engagement.
TMF is an excellent arena for automation and efficiencies particularly because it is a rather systematically driven deliverable.
So those are the key areas I think where there's a lot of interest and we're still in the discovery stage is where we can apply it in terms of the scientific automation, whether it's about protocol design or even trial strategy and mechanisms for looking at being more exploratory in different scenarios instead of just picking what's worked last, looking analytically across multiple scenarios and doing the cost benefit analysis.
Very relevant for early funded sponsors who are very aware of capital constraints and factoring those things in early in design can have huge downstream impact.
[00:13:25] Speaker C: Yeah, yeah. I mean here would be the trigger for me to say yes, AI is the backbone of CRO operations.
Sign the contract with the sponsor, begin to start work, you Know how many plans have to be set up? Project management plan, communication plan, risk management plan.
[00:13:42] Speaker A: Right.
[00:13:42] Speaker C: Data management.
[00:13:43] Speaker A: Yeah. Medical, all those things.
[00:13:46] Speaker C: If, if you sign the contract, the protocol is final, which by the way, it's rarely final when the contract is signed.
[00:13:55] Speaker A: Yeah, right.
[00:13:55] Speaker C: Okay. So once the protocol is final, some of these things are final.
You can have excellent first drafts of all those plans and then you can, as a CRO, you can develop the database around those different plans in the protocol. Your statistical analysis plan can be derived from that icf, all these things. Until you get to a place where a CRO is pretty, pretty, or any company is pretty hands off, developing all those documentations, validating them, et cetera, et cetera, with minimal human effort, which no one's there.
No one's there, I don't think. Nor should they be, nor could they be.
When that day, if and when that day comes, then it's the backbone. Until then it's a opportunity and yeah, agree.
[00:14:50] Speaker A: Yeah, it's an exciting thing to think forward about.
Indeed.
So let's shift gears slightly from some of those topics into the buying and managing of CRO services, which my intent here is we have a lot of folks who follow the POD who are in that role. They are seeking CROs, they are evaluating them and there's a lot of insights that you bring. I know as a keen follower of your LinkedIn feed, there are so many important insights that you're getting from your in depth knowledge of the sector.
So let's dive into some of those details.
In particular, how CROs price. This is perhaps a mysterious thing for many, but what is happening with pricing and what is biotech's key supplier?
[00:15:36] Speaker C: Yeah, you know, pricing, it's a very manual, custom process and that's a good thing for this industry. And you know, a couple things. When I started out my career in the early 2000s, it was not in clinical research, it was for a large retailer where you had hundreds of millions of customers, or at least millions.
Maybe when times were rough, you only had millions instead of hundreds of millions. The largest CROs have thousands of customers and small midsize CROs have hundreds or dozens of customers.
And at a large retailer or an Amazon or even an IBM, you are performing millions of transactions per year. Call them, call each millions of purchases, perhaps billions of purchases.
As a CRO, you know, you're having thousands of transactions and so the average transaction size at a Walmart is probably what, $200, $100, something like that.
For a CRO, it can be hundreds of it will be at least hundreds of thousands of dollars. And at the larger CROs, it's millions. And so, yeah, you are not doing some hands off automated pricing for a $6 million or $60 million opportunity.
You gotta make sure you've got some smart people behind the wheel of that. There are numerous people involved. So how's it take place? You know, today's a Friday, so an RFP comes in.
If you haven't noticed, Most of the RFPs tend to come in near the end of the day. All right, so let's say best case, you know, it's around noon right now. So let's say best case you get the RFP now from a customer, you may or may not have had advance notice that that RFP was coming. Let's be generous and say that you had a heads up that the RFP was probably coming this week and it shows up. Now. That RFP will typically have a two week turnaround. So it'll be due two Fridays from now, maybe three, but we're going to say two. So you got, you have 10 business days. Typically the RFP is coming in on the end of the day. So if it always feels like if you're leading an RFP process and your suppliers seem a bit rushed, it's because they are. So yours is probably not the rfp, only RFP that came in today or this week.
And so the CRO is having to triage who is going to lead the pricing of that project? It's a proposal manager or pricing manager, someone like that.
And so let's say that's all sorted out within, you know, by the end of the day we know who is going to work on an rfp. Those people have to be notified and then they have to set up a call because just because the RFP came in right now, the seven or eight people who are going to look at it, review it, they can't drop everything they're doing right now to go look at that rfp.
And so, you know, by Monday or Tuesday of next week, ideally, you know, there is a, there is a team strategy call to review that. And that's not just the pricing person and the business development person.
Those are different operational leads. To look at the protocol, the rfp, all the materials provided, and then start to figure out, okay, well for this study we've got to figure out, okay, what countries are we going to run it in, how many sites are we going to have it in?
Even if the RFP is very clear on the expectations of where to run the trial and how many sites you're still, you're still giving your evaluation as to whether those are appropriate numbers or not. And so let's say in a perfect world, you know, by middle to late next week, you've got a great idea, you've got, you've got a pretty crystal clear idea of how you want to price it. The overwhelming vast majority of CRO pricing is done in Microsoft Excel, at least three to four of the top six CROs, PriceIt and Excel.
One of them, IQV, has said that they're looking to move into a web based tool by next year to tell you about, you know, how long it takes to, to build something like that. Which also tells you these are extraordinarily complex pricing tools. In many cases, especially if you are a full service global CRO, it just has to take a lot into account. And so, yeah, so you know, that's a lot going on within that two, two week time frame. You're often doing like a miniature feasibility of the protocol. And at the same time you've got your data management people, your statistics people, all these different people looking at different assumptions and telling the pricing person assume this, not that. So you may think, well, why doesn't the pricing person know all of that? Well, I've been in this industry since 2006, 20 years, and I wouldn't know an SDTM domain if you put one in front of me unless it was, it was labeled like that. Right.
You know, we're not experts in these things, but a lot of the lot of the RFPs require you to figure out how many of different types of tasks apply and units apply. And it's a very, very complex, very complex situation.
Last piece of evidence I'll give for that is the most common service I provide is benchmarking for CROs. And so not just their hourly rates, but also their hours per unit. And you know, sometimes a client will say, well we've got like 500 different units. Okay, that's, that's par, that's par for the course, especially if you're global and you're full service. So yeah, very, very complex situation with hundreds of variables often. So if as a biotech you're or a farmer, you're wondering why does the price change all the time?
Because those, you know, those 100 variables are not going to stay the same. Especially based off of your version 1.0 protocol outline.
[00:21:24] Speaker A: There are very few fixed variables in, very few.
And then from the day you launch, you're likely modifying your plan, which has
[00:21:33] Speaker C: a Downstream effect that final protocol is rarely final. Right.
[00:21:37] Speaker A: It is rarely final. But we also have the challenge of the operational nuance and the assumptions that are made from the clean slate versus what we have to adjust once we begin execution.
And I think this is where oftentimes in conversations with biotechs they're asking to see the math. They don't understand what goes into the calculations for pricing their programs. We've had a lot of pricing and proposal discussions that often point to are there traps, are there pricing traps? And sponsors can sometimes fall into that when they're comparing. They have their bid grid they want to see against the three or four or sometimes five or six CROs that they've engaged in their pricing evaluation. And they don't have apples to apples.
Why is that? Why are they seeing very different calculations from one CRO to another?
[00:22:28] Speaker C: Yeah, yeah.
Not all CROs call the same task the same thing because their SOP is different. Or their last head of data management just didn't like the way something was named.
You know, one, one company's figure is another company's graph, just as one, you know, silly example. But all these things, all these things matter. So the tasks that are in play are named different things at different companies. They're also rolled up in different ways. So you just think of basic site management, you know, capital S, capital M site management. It's something that's pretty universal across CROs. But some CROs will have an all encompassing unit for site management.
Some will break out the actual meetings with the sites from maybe an SAE management versus different components of site management. So they may have, you know, five or six different things on their, on their unit grid.
That is equivalent to a single rolled up unit for another CRO on top of that. Yeah, you as a sponsor may want to see, well, I want to know the roles and hours per unit of how you do it. And when you start comparing, you know, everybody calls a CRA a cra.
[00:23:48] Speaker A: Like that's, that's at least the only, maybe project manager. That's probably the job.
[00:23:52] Speaker C: Oh no, no, no, no. That's what even within those you start breaking out. Some companies will have up to three or four levels of CRA on their rate card. So they'll have 1, 2, 3 and principal, you know, or senior or something like that.
And you know, project manager.
I would say the majority of CROs have a blended project manager rate. Some have associate, then a project manager and senior and super senior. I mean there's all kinds of things, but that's at least a role that is named the same thing when you get into data management, pharmacovigilance, which could be called safety or I've seen other variations of it. You know, one person's clinical data manager is actually another person's clinical data associate or analyst or specialist.
I could go on. Welcome to my benchmarking world. Right.
[00:24:46] Speaker B: We were trying to.
[00:24:47] Speaker C: Thanks. Yeah, yeah. You can say, oh my gosh, why is your, why is your data management lead doing data cleaning? You know, why do you have a manager doing your data review and cleaning? Well, that's, that's actually our, you know, this other company does it at an associate level. Well, you know, that's just what we call it processing.
That's our level. Yeah.
[00:25:12] Speaker A: Well, I think it's perhaps an unfair burden on sponsors to need to suddenly become experts in how pricing grids are built and differentiate them to be able to make a purchasing decision.
[00:25:26] Speaker C: It's self imposed.
[00:25:27] Speaker A: It is, it is.
[00:25:28] Speaker C: No CRO is going to demand that. Oh, yeah, I'm going to provide you my roles and hours per unit. There's no reason to.
[00:25:36] Speaker A: Yeah, yeah. And so I look forward to the day when we can move perhaps past trying to get through all those details and have something that is a more productive way to look at defining SOAP and managing cost consciousness.
Looking to be very transparent in terms of the finances without slowing things down. Yeah.
[00:25:59] Speaker C: I would say pay more attention to the assumptions page.
[00:26:01] Speaker A: Precisely.
[00:26:02] Speaker C: And it's much, much, much more important if one CRO is recommending 20 sites and the other 15, that is vastly more important than getting into those, Getting into those details. That kind of apples to apples at the roll hourly unit level. I am not an outsourcing consultant. I am not a procurement consultant. But all I'll say, Melissa, is that if I was and I was being paid on an hourly basis, hell yeah, I would be asking for a role and hourly unit breakout for every conceivable item. And I'd be asking tons of questions because that's what I'm incentivized to do if I'm in that role.
[00:26:38] Speaker A: Yeah, that's an important perspective.
Each person in the process is controlling for perhaps a different outcome, which is important to note. Yeah, yeah, yeah.
[00:26:47] Speaker C: You gotta, on the buying side, you gotta be, you gotta be, you know, cautious about job security work and there's nothing, there's no better, better way. We'll go too much into it, but yeah, just, just make sure that your procurement teams aren't spinning their wheels, looking at a bunch of stuff that's not actually affecting the overall pricing.
[00:27:08] Speaker A: And yet a lot of the sponsors that we work with don't have the luxury of a procurement team. They are lean, they are relying on their head of cleanops or perhaps a financial analyst to aid them in this. And it's a very different journey for them. Certainly.
[00:27:22] Speaker C: Yes, yeah, yeah, it's. Yeah, there's no one size fits all when it comes to how that's structured.
But yeah. So long story short, but CROs have to cram a lot into that two week process and then when you come back to them the next time something has changed and the price will change.
[00:27:42] Speaker A: Yeah, all these.
I wanted to focus on a different topic and that is the debate of FSP versus full service. These outsourcing methodologies have they trend. They move back and forth throughout the industry and different sizes of organizations. There's a perception that the functional service provider, the FSP model, is on the rise. When funding gets tight, it seems to be a lever that sponsors can use for a little more efficiency in their R and D spend.
You've noticed that that hasn't always been the case recently. And I'm curious, when should a small biotech choose an FSP over a full service?
[00:28:23] Speaker C: Yeah, yeah, yeah. There's probably not many use cases for a small biotech point in fsp.
Mostly because in an actual FSP model, which is where you're almost renting people personnel on really almost like a fractional basis, you as the buyer of those services, you basically have to be an expert at resource management because otherwise if the effective hourly rate of paying for someone on an FSP basis versus a full service is going to be lower in most cases on an fsp.
But if you sign an FSP agreement to get a full time or five full time clinical data managers for the three studies you plan to run and just don't actually have enough work for them or get them involved, things that isn't really what you had planned for, then you're going to end up massively overpaying compared to if you worked with a CRO on a full service basis. So for small biotechs, like you said, the six or eight person company, they are probably not core competent resource managers.
That's what CROs are. So there's really not great use cases for small biotechs and FSPs for as much as in generalize that statement, it is almost entirely a large pharma, large biotech game because they do have people who are expert resource managers. Now in terms of the relationship of industry Funding to fsp, it's drawing pretty broad lines here, but when times are lean, which they're opening up now. So I would not say funding, funding probably always feels tight across the industry, except for like the heydays of 2020, 21 and sometimes like that. But funding is opening up. But when funding is really tight and when large pharma in particular looking to downsize.
You saw this openly with Pfizer a little less than two years ago, if my timing is right, where they took a bunch of full service work from ICON and converted to FSP with icon, you know, but it was, you know, when times are tough and it's, it's time to start cutting, that can be seen as a way to do it.
Not necessarily, not so much converting, but saying like, oh my gosh, we're going to run all this stuff on a full service basis. Partly because when funding is typeless, there's not as much urgency to run new trials. So you have more time to plan things out, you have more time to try to figure out, okay, how can we effectively manage these 60 resources that we bring on an FSP when funding is coming through heavy as it appears to be more so now you have a couple things going on. One, traditionally that's led more by biotech, which does a lot less FSP resourcing. So in relative terms, full service would outperform FSP in a looser funding environment because the charge is being led by biotech.
There's a couple things that I'm just seeing right now where the large public CROs, they have to include pass throughs in their revenue and their financial reporting and by their own, not just by their own statements, but in the actual numbers themselves.
Their pass through spend is growing much more disproportionately higher than their organic services revenue. While FSPs typically have very little to zero pass throughs. So if FSP was on the rise, you would expect to see the opposite. That's not the case right now. I always like to point out that the undisputed number one fastest growing CRO of significant scale is Medpace. There's really no doubt about that. They have 0.00% FSP business.
If FSP was strongly on the rise, you would not expect to be the. You would not expect the fastest growing CRO to have zero FSP business. There's other things we could go into too, but I'm by no means saying FSP is doomed at all. It's got an extremely valuable place in the industry.
But just don't let any white papers or webinars convince you that, you know, it's taking over the world.
[00:32:51] Speaker A: Sure. Well, I think too it's. The other component of this is at a strategic level, when an organization is seeking to variableize cost, these are larger themes and having some flexibility about transition from fixed to variabilized labor cost is really, to me, the wind that will change from an outsourced model or an insourced to that go between sp.
[00:33:12] Speaker C: Yeah, there's a little bit of an irony. This just gets into.
Call it personal opinions, but there's, there's a, there's a take that full service outsourcing is a lot less transparent than fsp. Like it is more complex. There's no doubt but that it's less transparent. And I would just, I would just counter argue that under full service, you know what you're paying per unit for almost every single, you know, task regulated and unregulated that's going on in the trial in FSP, you know, you're paying for 150, 160 hours a month for a statistician in Romania, unless you know exactly what they're doing day to day, week to week, month to month, year to year. There's, you're not getting any more transparency from that than you are any of your employees.
[00:34:08] Speaker A: You don't have task completion as a metric unless you're managing that your.
[00:34:13] Speaker C: That's right. That's right. Yeah, you can, you know, with the full service contract, you go back and say, oh, okay, yeah, we ended up having 120saes and here's how much I paid for all of those things to be processed, reported, etc.
Whereas under, whereas under a pharmacovigilance FSP, that's a lot more, can be a lot more difficult to do.
[00:34:34] Speaker A: Yeah, indeed.
So let's talk about contracting and particularly the red flags. So beyond the price tag, which we've already discussed, can be sometimes difficult to compare from one CRO to another. What's one specific clause in a CRO master service agreement that sponsors almost always overlook but leader regret.
[00:34:57] Speaker C: Yeah, yeah. The, the large pharmas really don't overlook anything. All right, so let's get the large farmers, large biotechs, like, let's, let's get that out of the way. Right. They, they don't really miss anything. In fact, that can, that can often be the reverse is, you know, what are some things in a, in a pharma template being pushed on you that the CRO might miss in the, in the smaller biotech, there can be, there can be some things. Now I am just in my background, in my focus, I'm much more finance and pricing focus.
So some things that can be overlooked is actually what things are, could be missing in a CRO template that you may want some certainty around.
So exchange rates is one thing.
As we speak, the US Dollar is just all over the freaking place.
And so without exchange rate controls in your MSA or extremely vague or loose or generous terms, you could be getting a significant change order or unexpected invoice on a Euros or a GBP contract because its value moved against some other currency that you weren't even aware was a factor in the contract.
Inflation is damped down right now, but a lot of MSA templates don't address inflation.
And so if it's important to you, especially if you're doing a lot of TNM contracting or just a lot of things where rates are subject to change over time, you want to make sure that there's some type of an index reference in there to kind of keep a lid on it.
And this isn't so much an MSA issue, but you'd want to know how inflation is being handled and the price that's being sent to you. I remember during the post Covid days, right when inflation was overtaking the world more than 1 CRO, I saw where they send a budget.
You'd have all your unit prices and such in the contract.
You would have no way of knowing that those unit prices had zero inflation in there unless you looked at the size 6. It's like those TV commercials, right, where they fly through the terms and conditions with the person talking 100 miles an
[00:37:20] Speaker A: hour at 3am yeah.
[00:37:22] Speaker C: Size six font at the bottom. And even that just a vague statement that CRO has the has the right to apply annual increases to the rates starting on the first calendar year. So you could be receiving a budget in November and not knowing and thinking, oh, okay, the unit price for the SAE is $2,500 per. Not knowing that CRO has the right to boost that to whatever the hell they want.
[00:37:48] Speaker A: And 6%, 3, 4, 5% increase to your overall cost before you're even through your first deliverable.
[00:37:56] Speaker C: Yeah. Yeah. So again, I'm finance pricing oriented, so I can't really speak to liquidated damages
[00:38:01] Speaker A: and confidentiality in the pricing lane. I think that's exactly what we're looking for. Your insights.
[00:38:06] Speaker C: Yeah, I can tell you, man, one thing I wish I knew more about. There are experts far more knowledgeable is the some of the data privacy piece.
The founder CEO of Florence Healthcare, not a CRO, a tech company.
He put something on LinkedIn recently. Yeah. Ryan. Talking about some of the things that are being pushed on them about not allowing AI and contracts. So that's an interesting area for me. I don't know what's being missed or it's probably the over. Way over.
Over examined. But there's some interesting stuff there.
Not my field though.
[00:38:45] Speaker A: No. But certainly one that needs constant refresh. So maybe the underlying theme is if a template hasn't been refreshed with regard to data privacy in recent months, it's probably outdated.
[00:38:57] Speaker C: That's right. Yes, yes, absolutely.
[00:39:01] Speaker A: Great. Good tips. Thank you.
It's time the lightning round. Are you ready?
[00:39:06] Speaker C: Lightning round. Yes.
[00:39:06] Speaker A: Okay, we're going to go quick through a few summary questions, some fun things to have you. Have you back to me. All right, here we go. What's a great read for people who want to learn more about clinical research?
[00:39:19] Speaker C: Yeah. So for clinical research, one that just came out a few months ago, it's a book called beyond the Science. It's by a gentleman named Gary Zammit who is the founder CEO of ClinoLabs, a CNS specific CRO.
Great book. One of the only books, if not the only book I've ever read about.
He talks about clinical research in general. That's why I'm answering your question that way. But he also talks about founding a CRO and managing it over.
[00:39:45] Speaker A: Personal story. Yeah, very personal.
[00:39:48] Speaker C: Yeah.
Really good read. There's also technical.
Yeah. If you're looking for something more academic, there's a lot of clinical research programs now. Not the case when I was coming out of school. So there's. There's a lot of. Just textbooks. That's right, textbooks on it. Yeah.
[00:40:04] Speaker A: Yeah, indeed. But no, I agree. Gary's book is a great read.
[00:40:07] Speaker C: Yeah, Gary's is more fun.
[00:40:09] Speaker B: Yeah.
[00:40:09] Speaker A: Yes.
So for your LinkedIn content, as I mentioned earlier, I know you apply this into all of your consulting work. Where do you source your research on CROs?
[00:40:22] Speaker C: So many places. My number one source is the reporting and commentary of the publicly traded CROs.
So, yes, they produce earnings reports. I think a lot of people think that's all they do. But there is always an earnings call. And I find their commentary, I just read the transcripts because it's a lot faster. Their commentary is extremely enlightening. Beyond that, there's Baird Jeffries, different investment banks and such where I've kind of weaseled my way into getting Their information and yeah, very, very, very valuable.
[00:40:58] Speaker A: And we certainly find the value in them as you distill and give us these insights. So thank you for that.
What are some good sources on biotech funding and equities performance?
[00:41:09] Speaker C: Yeah, that's where you get into some of these hard to get sources. In fact, it was Baird.
One of the, one of the, one of the light bulb moments for me last year was two of the three worst biotech funding months ever in their database were the first half of last year. And I just remember almost flippantly thinking, I can't get worse from here. That ended up being true. Thankfully they do month over month. So that's an example that's on the biotech funding side. Equities.
It's equities. So it's publicly traded stuff. I follow different baskets of companies and just kind of flip through their charts once or twice a month just to just see if there's any bizarre stuff going on. And there has been over the past month. One of the top six CROs has a major accounting investigation and nothing will torpedo any company stock price like accounting irregularities. Yeah, that's tough, certainly.
[00:42:06] Speaker A: Yeah, that is tough.
Okay, so you talked earlier about the six Global Megas. Will we have more or fewer by 2030?
[00:42:16] Speaker C: My crystal ball says one fewer.
[00:42:19] Speaker A: Okay.
[00:42:20] Speaker C: And I'm not thinking of one 2030.
[00:42:21] Speaker A: And check you on that.
[00:42:23] Speaker C: Yeah, I'm not thinking of one company in particular. I just, that's, that's my guess would be 5 in 2030, not more. I'd be very surprised by more.
I don't know how logistically that would happen.
[00:42:35] Speaker A: Yeah, that's a tomorrow problem.
Next question for you. What are the two or three service areas in the CRO offerings that you think are the best candidates for efficiency?
[00:42:50] Speaker C: Apologies to my, my TMF friends. TMF number one.
I don't even know there's a close second tmf. And then pharmacovigilance and data management.
[00:43:02] Speaker A: Yeah, yeah, yeah, yeah.
[00:43:05] Speaker C: So that would be, that would be my top three.
[00:43:08] Speaker A: All right, final question. In the lightning round, a CRO bid is 30% lower than the median.
Great deal or red flag.
[00:43:18] Speaker C: Yeah, a warning flag, but a potential really good deal. Look at the assumptions.
If they bid fewer sites, if they bid a shorter study, make sure you understand why and that you believe it. Yeah. And then ask the others why they're longer.
But you know, don't throw it out like there's some old stereotypes. Right. Oh, you collected six. Throw out the lowest throughout the highest.
Don't you know, that's really disrespectful to the people you invited to these processes, but that'd be pretty lazy. I can't imagine myself doing that.
[00:43:54] Speaker A: Sure. Well, and if we are delivering on the promise of efficiency and lowering costs through tech enablement, you should start to see those numbers coming down and the assumptions should demonstrate how they are coming down.
[00:44:07] Speaker C: Yes, that's right.
Yeah. Well, so those assumptions should come down.
Unless cost savings from some of these things means sponsors want even more complex protocols.
That is a multi, multi year trend that is showing no signs of slowing down the level of complexity and protocols. And that's one of my kind of like secret guesses, secret forecasts. I try not to predict the future too much, but I think that if CRO pricing in certain areas comes down in a noticeable way, that sponsors will just want more trials and more complex trials and it will just offset any, any threat to the CRO business model.
Yeah, that's, that's, that's my, you know, guesswork there.
[00:44:55] Speaker A: Well, and it's always interesting to try and see around those corners. So thank you. I knew this would be an insight rich conversation.
Thank you so much. This has been a delight. Really appreciate you being on the pod.
[00:45:07] Speaker C: Oh, my pleasure. Same to you.
[00:45:09] Speaker A: Thank you.
[00:45:10] Speaker D: Hi, Melissa, how are you? Great episode.
[00:45:13] Speaker B: Thank you. Adam, good to see you.
[00:45:16] Speaker D: You too. I really enjoyed listening to Joel's insight on the current CERO market.
I want to start off the questions with study and protocol pricing.
It seems like each CRO uses a unique lens.
Are you able to talk a little bit about the similarities behind the differences?
[00:45:38] Speaker B: Oh, that's an important and tricky question to unwind. Oftentimes sponsors are still trying to establish the strategy for their drug development plan. And so protocols at the point that a CRO is initially looking at them to price out study execution are sometimes not yet finished.
They may be just a synopsis or an initial strategy, but it tends to be quite iterative with the CRO partner to then establish. Well, if we're choosing this approach that actually will either reduce cost or increase time and those variables end up iterating in numerous cycles with engagements. So it's hard to say that there is a different lens. It's more about where you're in the engagement model between the sponsor and the CRO.
[00:46:30] Speaker D: That's a great way to define it better. I think it kind of leads me to another question about how the final protocol is rarely final. I thought that was very profound and to be honest, it sounds completely applicable to every Project program blueprints in every single industry that is out there.
Sure. Is this iteration always expected or is there a way to lock it down?
[00:47:02] Speaker B: Well, locking it down is to everyone's advantage because it certainly can then help control costs and have better predictability in terms of timelines. But with locking down, you may risk not being able to achieve your scientific goals, you may risk not being able to be competitive, you may risk achievement of the end, of the end result being too rigid. The challenge is every iteration, every adjustment, every amendment carries an incredible cost.
And so my recommendations and who how to lock it down is to provide as much information up front to examine what the options might be so that we can then work more collaboratively to define.
Some sponsors are really keen on just getting an early signal and then deciding whether additional capital investment will follow. Other sponsors may be trying to differentiate from a competitor so their development path
[00:47:57] Speaker A: needs to have those considerations.
[00:47:59] Speaker B: Or you might be looking at a
[00:48:00] Speaker A: full fledged proof of concept that needs
[00:48:02] Speaker B: a lot of rigor, numerous endpoints. That's again a different modality which would have protocol considerations that would differentiate from the other two examples. So it's that level of exchange and getting super clear on what the trial is intending to deliver that can help prevent adjustments, downplay eliminating them entirely.
Not sure that's the goal. But trying to reduce how much trial and error are on the fly is certainly to everyone's benefit.
[00:48:34] Speaker D: And it really seems like it could
[00:48:35] Speaker C: be
[00:48:38] Speaker D: more of a communication piece and making sure that there is alignment, but there is also back and forth between every stakeholder on the project.
[00:48:48] Speaker A: Sure.
[00:48:49] Speaker B: Which you know you need to build the trust to be able to have that level of consultation and transparency and look at how that feedback can influence the path forward.
[00:49:01] Speaker D: So, working for Bay Rossi, I've seen the market rebound and it seems like it's getting closer and closer every year to a very positive position, but not quite there yet.
What do you still think is holding the industry back?
[00:49:22] Speaker B: Well, I think depends by which metric you are measuring. We certainly continue to see an increase in investment in this case, but what the investments are going toward is generally later stage in development.
So where it's super tricky is earlier stage development. The pool of resources have a far greater volume of competitors in it and therefore the success for fundraising in early stage development appears to be a lower ratio. But on balance there is more funding, more trials, more activity, which therefore means that there's more to do. If you're a CRO, there are more trials to seek to support and manage. If you're a sponsor, there are more trials to bring forward. What's shifting is the landscape where both in terms of how the funding is being applied, but also then in terms of how sponsors and providers are seeking to execute, particularly looking at lower cost regions, looking at mechanisms for being incredibly conscientious about capital and constraints around capital.
[00:50:25] Speaker A: And then of course, how are we
[00:50:27] Speaker B: applying the benefits of technology enablement to accelerate trial delivery and reduce cost? That needs to actually flow through to the bottom line. Otherwise, you know, the promise of technology is not delivering the rewards expected.
[00:50:42] Speaker D: Exactly, Exactly. Okay, last question.
I don't believe it's a podcast if we don't talk about AI a little bit.
I think Joel definitely hit on the inherent efficiency and cost Savings factor in AI in relation to CROs and their sponsors. Do you agree?
[00:51:05] Speaker B: I do agree.
[00:51:06] Speaker A: Well, and if we think specifically in
[00:51:09] Speaker B: the realm of clinical trial delivery, the application of AI in life science is vast and there are multiple components of engagement, from discovery through to design, through to delivery through to commercialization. But if we just look at the specifics of clinical trial delivery that seros tend to be at their core model, there are so many mechanisms by which application of efficiency drivers can help reduce manualized or repetitive work, and those are in place across a clinical trial life cycle. But there's also mechanisms to also get smarter about the design of the program. So to the earlier point of how do we prevent continuing to amend the protocol and the incurring cost associated with downstream change, we can now begin modeling those things, start to predict where there's risk and make better decisions earlier on, both to protect capital, but also to ensure that the delivery is much more.
We've mitigated the risks of that delivery and we've looked at options to consider along the way. So that's what I'm very excited about. And seeing our teams advancing here in our organization, I know that it's an industry wide conversation. Every event we're going to, every conference, these are the, these are the topics that are getting the podium for sure.
[00:52:25] Speaker D: Excellent. Okay, well, a great episode with Joel and many more great guests to come, so thank you.
[00:52:35] Speaker B: All right, thanks, Adam.
