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CROs and Cardiovascular Devices December 9, 2009 Frost Bank Tower 401 Congress Ave, Suite 2950 Austin, Texas 78701 (512) 721-1200

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Presentation on theme: "CROs and Cardiovascular Devices December 9, 2009 Frost Bank Tower 401 Congress Ave, Suite 2950 Austin, Texas 78701 (512) 721-1200"— Presentation transcript:

1 CROs and Cardiovascular Devices December 9, 2009 Frost Bank Tower 401 Congress Ave, Suite 2950 Austin, Texas (512) Prepared by Rachel Little, Stacee Millangue, Kathlyn Smyer, Cory Welch, & Kirk Yoshida School of Information, University of Texas

2 Confidential & Trade Secret 1 PROJECT OVERVIEW Objective Focus on the role of Clinical Research Organizations (CROs) in the medical device industry to help Santé Ventures decide whether or not to invest in or acquire a CRO company Main Questions How is the CRO industry structured (key players, key sponsors, services, growth rates and trends)? Is there evidence of VC firms using CROs for their portfolio companies? Are there case studies that describe how a key sponsor used a CRO for medical device development? What is the FDAs position on offshore clinical trials, including their view of offshore test populations as representative of US populations? Secondary Questions: What are the stages in the medical device development process and how do CROs help at each stage in the process? What are the service offerings that CROs provide and what are the pricing models? Are there metrics for sponsors to select CROs? Other Deliverables: Provide a list of top CROs that either specialize or have known capabilities in the cardiovascular medical device area Provide a list of top VC firms that invest in medical devices Links to datasets for clinical trials and medical device submissions

3 Confidential & Trade Secret 2 OVERALL CRO MARKET Current estimated CRO market size: $10.91B (Frost & Sullivan) 1 to $23.7B (Goldman Sachs) 3Frost & SullivanGoldman Sachs Projected CRO market size: $22.87B (1) for 2015 to $33.7 for 2012 (3)(1)(3) Current growth rate (2009): 10% (1)(1) 2008 growth rate: 14-15% (1)(1) 1,100 CRO companies worldwide (1)(1) Percentages rounded up Sources: Frost & Sullivan(1,2)12

4 Confidential & Trade Secret 3 TOP CARDIOVASCULAR CROS Companies chosen from list compiled through searches in Cap IQ, Google, market research reports Narrowed down to medical device CROS Narrowed further to those with cardiovascular capabilities Researched for years of experience Checked for offices in Europe and Latin America (CRO spreadsheets attached) CRO Year Founded Europe Offices Latin American Offices Revenue ($b) Company Website Quintiles1990Yes 3 PPD1985Yes Covance1987Yes Top Players in CRO market who work on cardiovascular medical devices

5 Confidential & Trade Secret 4 CARDIOVASCULAR CROS (continued) CRO Year Founded Europ e Offices Latin American Offices Company Website MDS Pharma Svcs. 1933Yes Parexel1983Yes ParmaNet1984Yes Factory CRO1998Yes Clindatrix2003Yes Charles River Labs 1947YesNo MDCI1980YesNo Criterium1991YesNo ClinSys1992YesNo Integrium1998YesNo Cidal2001NoYes Venn Life Sciences 2006YesNo CRO Year Founded Europe Offices Latin American Offices Company Website Averion International Corp. 2007YesNo GRSworldwide2007YesNo Clinimetrics1988No Alquest1993No MPI Research1995No Regulatory & Clinical Research Institute 1999No CBSET, Inc.2006No Symbios Clinical, Inc. 2006No Innoventz N/A (10+ yrs exp.) No

6 Confidential & Trade Secret 5 MEDICAL DEVICE MARKET Medical Device Market worth $250 billion in 2009 Growth rate 6%-8% Outsourcing has helped medical device manufacturers reduce product development cost by 10% to 30% (MarketsandMarkets) 1MarketsandMarkets Orthopedics, neurology, cardiology, and cosmetics/aesthetics are the fastest-growing medical device market segments in the United States Industry produces approximately 100,000 individual products per year (Devicelink) 2Devicelink Types of Cardiovascular Devices Cardiac Rhythm Management Cardiovascular Monitoring & Diagnostic Cardiovascular Prosthetic Device Cardiovascular Surgery Electrophysiology Interventional Cardiology Peripheral Vascular Devices Top Cardiovascular Device Companies by FDA submissions, present (Global Data) 3Global Data (Boliven) 4Boliven

7 Confidential & Trade Secret MEDICAL DEVICE INVESTMENTS Medical Device investments up (Thomson) 1Thomson Medical Device investments fell 2008; increased in Q (Dow Jones) 2Dow Jones VC firms investing in device companies (1,2, Established medical device companies investing in start-ups o Ex: Johnson & Johnsons investment arm - JJDC group Ex Evidence of CROs investing in medical devices, drugs, start-ups o Ex: Quintiles takes cut in product revenues (4243B attached)4243B o Ex: Cato Research started investment arm Cato Bioventures 4Cato Research Cato Bioventures o Ex: PPD investing in Celtic Therapuetics (private equity firm) Ex Top VC Firms in Medical Device Field ($100+ M in health care capital) Accuitive Medical Ventures Golden Pine Ventures Mayfield Fund MPM Capital Three Arch Partners Versant Ventures Sierra Ventures Source: SourceSource: Ernst & Young, Capital IQ, Dow Jones VentureSource and Windhover VC Investment in MedTech MedTech Field Includes Nonimaging diagnostics Research and other equipment Imaging Therapeutic Devices Source: Ernst & YoungErnst & Young

8 Confidential & Trade Secret 7 CRO & DEVICE SPONSOR PARTNERSHIPS What to ask a CRO: What are the capabilities and capacity of existing clinical personnel? What are the critical business factors (e.g., time, money, headcount) for the organization? What are the long-term needs to support clinical development? Do they substantiate in-house capabilities? What can be outsourced in conducting clinical trials? SOP development Site Protocol development Monitoring / Project Management Data Management / Statistics Audits of internal and external of clinical processes, procedures and personnel (Source: Kate Giovino, OrganoGenesis Inc. )Source Pricing Models Fixed Great for small projects Option for tight budgets Billable Hours, by service Current standard for most CROs Allows for some flexibility Sources: Clinpage: 1,212

9 Confidential & Trade Secret 8 MEDICAL DEVICE TESTING PROCESS Major categories under which medical device testing fall aligned with the stages of product development: 1. Research and Development (2-3 years): includes screening and qualification tests that chemically characterize raw materials or medical device components 2. Design and Validation (6-12 months): or functionality testing, usually involves surgical studies that evaluate how well the device performs the intended treatment 3. Biocompatibility (1-2 years): testing uses both in vitro and in vivo models to ensure that the device or component material is biologically safe for its intended use 4. Clinical Trials (1-2 years): scientific studies are employed to evaluate a drug, device, or biologic on patients in the treatment, prevention, or diagnosis of a disease or condition 5. Sterility Assurance & Microbiology (1-2 years): sterilization validation, environmental monitoring, and packaging validation with shelf-life testing (Source)(Source) Graphic Source

10 Confidential & Trade Secret 9 MEDICAL DEVICE POST-APPROVAL PROCESS FDA charged to seek least burdensome means to evaluate data, which necessitates post- market surveillance. When failure may result in health consequences. When intended for implantation for more than one year. When life-supporting devices will be used outside facility. Device company may choose CRO for post-market testing. Clarify CRO responsibilities. Concur on study purpose and data management. Reviews of milestones. Sites for trials are determined by sponsor. Study tracking website developed. Sponsor legal team and CRO negotiate contract to facilitate study start-up. (Source)

11 Confidential & Trade Secret 10 CLINICAL TRIALS 10 82,466 trials with locations in 170 countries registered with FDA, 3/ /1/2009FDA 6,731 related to medical devices 3,480 outside U.S. 2,930 actively recruiting outside U.S. 1,945 trials related to cardiovascular conditions and medical devices 975 conducted outside U.S. (Source: Percentages to whole number Source: (Source:

12 Confidential & Trade Secret 11 CRO/MEDICAL DEVICE TRENDS CRO Industry Trends (Source) 1Source "Undercurrent of interest" among private equity firms in acquiring CROs Possible emerging trend: Long-term partnering arrangements between CROs & recruiting firms Number of CROs has reached 1,100 despite continued consolidation (Source) 2Source Medical Device Trends (Depends on who you are talking to) FDA leadership on role of outsourcing: (Source) 3Source Outsourcing requires more international collaboration on inspections, enforcement, and compliance policy issues. Also, greater regulatory focus on supplier selection, qualification, and monitoring Market opportunity in fusion pumps – look at recalls Five new science platforms that apply to the medical device industry: nanotechnology, synthetic biology, tissue engineering, stem cells, and robotics CRO Industry (Source: Linda Alexander, Alquest CEO) 4Source Seeing a more cautious, rigorous approach from FDA, but not necessarily scientifically or medically sound Suggestions for sponsors - Take products abroad first With longer U.S approval process, companies should develop a strategy for selling their product abroad Revenue stream can help sustain the company and show VC market that they have a viable product Europe is best choice right now

13 Confidential & Trade Secret 12 CRO/MEDICAL DEVICE TRENDS (continued) Market Potential (Source) 1Source The CRO medical device industry is smaller than pharmaceutical & biotech but growing Few blockbuster (>$1B sales) medical devices in the past but cardiovascular drug-eluting stents is game changer Anecdotal evidence shows firms moving into the medical device area Some CROs are differentiating themselves by concentrating on cardiovascular medical device testing Four fastest growing medical device segments are orthopedics, neurology, cardiology, and cosmetics/aesthetics Fueled by aging populations Barriers to growth - device recalls & device-related deaths (spiked in 2006 vs 2005) Small to Medium CROs forming networks or alliances (Clinpage 1, Clinpage 2, Centerwatch)Clinpage, Clinpage 2 Centerwatc Smaller CROs provide better one-on-one service but do not have global presence Establish standard methodologies to expedite and improve operations Target sponsors based on specialties Allow smaller CROs to compete with larger companies Examples: Pharmaceutical Services Network and Agile NetworkPharmaceutical Services NetworkAgile Network Expert Networks & Management Tools Beginning to see resources for connecting companies to CROs (example: GoBalto for pharma)GoBalto Online business network for medical device industry and software reduce time & costs o E-Zassis database and FDA regulation calculator E-ZassisFDA regulation calculator o M2Ss iMAP for collecting clinical trial imagesiMAP Management tools are often targeted to both sponsor and CROs for conducting trials (Example: StudyManager)StudyManage o Some CROs use multiple electronic data capture (EDC) vendors (Clinpage)Clinpage Some CROs specialize in in-house management tools for EDC (Contractpharma)Contractpharma o EDC allows smaller CROs to compete with larger ones o EDC makes allows for easier management of global clinical trials o Example: ClinipaceClinipace

14 Confidential & Trade Secret 13 FDA POSITION ON OFFSHORE CLINICAL TRIALS OF MEDICAL DEVICES Permissible to conduct offshore clinical trials of medical devices. No FDA jurisdiction over foreign clinical trials, but FDA does set standards for data submitted in support of U.S. marketing applications for medical devices (including Premarket Approvals (PMA) and Premarket Notifications(510(k) ). (Source: FDAs Total Product LifeCycle: What Clinical Data from Outside the U.S. Does FDA Accept?)FDAs Total Product LifeCycle: What Clinical Data from Outside the U.S. Does FDA Accept? If a clinical trial is conducted overseas pursuant to an approved Investigational Device Exemption(IDE):Investigational Device Exemption(IDE): The trial must comply with U.S. FDA regulations (21 C.F.R. §814.15(a))21 C.F.R. §814.15(a) If a clinical trial is conducted overseas and no IDE is filed, the FDA will accept the study if it conforms with: The 1983 version of the Declaration of HelsinkiDeclaration of Helsinki (FDA regulations have not been updated to include the current version of the Declaration)current version OR The laws and regulations of the country in which the research was conducted (21 C.F.R. §814.15(b)).21 C.F.R. §814.15(b) Clinical trials that use host country laws and regulations must state the difference between those laws and the Declaration, and must explain why they offer greater protection to human subjects (21 C.F.R. § (b)). 21 C.F.R. § (b) Foreign clinical data must be applicable to the U.S. population and U.S. medical practice, clinical investigators must have recognized competence, and clinical data is subject to FDA inspection (on-site or through other means) (21 C.F.R. §814.15(d)).21 C.F.R. §814.15(d) IDEs place a higher regulatory burden on CROs. Further research is necessary to determine how often they are used in foreign clinical trials. Source: FDA Guidance – Acceptance of Foreign Clinical Studies. FDA Guidance – Acceptance of Foreign Clinical Studies

15 Confidential & Trade Secret 14 BIOETHICAL ISSUES SURROUNDING CLINICAL TRIALS 1.Lack of foreign government regulation of CROs and human subject research activities. 2.Lack of strong international standards and legal remedies to protect patients in clinical trials. 3.Unethical or exploitative conduct by researchers (physician practices may be unacceptable by U.S. standards). 4.Lack of understanding by patients of purpose of clinical trials. 5.Participation in clinical trials may be the only way for individuals to access medical care. 6.Lack of patient consent (and inability of patients to give informed consent). 7.Risks to sponsors of working with CROs that are inexperienced in a particular market or that do not follow required clinical trial standards. 8.Liability in U.S. courts under Alien Tort Statute (though risk appears to be fairly limited). 9.Liability under U.S. Foreign Corrupt Practices Act if U.S. sponsors or their CROs accept bribes from foreign government officials. 10.Limited FDA oversight and inspections of overseas clinical trials. 11.Intellectual property theft, limited patent protections (especially in India and China), and trade secret issues with employees who leave CROs to work for competitors. Source: FDA Research Summary (Appendix).

16 Confidential & Trade Secret 15 FDA: ARE OFFSHORE TEST POPULATIONS REPRESENTATIVE OF U.S. POPULATIONS? The FDA values diversity in clinical trial populations, but acknowledges that various issues that may exist in creating comparable U.S. and foreign test populations. (See Drug Testing Goes Offshore).Drug Testing Goes Offshore Barriers to creating representative test populations: (See FDA Presentation - Total Product Lifecycle)FDA Presentation - Total Product Lifecycle 1.Demographic variables - race, gender, ethnicity and age. 2.Clinical variables - prevalence of smoking, obesity, and diabetes; compliance with medical regimen and follow-up; education level of patients (e.g. ability to understand directions), and language/cultural differences. 3.Medication/device usage - economic factors in medication usage, legal/regulatory factors, and differing standards of care. 4.Differing physician/medical practices - adherence to study protocol, varying regional practice guidelines, and economic/legal considerations. 5.Availability of drugs/adjunct devices Recommendations 1.Use statistical analysis to draw comparisons between foreign and U.S. populations (Id.).Id. 2.Consult with the FDA on clinical protocol prior to conducting overseas clinical trials (Id.). Id. 3.Create targeted enrollment programs based on geographic region and intended use of product (New England Journal of Medicine).New England Journal of Medicine 4.Use bridging studies to link foreign and U.S. clinical data (Concept is discussed in Guidance on Ethnic Factors in the Acceptance of Foreign Clinical Data and Questions and Answers, though this guidance is specifically applicable to drug trials where the safety and efficacy of a drug is linked to ethnicity).Guidance on Ethnic Factors in the Acceptance of Foreign Clinical DataQuestions and Answers Recommendations are very vague. This topic merits further research and may require discussions with actual CROs to determine how they structure their clinical trials to address this issue.

17 Confidential & Trade Secret 16 SOURCES Slide 2: OVERALL CRO MARKET Frost & Sullivan: Frost & Sullivan: Goldman Sachs: Slides 3-4: CARDIOVASCULAR CROS See company website links Attached CRO Spreadsheet: Appendices/MedicalDeviceCROs_and_Full_CRO_lists.xlsAppendices/MedicalDeviceCROs_and_Full_CRO_lists.xls Slide 5: MEDICAL DEVICE MARKET MarketsandMarkets: html html Devicelink: Global Data: Source chart created with search aggregator from FDA data: Slide 6: MEDICAL DEVICE INVESTMENTS Thomson: Dow Jones: Devicelink VC list: Johnson & Johnson investment arm: Quintiles SEC: Appendices/QUINTILESTRANSN424B pdfAppendices/QUINTILESTRANSN424B pdf Cato Research: Cato Bioventures: PPD investing: Ernst & Young Pulse on the Industry:

18 Confidential & Trade Secret 17 SOURCES (continued) Slide 7: MEDICAL DEVICE PARTNERSHIPS Kate Giovino presentation: Clinpage article 1: Clinpage article 2: Slide 8: MEDICAL DEVICE TESTING PROCESS Expanding role of CRO (graphic): Post-Approval Process article: Slide 9: POST-APPROVAL PROCESS Slide 10: GLOBAL CLINICAL TRIALS medical device & cardiovascular map: Slide 11: CRO/MEDICAL DEVICE TRENDS Frost & Sullivan: Global Insights: Devicelink: Devicelink2:

19 Confidential & Trade Secret 18 SOURCES (continued) Slide 12: CRO/MEDICAL DEVICE TRENDS (continued) Pharmaceutical Services Network: Agile Network: GoBalto: E-Zassi: FDA Regulation Calculator: iMAP: StudyManager: Clinpage: Contractpharma: Clinipace: Slide 13: FDA POSITION ON OFFSHORE CLINICAL TRIALS OF MEDICAL DEVICES FDAs Total Product Lifecycle: IDE: 21 C.F.R. §814.15(a) (b) (d): Declaration of Helsinki: Current Declaration of Helsinki: FDA Guidance – Acceptance of Foreign Clinical Studies: Slide 14: BIOETHICAL ISSUES FDA Research Sumamary (attached in Appendix): Appendices/FDA_Research_Summary.docAppendices/FDA_Research_Summary.doc Slide 15: FDA: ARE OFFSHORE TEST POPULATIONS REPRESENTATIVE OF U.S. POPULATIONS? Drug Testing Goes Offshore: Testing Goes Offshore /index.htm FDA Presentation - Total Product Lifecycle: Presentation - Total Product Lifecycle New England Journal of Medicine: Guidance on Ethnic Factors in the Acceptance of Foreign Clinical Data: FDA Questions and Answers:

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