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Presentation on theme: "PROJECT OVERVIEW Objective"— Presentation transcript:

0 CROs and Cardiovascular Devices
December 9, 2009 Prepared by Rachel Little, Stacee Millangue, Kathlyn Smyer, Cory Welch, & Kirk Yoshida School of Information, University of Texas Frost Bank Tower 401 Congress Ave, Suite 2950 Austin, Texas 78701 (512)

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 FDA’s 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 Source: Frost & Sullivan report– press release/TOCs Sample page:

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

Companies chosen from list compiled through searches in Cap IQ, Google, market research reports Narrowed down to medical device CRO’S Narrowed further to those with cardiovascular capabilities Researched for years of experience Checked for offices in Europe and Latin America (CRO spreadsheets attached) Top Players in CRO market who work on cardiovascular medical devices CRO Year Founded Europe Offices Latin American Offices Revenue ($b) Company Website Quintiles 1990 Yes 3 PPD 1985 1.57 Covance 1987 1.73

Year Founded Europe Offices Latin American Offices Company Website MDS Pharma Svcs. 1933 Yes Parexel 1983 ParmaNet 1984 Factory CRO 1998 Clindatrix 2003 Charles River Labs 1947 No MDCI 1980 Criterium 1991 ClinSys 1992 Integrium Cidal 2001 Venn Life Sciences 2006 CRO Year Founded Europe Offices Latin American Offices Company Website Averion International Corp. 2007 Yes No GRSworldwide Clinimetrics 1988 Alquest 1993 MPI Research 1995 Regulatory & Clinical Research Institute 1999 CBSET, Inc. 2006 Symbios Clinical, Inc. Innoventz N/A (10+ yrs exp.)

5 Top Cardiovascular Device Companies by FDA submissions, 1976- present
MEDICAL DEVICE MARKET Types of Cardiovascular Devices Cardiac Rhythm Management Cardiovascular Monitoring & Diagnostic Cardiovascular Prosthetic Device Cardiovascular Surgery Electrophysiology Interventional Cardiology Peripheral Vascular Devices 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)1 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)2 (Global Data)3 Top Cardiovascular Device Companies by FDA submissions, present MarketsandMarkets: 3 Global Data: 4. Source chart created with search aggregator from FDA data: (Boliven)4

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 Medical Device investments up (Thomson)1 Medical Device investments fell 2008; increased in Q (Dow Jones) 2 VC firms investing in device companies (1,2, Established medical device companies investing in start-ups Ex: Johnson & Johnson’s investment arm - JJDC group Evidence of CROs investing in medical devices, drugs, start-ups Ex: Quintiles takes cut in product revenues (4243B attached) Ex: Cato Research started investment arm Cato Bioventures4 Ex: PPD investing in Celtic Therapuetics (private equity firm) VC Investment in MedTech Source: Thomson: Dow Jones: Devicelink VC list: Johnson & Johnson investment arm: Quintiles SEC: Appendices/QUINTILESTRANSN424B pdf Cato Research: Cato Bioventures: PPD investing: Ernst & Young Pulse on the Industry: MedTech Field Includes Nonimaging diagnostics Research and other equipment Imaging Therapeutic Devices Source: Ernst & Young Source: Ernst & Young, Capital IQ, Dow Jones VentureSource and Windhover

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. ) Pricing Models Fixed Great for small projects Option for tight budgets Billable Hours, by service Current standard for most CRO’s Allows for some flexibility Sources: Clinpage: 1,2 Kate Giovino presentation: Clinpage article 1: Clinpage article 2:

Graphic Source 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: David Jefferys, Thomas J. Fogarty, Richard E. Kuntz and Martin B. Leon Aaron V. Kaplan, Donald S. Baim, John J. Smith, David A. Feigal, Michael Simons, Medical Device Development: From Prototype to Regulatory Approval Circulation 2004;109; Expanding role of CRO (graphic): 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: FDA charged to seek "least burdensome means" to evaluate trail data required to establish safety & efficacy of medical devices The above limits the size and duration of trials, often necessitating additional post-market surveillance on device performance after FDA approval has been obtained Class II & III (see Rachel's FDA section) device manufacturers are generally required to conduct post-market surveillance under the following conditions: When the likelihood of device failure would be reasonably expected to have adverse health consequences When a device is intended to be implanted in the human body for more than one year When a life-sustaining or life-supporting device is used outside of a device user facility When a post-market study is required, the device company assesses whether it has the internal resources necessary to conduct the study or if it would be more efficient to outsource that function Medical device experience desirable but should not be the only criteria Companies with therapeutic and regulatory expertise in postmarket assessments and solid project management experience may be compatible candidates Define study scope Communications plan developed Clarify CRO and sponsor responsibilities and interdependencies Concur on study purpose and data management plan Regularly scheduled reviews between CRO and sponsor when milestones are met Sites for the trial are determined by the sponsor Study tracking website is developed Sponsor legal team and CRO work closely together to ensure timely negotiations of contract language designed to facilitate rapid study start-up (Source)

10 CLINICAL TRIALS 82,466 trials with locations in 170 countries registered with FDA, 3/ /1/2009 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: medical device & cardiovascular map: Percentages to whole number Source: (Source: 10

CRO Industry Trends (Source)1 "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)2 Medical Device Trends (Depends on who you are talking to) FDA leadership on role of outsourcing: (Source)3 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)4 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 Frost & Sullivan: Global Insights: Devicelink: Devicelink2:

Market Potential (Source)1 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 (Clinpage1, Clinpage2, Centerwatch) 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 Network Expert Networks & Management Tools Beginning to see resources for connecting companies to CRO’s (example: GoBalto for pharma) Online business network for medical device industry and software reduce time & costs E-Zassi’s database and FDA regulation calculator M2S’s iMAP for collecting clinical trial images Management tools are often targeted to both sponsor and CRO’s for conducting trials (Example: StudyManager) Some CRO’s use multiple electronic data capture (EDC) vendors (Clinpage) Some CRO’s specialize in in-house management tools for EDC (Contractpharma) EDC allows smaller CRO’s to compete with larger ones EDC makes allows for easier management of global clinical trials Example: Clinipace Pharmaceutical Services Network: Agile Network: GoBalto: E-Zassi: FDA Regulation Calculator: iMAP: StudyManager: Clinpage: Contractpharma: Clinipace:

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: FDA’s 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): The trial must comply with U.S. FDA regulations (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 Helsinki (FDA regulations have not been updated to include the current version of the Declaration) OR The laws and regulations of the country in which the research was conducted (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)).  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)). 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’s 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:

Lack of foreign government regulation of CROs and human subject research activities. Lack of strong international standards and legal remedies to protect patients in clinical trials. Unethical or exploitative conduct by researchers (physician practices may be unacceptable by U.S. standards). Lack of understanding by patients of purpose of clinical trials. Participation in clinical trials may be the only way for individuals to access medical care. Lack of patient consent (and inability of patients to give informed consent). Risks to sponsors of working with CROs that are inexperienced in a particular market or that do not follow required clinical trial standards. Liability in U.S. courts under Alien Tort Statute (though risk appears to be fairly limited). Liability under U.S. Foreign Corrupt Practices Act if U.S. sponsors or their CROs accept bribes from foreign government officials. Limited FDA oversight and inspections of overseas clinical trials. 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).

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). Barriers to creating representative test populations: (See FDA Presentation - Total Product Lifecycle) Demographic variables - race, gender, ethnicity and age. 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. Medication/device usage - economic factors in medication usage, legal/regulatory factors, and differing standards of care. Differing physician/medical practices - adherence to study protocol, varying regional practice guidelines, and economic/legal considerations. Availability of drugs/adjunct devices Recommendations Use statistical analysis to draw comparisons between foreign and U.S. populations (Id.). Consult with the FDA on clinical protocol prior to conducting overseas clinical trials (Id.).   Create targeted enrollment programs based on geographic region and intended use of product (New England Journal of Medicine). 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). 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.

Frost & Sullivan: Frost & Sullivan: Goldman Sachs: Slides 3-4: CARDIOVASCULAR CRO’S See company website links Attached CRO Spreadsheet: Appendices/MedicalDeviceCROs_and_Full_CRO_lists.xls Slide 5: MEDICAL DEVICE MARKET MarketsandMarkets: 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 pdf Cato Research: Cato Bioventures: PPD investing: Ernst & Young Pulse on the Industry:

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:

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 FDA’s 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.doc Slide 15: FDA: ARE OFFSHORE TEST POPULATIONS REPRESENTATIVE OF U.S. POPULATIONS? Drug Testing Goes Offshore: FDA 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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