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Excerpts resulting from the extended discussion on CRO oversight at the recent CBI Finance and Accounting for Bioscience Companies conference.
At the recent CBI Finance and Accounting for Bioscience Companies conference, professionals from small- to mid-sized biopharma gathered to learn from each other and discuss their unique challenges. Typically, smaller-staffed organizations, with their smaller-staffed departments, require their executives to be accountable for much more than those serving at a larger pharma manufacturer. RSM, hosting a breakfast roundtable for these professionals, graciously allowed Pharm Exec to moderate “The Role of the Finance Leader in Scaling the Biotech Business.” The original-and more broad discussion-appeared in December and you can read it here.
Moderator: Lisa Henderson, Editorial Director, Pharmaceutical Executive
Nancy Aubrey, Risk Advisory Services, Life Sciences Industry, RSM US LLP
Kim Cammarata, Controller, Virtus Pharmaceuticals
Rhonda Chicko, CFO, Scholar Rock, Inc.
Amy Diebler, VP of Finance and CFO, Chisei USA
Nancy Dong, VP Finance & Administration, ContraFect Corp.
Jon Freve, CFO, Spring Bank Pharmaceuticals, Inc.
Stephen Garbacz, SVP Finance & Operations, Spero Therapeutics
John Lanza, National Life Sciences Industry Leader, RSM US LLP
Ben Stein, Accounting Manager, Ovid Therapeutics
What follows are edited excerpts resulting from the extended discussion on CRO oversight, not originally included in the article.
CHICKO: How do you find bringing in contractors to act as your FTEs? How was this experience? Is there a difference between the contractor and a FTE?
GARBACZ: We've been successful with contractors and believe that they play a useful role for positions that either do not currently require a full-time resource or are temporary in nature. However, performance depends on the quality of the contractor and you therefore need to exercise diligence in screening the potential candidates. I guess we've been fairly lucky. I'm sure there are many stories where the contractor hasn’t worked out and a replacement was needed.
LANZA: We had a similar conversation on CROs--how you have to manage them; the differences between the cash and the contract price; and the back and forth with them. At the conference yesterday, we discussed the right to audit that contract. Have any of you considered auditing the CRO and was it beneficial?
FREVE: Yes, for us it was. We were successful in reducing some of our costs as we are very involved in managing our CRO relationships and managing the overall experience. For our first clinical trial, we didn't have a clinical operations person on staff to help identify billing errors, which were not intentional--I'm not suggesting that. But, as a CFO, I wouldn't know looking at the invoices that a clinical trial subject wouldn't need a certain type of blood test based on other medical considerations. That’s not my background so I wouldn’t know to ask ‘why are you charging us for this?’
On the CRO side, they are just used to testing every patient for A, B, and C and they aren’t necessarily thinking about it like a clinical operations person would, saying, "Wait a minute. Half of these patients are E-antigen negative versus E-antigen positive. These tests don't apply. Why are you billing us for it?" Having someone that's able to do that regularly makes it much easier.
CHICKO: When you push back on the CRO, how has that been? Have you received any type of backlash or were they receptive to it?
FREVE: For the most part, receptive. Our experience has been with the CRO management team and the people that we're dealing with on a day-to-day basis, who are very good. It's the back office and the support folks that aren't as involved in the day-to-day functions but are involved in the billing and other aspects of managing our project that aren't necessarily as helpful. It's unfortunate because we may really like our project manager, but other parts of CRO team are not as responsive and/or knowledgeable.
AUBREY: There is always that possibility of change…if you have a good project manager and they change…
FREVE: It’s a multi-year clinical trial and there can be a lot of CRO organizational changes over time. We've had three different project managers on our most recent clinical trial. It's a challenge.
LANZA: How do you feel about the CRO business model? I would think as project-based company, the faster they get the project done, the more they can recognize revenue and make money. Where do you see problems?
FREVE: There's no incentive for them to try and recruit or accelerate recruitment within a particular program because they're paid on a monthly basis. Many of these projects, the CRO is paying for staff to support your trial, such as a call center being open and active, or a logistics team ready and available to deploy. But the CRO isn’t paying per patient. We pay for that and all the support fees, and the support fees can get dragged out based on delays. That's a challenge for us. Many people that I've talked to have indicated that controlling the CRO costs is their biggest concern.
CHICKO: How about CMOs? It's been my experience that they can be pivotal to your overall timelines. If something gets delayed and you miss a slot, it can delay the overall timeline for years.
FREVE: We've had very good experiences with ours. But I can see that being a major obstacle because we have certain manufacturing slots that are kind of tied up and ready to go, and fortunately we haven't had material issues.
LANZA: Amy, your company is more commercialized. What are your thoughts on CMOs?
DIEBLER: Although we’re relatively small, Chiesi USA is part of a much larger global organization. We sell nine products domestically, each representing less than $100 million in sales. So they aren’t considered high volume, which means we have to reserve early and fight for our manufacturing slots. Then, if we have a chance to capitalize on a market situation, such as a competitor shortage for example, we have to push our partners to manufacture extra batches for us, and sometimes we pay a premium to secure them. But we also have a few long-term partners who will stretch for us. For example, if they have a slot opening, they'll reach out to us and ask if we want to run extra product or if we need anything.
HENDERSON: Do you work with large CROs or smaller ones?
FREVE: Both, and we have backups. We haven't had issues to date because we actively manage the process. We're continuously reforecasting our needs and working through contingency plans.