US-based contract research organisation (CRO) Kendle is beefing up its early-phase capabilities with the acquisition of DecisionLine Clinical Research Corporation, a privately owned CRO based in Toronto, Canada and specialising in Phase I studies, for an undisclosed cash sum.

DecisionLine’s particular speciality is measuring the pharmacodynamic effects of central nervous system drugs. The company is recognised worldwide as a leader in conducting human abuse liability studies and assessing abuse potential and risk mitigation, Kendle said.

The acquisition brings Kendle “extensive world-class scientific expertise with psychopharmacology high-end exploratory/translational medicine capabilities, from first-in-human to proof-of-concept trial conduct, as well as drug development consulting, medical writing, data management, biostatistics and other support services”, the US CRO noted.

The deal also responds to a dynamic growth trend in the early-phase sector. “With Phase I growth expected to outpace the broader outsourcing market at approximately 15% annually, early-phase development remains an important need for our customers and an area of significant growth opportunity for Kendle,” commented president Simon Higginbotham.

In recent years the CRO has significantly boosted its late-stage presence through the acquisition of Charles River Laboratories’ Phase II to Phase IV clinical services business, which was completed in August 2006. In the first quarter of 2008, net service revenues in Kendle’s Late Stage segment climbed 18.5% to US$104.8 million, pushing operating income up by 24.2% to US$24.7 million.

By contrast, the much smaller Early Stage business showed only modest growth in net revenues, which were 4.2% higher at US$5.6 million. Operating income in the segment dropped by 28.8% to US$386,000.

Kendle has been well aware of the need to establish a more compelling presence in the early-phase space. At an Investor Day marking its 10th anniversary as a public company last August, the CRO said the total outsourced Phase I-IV drug research and development market was expected to reach $17.8-US$19.6 billion globally in 2007 and $25.9-$29.6 billion by 2010.

With a relative dearth of new chemical entities hitting the market, it was the early phases of the development process that were showing the most vitality, Kendle noted. Preclinical/Phase I studies were generating year-on-year growth of 6.8% in 2005/06, while the three-year compound annual growth rate (CAGR) for the segment was 7.6%, suggesting a $6.9 billion market by 2010.

Founded in 1997 by president and chief executive officer Dr Edward Sellers and senior vice-president, research, development & medical affairs Dr Myroslava Romach, DecisionLine runs an 82-bed, 36,000 sq ft medical facility in Toronto, staffed by a team of “internationally recognised” scientists including clinical pharmacologists and neuropsychologists, physicians, research nurses, pharmacists, paramedics and research assistants.

The Canadian CRO, which employs some 110 full-time and 130 part-time associates, has boosted its revenues at an average compound annual growth rate of 60% since 2002, making Profit magazine’s list of the top 100 fastest-growing companies in Canada.

Dr Sellers will stay on as general manager, early phase, Toronto and senior scientist for Kendle International while Dr Romach becomes Kendle’s head of clinical operations and medical affairs, early phase, Toronto and senior scientist. The acquired business will report to Philip Davies, Kendle’s vice-president, Early Phase.

The US company’s existing capabilities in the early-phase sector include a Clinical Pharmacology Unit in Utrecht, The Netherlands, and a Bioequivalence Unit in Morgantown, US.