US-based contract research organisation (CRO) PharmaNet Development Group continues to restore its credibility with the opening of a new Phase I clinical facility in Toronto, Canada as well as offices in Belgium and Italy.

The latest expansion comes only a couple of weeks after PharmaNet announced that its Canadian early-phase subsidiary Anapharm had shifted its existing Quebec City operations into a new 150,000sq ft facility in the city. These developments, together with PharmaNet’s improved financial profile, should help to draw a line under the extended bout of negative publicity that seriously damaged the company’s reputation and finances in 2005 and 2006.

In its previous incarnation as SFBC International, PharmaNet’s credibility was badly shaken by revelations of structural flaws at an early-stage clinical facility in Miami, media allegations of lax procedures and questionable practices at the same site, and an outbreak of tuberculosis during a trial at Anapharm’s facility in Montreal, Canada. The resulting loss of business saw SFBC report a net loss of $4.1 million for the first quarter of 2006 and drastically scale back its forecasts for the year.

A string of announcements in the last two months suggest that the renamed PharmaNet is now moving into calmer waters. The 40,000sq ft Anapharm facility in Toronto contains four clinical units that can accommodate a total of 160 beds, offering “optimal quality” and synergies with PharmaNet’s existing Canadian sites in Quebec City and Montreal, the parent company noted.

Anapharm, which was acquired by SFBC in March 2002, completed the move into its new Quebec City home in mid-June. The facility, which replaces two existing units, is scaleable and should provide enough space to expand the existing laboratory and 200-bed clinic in the future, PharmaNet said. Anapharm provides clinical development services including early-phase consulting, Phase I trials, bioequivalence studies and bioanalytical services to pharmaceutical and generic drug companies.

Growth momentum

The new facilities should help to maintain the growth momentum in a business segment that had slumped on reduced demand for bioequivalence testing and the damning coverage of activities at the Miami site in late 2005, despite SFBC’s insistence that the vast bulk of these claims were inaccurate or fabricated. The allegations led to an investigation by Republican Senator Charles Grassley, while the CRO’s problems were compounded when local government officials raised concerns about the structural safety of the Miami facility.

SFBC eventually caved in and announced in May 2006 that it was ceasing all operations in Florida, including the Miami facility and another Phase I site in Ft. Myers. In August 2006 the CRO changed its name to PharmaNet Development Group, trading on the reputation of the late-stage clinical development business acquired through a merger with New Jersey-based Phase II-IV specialist PharmaNet in November 2004. SFBC moved its corporate headquarters from Miami to PharmaNet’s base in Princeton, New Jersey in January 2006.

The blow to SFBC’s early-phase operations was evident in the $5.6 million operating loss sustained by this segment in Q1 2006; at the same time, the lower-margin late-phase business doubled its operating income to $7.5 million. The picture looked a good deal healthier in the first quarter of 2007, with the early-stage segment reporting operating income of $5.0 million against restated operating earnings (to reflect discontinued operations) of $3.2 million for Q1 2006. The late-stage business posted operating income of $8.8 million, 7.5% more in the previous year’s quarter (also restated).

The latter segment should receive an extra boost from the new European offices opened by PharmaNet Development Group in Brussels and Milan. The Belgian and Italian offices “are strategically located to provide support to clients conducting late-stage clinical development programmes in these regions," PharmaNet said. The CRO has also relocated its office in Zurich, Switzerland, to larger premises to allow for future growth in staffing.