Delayed start dates for contracted clinical trials cut into turnover and profit at UK company Synexus Clinical Research in the 12 months to March 31 2007, the first full financial year since the company floated on London’s AIM market.
Turnover from continuing operations was £9.55 million, almost flat against 2005/6, while acquisitions added £784,000. This pushed total sales up to £10.3 million, an 8.3% increase compared with the prior year. The acquisitions did not include Clinical Research Centres (CRC), the South African company snapped up by Synexus for £1.8 million last October, as completion did not come until just before year-end.
Operating profit came in at £328,000, down from £1.53 million in the previous financial year, and pre-tax profit dropped from £1.23 million to £359,000. But Synexus remains optimistic about this year’s performance. Based on existing signed contracts and bids under negotiation, predicted executive chairman Mike Redmond, activity levels across the company should be “substantially increased” by the end of the first half, with a beneficial effect on profits.
Hub site strategy
Synexus has pursued a ‘hub site’ strategy, aimed at recruiting large numbers of patients into late-stage clinical trials. The model combines specialist recruitment and clinical trial management services with dedicated centres employing their own full-time clinical staff.
In its home market, Synexus has built on this strategy to create a number of ‘super hubs’, boosting capacity by around 50%. This was achieved during the year by merging existing sites in Glasgow (now called the Scottish Research Centre), Wigan and Chorley (Lancashire Research Centre), Coventry and Birmingham (Midlands Research Centre), and Liverpool and Crosby (Merseyside Research Centre). Plans have been agreed to relocate Synexus’ Reading site to the purpose-built Thames Valley Research Centre (also in Reading), which will also house a sales office.
In addition, the model has been exported abroad, with new site openings or acquisitions of existing research facilities in South Africa, India, Poland, Hungary and Bulgaria. As a result, the total number of patient visits to Synexus sites exceeded 32,500 in 2006/7, without taking into account CRC and with Synexus Hungary contributing only since its acquisition in June 2006.
One vindication of the hub site strategy was that last year the UK company completed recruitment of nearly 3,000 patients to a single study for “a major pharmaceutical client.” Synexus believes this is the largest number of patients ever recruited by just one organisation to a late-stage clinical trial. More than 20% of the worldwide patient requirements for the trial were recruited from fewer than 1% of the sites used, it added.
While the study delays that Synexus previously flagged up in a trading update on January 26 are not uncommon in the contract research sector, the number of stalled contracts affecting the company in 2006/7 was particularly high, it noted. Of the 20 or so trials expected to start in the fourth quarter of the year, nine were delayed. To date, only one of the delayed studies has been lost, Synexus emphasised. Some have now started while others “continue to be delayed beyond our control by sponsors.”
Commenting on the wider operating environment, Synexus said the clinical trials process “remains underpinned by a very inefficient model,” particularly where patient recruitment and retention were concerned. “Our clients tell us of increasing difficulties in achieving recruitment targets due to problems with access to patients, delays in study starts at sites, increasingly complex protocols with much higher safety hurdle rates and so on,” the company observed.
The average cost to global pharmaceutical companies of opening a single General Practitioner site is between $25,000 and $37,000, yet 40% of these sites will recruit only one patient, Synexus pointed out. According to CenterWatch Trials Listings 2006, the industry average for the number of patients recruited per site is below five.
All the same, Synexus noted, the market for clinical trials continues to grow, driven by “industry’s need to innovate, combined with more stringent safety regulations in the post-Vioxx era”. Spending on contract research grants is expected to rise at a compound annual growth rate of 14.8% between 2007 and 2009 (Thomson CenterWatch/Goldman Sachs), it added.