Local service companies benefit from clinical trials

Pfizer Australia has hired cryogenic storage company Cryosite (ASX:CTE) to handle storage of its clinical trial drugs in Australia, and Cryosite CEO Gordon Milliken has pointed to a growing trend for big pharma and international biotechs to outsource the storage and logistics of their newest drugs to local service providers.

He said clinical trial logistics now made up 25 to 30 per cent of Cryosite's business, from a standing start 18 months ago. The company is now contracted to store and ship clinical trials products for more than 23 companies, Milliken said, including Bristol-Myers Squibb, American Type Culture Collection and Omnicare.

"We're in a good position to tap into an increasing trend for drugs to require specialist handing," said Milliken. "[Companies are using] more and more monoclonal antibodies and protein-based drugs which require full cold-chain management."

He explained that Australia remained a highly-regarded location for international clinical trials, a boon for Australian service providers such as Cryosite. "We're now starting to deal directly with a lot of small American biotech companies which have one or two products," he said. "With the trial work we charge a monthly facility fee, charging per space to store the drugs under prescribed conditions, plus an activity-based fee."

Cryosite began as a umbilical-cord blood storage business, and continues to charge AUD$2000 up front and $150 per annum subsequently to archive cord blood. More than 2000 cords are stored at its Lane Cove facilities.

Last week, the company released half-year figures hich showed that its operational cash-flow was positive with a 28 per cent increase in income to $770,000. Cash flow burn was kept to $3000, with Cryosite maintaining $1.59 million in cash reserves for the quarter despite capital expenditure of $179,000 on new cryogenic storage equipment.