Trials without error: Australia's clinical capabilities

Australia's clinical trial expertise may be the great undiscovered bargain for pharmas and biotechs from both the east and the western world.

That sentiment comes from at least one high-profile international biotech observer -- Richard Haiduck, a director of biotech investment bank Burrill & Co, confided as much to a recent gathering at the Securities Institute in New South Wales.

"Australia has an important development cost advantage," he said. "Clinical trials can be done in Australia far cheaper than they can be done in the rest of the western world. One could make the argument that clinical trials in Australia for the western world is the best bargain there is.

"Capitalising on that is where a lot of development could be done in Australian with a European and American partner. I think everyone knows it intellectually, I'm not sure the behaviours that go with it have been fully developed."

But a clutch of Australian CROs will be at BIO in San Francisco this year, with exactly that kind of development on their minds. Attendees include Novotech, Datapharm Australia, Q-Pharm, Clinical Trials Victoria, Kendle and Clinical Network Services. Many will also attend the Drug Information Association meeting in Washington immediately after BIO 2004.

"If [Haiduck] is right and that demand does exist, the Australian operators are well placed to take advantage of it," says Wayne Hooper of Queensland-based clinical trial facility Q-Pharm.

At least some international companies have been in on the secret for a few years, says Alex Safarian of Sydney-based Novotech. "Most of our biotech work is from companies in the US," he says. "It's really been a trend that's been accelerating in the last three years. Five years ago, 75 per cent of our business came from Australian clients, but there has been a steady and rapid swing [towards large international trials]. Three years ago we had our first overseas client -- now we're working with around 25 international companies,"

He believes that Australia's advantages are an undertold story. "There are many sectors of the US industry they don't even consider Australia," he says. "The savings compared to the US and Western Europe are in the order of 35 to 40 per cent, and we've been able to show that in practice by our own results.

"We don't see companies from Asia, but we do see European companies -- a lot more European pharmas than biotechs as European biotechs tend to stick to their own turf."

Novotech is one of Australia's independent full-service clinical CROs, able to manage a project from the development of a product, through the different phases of trials, to the filing of regulatory submissions and medical writing.

The CRO landscape in Australia includes branch offices of large multinationals, sizeable locally enterprises, and niche players with one to six employees.

Of the multinational CROs with an Australian presence, the largest include Quintiles, Covance, Icon Clinical Research, PPD Development, Parexel International and Kendle Australia, and PRA International.

A number of smaller companies have grown up in Australia as well, including independents Datapharm, Novotech, IDT, Clinical Network Services, Clinical Trials Victoria and ICP Firefly.

Some run to staff counts of 40 to 100 and most, but not all, have the resources to support the entire drug development pipeline, from strategic planning, toxicology and pre-clinical studies through clinical trial management and monitoring, to health outcomes.

"We know that there are significant advantages in conducting clinical trials in Australia," says John Eddington, a director of Sydney-based CRO, Datapharm. "[These include] access to world-renowned medical research and institutions, globally accepted medical standards and scientific infrastructure and with the Australian dollar going back, and cost savings. When companies do a clinical trial they have to pay investigators -- which is cheaper in Australia. The project management services are also cheaper.

"There is rapid trial approval processes. A clinical trial can be started very quickly through the approval processes of the Australian Therapeutic Goods Association, known as a Clinical Trial Notification. Timezone, languages and a multicultural population allow Australia to be a link between Asia and the United States and Europe."

George Mihaly, managing director of international CRO Kendle's Australian arm, believes that clinical trial data from Australia are also well-regarded by regulators. "The rigours with which the Code of Good Clinical Practice is followed is well viewed by the FDA and by the European Medicines Evaluation Agency," he says.

"The companies we've worked with over a number of years have become increasingly comfortable with working with Australia, based on track record."

Tyranny of time

Mihaly believes that the tyranny of time is the real concern for any clinical trial - and that this, rather than cost should be where CROs must concentrate their energies and their expertise.

"The issue that has haunted any clinical development program is tight timelines. Delivering against those tight timelines is the biggest challenge. Finding clinical investigators who are cognizant of the business imperative is extremely important. It sounds clichéd to talk about teams, but without a successful team effort things quickly go pear-shaped," says Mihaly. "In drug development it's a roller coaster -- you need the development of a strong relationship to work through challenges."

Dr Mark Woolley, of medical communications company Proscribe, is even more specific about what issues are key to a clinical trial partnership.

"There are three things that are important for the clinical trial industry -- recruitment, recruitment, recruitment," he says. "There is a lot of time and effort being put into streamlining the ethics approval process [in Australia], but it comes down to whether you can meet your patient targets and timelines."

Woolley speaks with some authority -- in 2003 Proscribe released the first Australian Clinical Trial Survey (FACTS) with support from professional association ARCS Australia and pharmaceutical lobby group Medicines Australia. All Australian affiliates of the leading international pharmas participated in the survey.

Woolley says that, to the best of his knowledge, more than 600 clinical trials are conducted in Australia each year. The vast majority of these are Phase III trials for pharmaceutical companies, but with a burgeoning Australian biotechnology sector, he expects to see an increase in the number of Australian biotechs doing clinical trials.

He believes that public awareness campaigns will be more and more important for recruiting patients to clinical trials. "There are great benefits to being involved in a clinical trial -- there's always a risk, but most people benefit. They get better care, for a start."

Kendle's Mihaly is also careful to acknowledge the goodwill of trial participants. "There are people who are prepared to volunteer to participate in trials -- [finding] ways of more competently and safely providing medicines in the future for other patients. It's something I think which needs to be applauded," he says.

Mihaly says that in the last 10 years, Kendle has grown to a staff of 60, and sources around 30 per cent of its work from overseas biotechs in the UK, Europe and the US.

Q-Pharm's Hooper suggests that at the moment, US clinical trials coming to Australia are not escaping from North America as such. Instead, US companies come to Australia seeking additional capacity.

The regulatory ground has been shifting in Europe, changing the state of play for European clinical trials and possibly making trial approval in Europe more difficult. The new regulations -- part of the 2001 EC Clinical Trials Directive -- came into force in May and require all European clinical trials to be designed, conducted and reported in accordance with the principles of good clinical practice. Researchers must report all serious adverse reactions to the Medicines Healthcare and Regulatory Authority (MHRA).

The X factor

There seems to be consensus that the most important asset a CRO can have is intangible -- you might call it the X factor -- and that is the ability to build good relationships with the people in a client organisations, wherever in the world it might be.

"The glue that holds it together is relationship building based on mutual trust, mutual respect and mutual accountability," says Mihaly.

And more often than not a match should be a meeting of equals, says Novotech's Alex Safarian. "Sponsoring companies, particularly biotechs, need to have a clear idea of what their requirements and directions are, [in order to] pick a service provider that is well matched in terms of capabilities and also in terms of size.

"There are times when that mismatch in size between the client and the service provider translates to expectations that aren't met. You need to find someone that can grow with you."

Asian ferment

Will Australia become a hub for clinical trials in the Asia region? Opinion is mixed -- but some evidence is emerging that local hospitals, scientific institutions, and CROs are sparking interest in the countries to Australia's north.

"Asia is difficult. We have had some enquiries from Japan and so far no work," says Wayne Hooper of Q-Pharm.

Hooper believes Australia is not cost-competitive for Asian companies. Other observers suggest that the biotechnology and pharmaceutical industries in many Asian countries are simply not yet well developed enough to look overseas for clinical trial locations.

But Singapore-based stem cell therapeutics company CyGenics, which recently announced an AUD$18 million initial public offering on the Australian Stock Exchange, has given at least one vote of confidence to the Australian system. "[We] had done an assessment to find the best sites for global clinical trial, and the conclusion was Australia provided the best localities," said CyGenics CEO Steven Fang.

"Since then we've been working with the US FDA and the Therapeutic Goods Administration [in Australia] to initiate Phase I and II clinical trials for our two key platform technologies in Australia. The first is for the ex vivo extension of stem cells; the second is the ex vivo production of the T-cells."

It has also been observed that clinical trials done in Japan and other Asian countries may not as useful to the FDA as those in Australia, with its predominantly Caucasian population.

Kendle's George Mihaly says opportunities are fermenting in Asian countries such as Singapore and Taiwan, where Kendle has chosen to partner with local CROs. He mentions China as the next frontier for CROs -- a huge emerging market if it could be tapped.

Close ties

Sydney-based Novogen recently reported promising preliminary Phase II results for its anti-cancer therapeutic, phenoxodiol. Managing director Christopher Naughton pinpoints good, continuing relationships with hospitals and institutions as the deciding factor on where to conduct clinical trials

Although the drug is being developed by Novogen's US subsidiary Marshall Edwards (Nasdaq: MSHL, LSE AIM: MSH), the trials were an international affair, taking place in Sydney, Melbourne, Perth and in Cleveland, Ohio, and Yale in Connecticut.

"We have good relations with a number of hospitals and Australian institutions which have been participating in pre-clinical work, convenient, natural and appropriate to continue with the investigators," Naughton says. "That also applies in the US where some of the pre-clinical work is being done there at the request of investigators in the US and in the case of Yale, asked us to the trial at their institutions.

"It's really a matter of which is the most appropriate institution based on their in-house expertise, their desire to work on phenoxodiol and cost and utility, all those are weighed up. Where there are a number of institutions that are highly ranked, cost becomes an issue.

"We have looked at Europe and once again the same issues arise, it depends on the enthusiasm of the investigator as that has a direct affect on the costing issue. We use CROs all around the place. We think that there's good competitive advantage in the Australian organisations. They're certainly competent and totally justifiable enthusiasm for their ability to compete internationally."

He warns that Australian CROs must be careful not to defeat their own competitive cost advantage as they gain international work. "It's something that needs to be maintained and not thwarted in the enthusiasm of business growth."