Seventh Wave Laboratories, a consulting-based contract research organization (CRO), recently purchased a 50,000 sq. ft. building in Maryland Heights, MO, which is more than three times the size of their current location. The company, which was established in 2003 by former Pharmacia/Pfizer nonclinical scientists, says it needed the space to enable strategic growth and the gradual transition of all offices to the new space will occur in September.

“We are excited about this growth,” said John Sagartz, president, chief executive officer and founder of Seventh Wave. “This expanded facility will enable us to better serve existing clients, attract new clients, grow existing services, and launch new ones.”

Sixty percent of the new space will be used for offices and laboratories. Plans for the remaining 40% include a vivarium, a wet lab and additional offices for future expansion. In fact, Seventh Wave has partnered with the Missouri Department of Economic Development and the St. Louis Economic Development Partners to develop a multi-year, $11 million program that includes the hiring of 42 technical and scientific professionals over the next five years.

In the midst of this company growth, Contract Pharma had the chance to ask Mr. Sagartz a few questions about the trends impacting his business and the market in general.

Contract Pharma: What are some of the latest drug development trends and how are they impacting CROs?

John Sagartz: I’ll start by characterizing our client experience. Our interactions are mostly with small- to medium-sized pharmaceutical companies. We work with over 100 of these sponsor companies every year. Some clients have literally just 2 employees, but a few are top 10 pharmaceutical companies. We hear a consistent message from all of them—that they are getting more funding and have aggressive goals to put more drug candidates into their pipeline.     

The majority of our clients are smaller or virtual companies that don’t have fully staffed drug development teams or broad laboratory capabilities. They rely on us to actively participate on their drug development teams, and they also rely on us to provide laboratory services to characterize their drug candidates in order to improve the odds that they will make it into human clinical trials. We see a trend towards clients placing value on the more consultative approach that companies like ours can provide.

The impact to CROs is growth. In our case it has allowed us to purchase a building and renovate it to accommodate our expansion. Managing the growth is where a lot of CROs have stumbled in the past, and we know some still struggle now. The challenge we’ve laid out for ourselves is to be very responsible and aware of these challenges as we grow. We can’t jeopardize our clients’ needs by letting quality or timing slip. Staging our growth to meet our clients’ growing pipelines, while at the same time maintaining our quality standard, that’s our most important challenge.

A product of this strengthening market is that CROs become more attractive targets for mergers and acquisition. As these events happen they can be disruptive to the organizations involved; managing through these consolidations without losing key talent, processes, or quality will be difficult for some CROs. Sponsor companies will have to be more diligent in monitoring their chosen contract labs through these changes.

CP: What service areas are you seeing an increased demand for and from what sectors? Where do you think the biggest opportunities lie?

JS: Our emphasis is at the later stages of drug discovery and the earlier stages of drug development. As I mentioned, we see a real strengthening of pipelines at this stage. Our core clients are those smaller and virtual companies, where we can really impact the value of their assets with the advice we provide and the services we render. We see increased demand for drug candidate de-risking. As these drug candidates progress and the data needs become more diverse, these sponsors will need to use multiple CROs to get the quality and timing they need. As a result, we are experiencing an increased demand for study monitoring to make sure things go smoothly across all service providers. 

Regarding opportunities, many of our clients ask us to support them in their licensing and milestone meetings with their big pharma suitors. Successful outcomes in these partnerships represent the largest opportunities for our industry.

These deals provide significant reward to the small companies that are discovering these new therapies. As a result they reinvest in discovery of more drug candidates. Success here also means that the big pharma partners eventually have more robust clinical pipelines, which ultimately result in better medicines to benefit all of us. It’s like a flywheel—each success helps spin it a little faster, a little more efficiently, as momentum builds and pipelines grow.

CP: With the first biosimilar approval in the U.S., and additional approvals set to rise, what sort of activity are you seeing and what do you anticipate for CROs in this area in the future?

JS: We do see increases in biotherapeutic drug discovery, consistent with industry reports. For our business model though, biosimilars have limited needs at the drug discovery stage because the target is already validated, safety and efficacy are established, etc. Therefore, we don’t anticipate significant impact to most of our service offerings. One exception to this would be in our pharmacokinetics area. We do expect that biosimilar development will result more bioequivelance studies, which should result in more opportunities for our pharmacokinetic services. 

CP: What efforts are being made to streamline drug development within sponsor/CRO partnership models? What progress is being made and what are the continued challenges?

JS: Regarding progress, we’re finding that some CROs are doing a better job of working collaboratively within a network of drug development partners, so that our sponsors can have the best possible experience for their every need. No one CRO can be best-in-class at every aspect of drug development. In order to meet every client’s needs for science, regulatory considerations, quality and timing, we have to identify the right blend of service providers that align with the sponsor’s needs. Many of these CROs readily support our sponsors in a networked and collaborative model.   

Regarding continued challenges, larger CROs are, and to some extent should be, very limited in their flexibility. In order to adhere to their quality and timing standards, and also produce very large volumes of work, they have to be comparatively rigid in their approach. To small and nimble clients, this rigidity can be cumbersome to navigate. When CROs are rigid in their offering and also less than collaborative with other service providers, it gets in the way of progress as an industry. 

CP: Does oversight continue to present a challenge or do you find CROs are able to operate more independently? If so, in what areas?

JS: It’s hard to provide one answer to this question. I think the best way I can characterize what I see would be as follows: Contract lab sites that are well established and stable can operate very independently for the work performed at that site. When contract labs have multiple sites and a client’s program spans those sites, that’s where more oversight is necessary. Frequently the contract labs will have different systems, processes, culture, and organizational structures at their various sites, which can make it difficult to deliver consistently. 

CP: To what extent are e-clinical solutions impacting clinical trials, services and partnerships?

JS: e-clinical solutions are having impact downstream from our expertise and I’m not in a good position to comment on that. However, there’s an electronic initiative underway that does have direct impact on preclinical development called SEND, or the Standard for Exchange of Nonclinical Data. In December of 2014 the FDA issued guidance enforcing the usage of SEND as part of IND and BLA submissions. Studies starting after December 15, 2016 will need to comply. The near term impact is that all service providers and sponsors that generate nonclinical data have to align with the data standards that have been set forth. In most cases this requires investments in systems and processes. At Seventh Wave, we are taking steps now to be compliant well before the mandated deadline.

The long-term impact remains to be seen, but there’s a reasonable expectation that this initiative will enable common data exchange model across the industry. It should enable better tools, improved information sharing across organizations, and streamlined nonclinical decision making. 

CP: In what geographic markets do you see the most growth and investment?

JS: Since many of our clients depend on venture capital for seed and early series funding, they tend to be concentrated where venture funding is most readily available:  San Diego, San Francisco, and Boston are where we have seen the most dramatic growth. However, the reductions in force at large pharmaceutical companies over the past 10 years has given many talented people the opportunity to scratch the entrepreneurial itch. As a result, we see clients popping up around the Midwest, and in cities that you don’t normally think of as pharma R&D centers. Of course, it’s also given rise to many startup CROs and consultants, some of which have become an important part of our network.

CP: With respect to establishing global standards (i.e. site accreditation and standards for sustainability and best practices), what progress is being made? Where are greater efficiencies needed?

JS: Regarding global standards for site accreditation, OECD member countries have a reasonable level of harmony, and China is catching up. The emerging pharma initiatives in places like Brazil, Russia, and elsewhere still have some work to do. For example, we are seeing an increase in requests from those developing regions to help support their locally discovered drug candidates in order to pursue development in the U.S. because the path for developing and approving in their country is not yet well defined. 

To learn more about Seventh Wave visit them online at www.7thwavelabs.com