Looking for a contract research organization (CRO) that also has its own Phase I research facility? Well, you can try large firms like Quintiles, Parexel and MDS. Or you can call the relatively diminutive Clinilabs.

Manhattan-based Clinilabs is one of the few—if not the only—small CRO with its own sizable Phase I research facility. CEO Gary Zammit couldn’t help it. Research was where he came from.

Asset Obtained

Zammit had been founder and director of the Sleep Disorders Institute at Luke’s Roosevelt Hospital, conducting research there for nine years. Then, in 1999, the hospital decided to close several of its research programs, including Zammit’s. He did what he could to keep his program alive, but to no avail. Instead, the hospital agreed to sell it—the lease for space, the office furniture, the lab equipment—to him.

Zammit, who had coauthored the book “Good Nights: How to Stop Sleep Deprivation, Overcome Insomnia, and Get the Sleep You Need” (Andrews McMeel Publishing, 1998), cobbled together the funds using credit cards, savings, and a loan. He hired away eight of the hospital’s employees and on Feb. 1, 2001, Clinilabs was born.

Cardio and CNS

But Zammit knew he needed to offer more than just a small Phase I facility if he wanted his new business to fly, so he launched Clinilabs as primarily a more traditional CRO, one that focused not so much on sleep, but on the central nervous system (CNS) and the cardiovascular system—two areas that make up 36 percent of all pharmaceutical research and development spending, he says. And it worked. Thus far, Clinilabs has done about 200 studies for sponsors that include seven of the 20 biggest pharma companies.

“That leaves 13 more who probably don’t yet know we exist. That’s a lot of growth potential,” says Zammit.

Getting Big

About 85 percent of Clinilabs’ traditional CRO work is currently focused in the CNS arena. The company has overseen lots of trials on Parkinson’s disease, Alzheimer’s, epilepsy, depression, and anxiety disorders, working with sponsors of all sizes.

It may be small now, but Clinilabs is focused on getting big. In 2006, the company closed its 6,800-square-foot hospital-based facility and opened a new 24,000-square-foot one, which became New York City’s largest clinical trials facility. Mayor Michael Bloomberg was at the ribbon cutting. More recently, the company expanded the space even further. Phase I work now represents about 40 percent of Clinilabs’ business, Zammit said.

Data Launch

Another 40 percent of the business comes from the company’s core data center, launched in 2003. A year earlier, recalls Zammit, Clinilabs was serving as the CRO on two studies for one sponsor. For the first one, the sponsor asked the CRO to handle data management using a paper-based system, which presented no problems. For study No. 2, though, the sponsor transitioned to an electronic data capture system, which did present a problem.

“At that point, we had to overcome the challenge of Part 11 compliance,” Zammit said, referring to the FDA’s 21 CFR Part 11 regulations, which (among many other things) requires that electronic records and signatures be kept secure.

Opportunity Identified

Clinilabs brought in several consultants to help decipher what Part 11 would mean for their CRO business. Just then, it dawned on Zammit that the need for secure electronic records and the confusion surrounding it could represent an area of real growth. Clinilabs responded by plowing $4 million into building a 50-server core data center. It’s now housed in an all-brick building in Secaucus, N.J., presided over by beefy security guards.

“We knew this was where the industry was headed, and that was really borne out by the stats,” said Zammit, adding that in 2005, perhaps a quarter of all trials were using electronic data, and by last year that number had jumped to as many as half of all trials.

Second Office Coming

Last year, the company secured $11 million through a private equity firm. Zammit said the money is being used to add to data management infrastructure, maintain the Phase I facility, and start a new hiring push.

Clinilabs now has about 180 employees, but hopes to have 220 by the end of the year, when it opens a second office (location to be determined, said Zammit). The sales team is a particular focus, going from one employee in 2007 to nine this year. The company’s revenue in 2007 was $15 million. But this year Zammit expects that to surge to $24 million.

New Frontiers

Other frontiers for the untraditional CRO? Recruiting, possibly. Currently, Zammit is trying to grow that part of the business by offering innovative approaches. Instead of the more typical tact of print, radio or TV ads, Clinilabs uses banner ads online. If a potential subject clicks on an ad, he or she is taken to an online screening form.

When a potential subject fills it out, the resulting health profile is automatically sent to the trial site in that subject’s geographical area. From there, the Clinilabs call center rings the local study coordinator to make sure he or she contacted the potential subject right away. Zammit is sensitive to how quickly interest in a trial can fade.

“If you respond immediately, you have the greatest chance of enrolling the person,” he says. “If you wait 24 hours, the chance they will enroll drops off precipitously. And by the end of three days, it’s a dead lead.”

Jazzed CEO

Recruiting is currently a very small part of Clinilabs’ business, but, says Zammit, “We’re really trying to build it because we think it’s such a linchpin to successful trials.”

Zammit is jazzed about the state of the market.

“It’s fantastic,” he says. “Outsourcing has been growing by 12 or 13 percent per year as more big pharmas downsize. It’s a crowded space. It’s very competitive—but that competition means that companies like mine have to do great work to get ahead. It pushes you every day to deliver a better product than yesterday.”

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