The biotechnology sector may be stumbling. Even so, Synteract, a medium/small contract research organization (CRO) that works almost exclusively with biotechs, is doing fine.

No, 2009 won't be 2008, when the company experienced 35 percent growth. But 2009 won't be terrible, either. Synteract CEO, president and co-founder Ellen Morgan projects 8 percent growth. “Hopefully, if things improve with the economy, we should be back to close to 20 to 25 percent growth next year,” she says.

VC Consultancy

To add a new revenue stream, Synteract recently announced that it was extending its consulting services beyond biotechs to include venture capital (VC) firms specializing in the industry. “We've worked with a lot of biotechs. This is just us taking it a step further and helping venture capitalists evaluate new opportunities,” says Morgan. “It seemed like a natural for us to be advisors to the VCs.”

Ah, the joys of being small and agile, able to just up and launch new services without first going through miles of red tape.

Morgan launched Synteract a decade and a half ago with Russ Holmes, now the company's executive VP. The two met while working for Pfizer in New York—Morgan as manager of the clinical data operations group and Holmes as data analyst and software applications programmer. In 1995, they both moved to San Diego to take jobs with the biotech Gencia. Soon after, Gencia collapsed. Morgan and Holmes knew what they had to do.

“I came to California when biotech was really just starting to take off out here and found there really wasn't a lot of expertise on the West Coast with doing clinical trials," says Morgan. "If I wanted to recruit someone with experience, I had to get them from the East Coast. I saw a lot of little biotechs springing up and they really didn't know how to do clinical trials very well.”

90% Biotech

On top of all that, Morgan's interactions with the big CROs showed her that they didn't always prioritize the well-being of their small clients. “The big CROs didn't really understand some of the needs these small biotechs had,” Morgan says. And so she and Holmes launched a CRO with the small, emerging companies in mind. Since then, Synteract has worked with about 90 biotechs on about 800 trials. Less than 10 percent of its work comes from big pharma.

Do Morgan and Holmes plan to increase that percentage? No. “We really like working with the smaller companies,” says Morgan. “You become part of their team rather than just extra hands. Our people like that—it's more rewarding.” Adds Holmes: “You work more directly with the decision makers, too. They move fast, and many levels of bureaucracy are eliminated.”

Synteract has 265 employees and about 300 more people on contract. The company's turnover rate is nice and low—closer to 10 percent than the industry average of 20 percent, says Morgan.

Prague, India

The company has just two offices: the headquarters in San Diego and a small office in Research Triangle in North Carolina. But that's about to change. This month, Synteract will open a location in Prague. The point, of course, is to gain access to patients. Morgan says Synteract is looking to acquire another CRO in Eastern or Western Europe soon. Having a presence there will help them scout around.

Why not just partner with CROs in Europe? Because clients don't always like that. “It's just a tough sell,” says Morgan. “Clients don't feel comfortable with a partnership that you're really going to work as a cohesive team, and have the same processes, and that you'll stay together until the end of their trial. In reality, we probably work better with our partners than some of the big CROs do with their own offices. But it's a perception.” After the hoped-for European acquisition, Synteract will turn its sights on India, with a plan of acquiring there, too, says Morgan.

Synteract's therapeutic areas include a heavy emphasis on oncology and central nervous system. The company also focuses on cardiovascular and opthalmology. “We've done a little of everything,” Morgan says.

Synteract has come up with its own electronic data capture tool. It's called SynCapture, and was developed as a layer on top of DataFax technology. The software offers three modes of data entry: paper, fax or internet. The company has used SynCapture for about 12 trials over the last four years, and has no plans to market it beyond their CRO clients at this point.

Longer Lead Times

Though four or five of their previous clients have gone out of business in recent months, the limping economy has thus far not resulted in any canceled contracts for Synteract. But Morgan has witnessed other worrisome signals.

“We see a lot of delays in decision making, or a lot of times we'll bid on a trial and it never happens—they just can't raise the funds,” she says, adding that she's seen more of this in the last nine months than she's seen in Synteract's 14 years.

But things might just be starting to turn around. “We think that we're seeing an improvement over the last six weeks or so,” she adds. “We're hoping it's the beginning of a trend.”

—by Suz Redfearn