-- Companies, FDA find oversight of third-party contractors in
clinical trials tricky
-- Mistakes made by contractors can derail or delay drug
development
-- Peregrine retracts cancer drug data after finding errors by a
contractor
By Joseph Walker
Peregrine Pharmaceuticals Inc. (PPHM) was riding high in early
September. Its experimental cancer drug had dramatically improved
survival rates in a mid-stage trial, lifting the stock to multiyear
highs and raising hopes that the 31-year-old company might be
closer to bringing its first drug to market.
Three weeks later, Peregrine had lost more than 85% of its
market value after telling investors that data from the trial
wasn't reliable, blaming a third-party firm for making errors in
its coding and distribution of study drugs. The error threw doubt
on the drug's viability, prompted lawsuits against Peregrine and
could lead to the company's stock being delisted from Nasdaq.
Peregrine's story highlights the role that third-party
contractors known as contract research organizations, or CROs, play
in drug research. The $25 billion industry--ranging in size from
Charles River Laboratories International Inc. (CRL) and closely
held Quintiles Inc. to dozens of smaller CROs that perform niche
tasks--can handle everything from analyzing data to choosing and
conducting oversight of clinical investigators.
Outsourcing those responsibilities has saved drug companies
money and quickened the development of life-saving therapies. But
the process of supervising CROs has sometimes proven tricky for
companies and even the U.S. Food and Drug Administration, as they
juggle oversight of dozens of study locations and personnel across
the world.
Even though contractors play an instrumental role in bringing
drugs to market during the clinical trial phase, investors are
seldom aware of the identities or reputations of the CROs involved.
Neither drug companies or the FDA typically disclose the
information, even when costly errors are made that derail drugs
that took years of research and millions of dollars to develop.
Johnson & Johnson (JNJ) and Basilea Pharmaceutica AG
(BSLN.EB) learned the risks of outsourcing in 2009 when the FDA
rejected the antibiotic drug Zeftera, projected to be worth as much
as $1 billion by analysts.
The FDA said J&J failed to properly monitor and ensure the
accuracy of data collected by its CRO and didn't account for
ineligible patients being included in the study, among other
lapses. Basilea's stock price dropped 70% between 2008 and
2010.
Both companies declined to comment for this story. The name of
the CRO was redacted in documents made public by the FDA.
There are risks for start-ups, too. Jay Lichter, a partner at
biotechnolgy investment firm Avalon Ventures, said third-party
errors are more common than many realize.
"We've been burned so many times by the lowest cost provider,"
Mr. Lichter said. A CRO with a poor reputation for quality-control
can lower the price that big pharma companies pay to acquire or
partner with a start-up.
"They'll say, 'Oh, it was those guys,'" and lower their offer,
Mr, Lichter said.
As drug trials have become more diffused, they have also become
more difficult for the FDA to monitor.
"The challenge of trying to have effective oversight in this
complex, international ecosystem is overwhelming the FDA," said
Greg Koski, associate professor at Harvard Medical School and
co-founder of the Alliance for Clinical Research Excellence and
Safety.
With information about closely guarded drug trials limited to
the disclosures made by companies, investors count, in part, on the
FDA to ensure the integrity of trial protocols and data. Yet most
trial sites are never inspected.
The FDA inspected 1.2% of the 12,000 clinical trial sites where
data were produced for drug approval in 2008, a government report
found. The FDA's inspection regulations have "fallen behind
industry practices" as "clinical trials have grown increasingly
complex," the Department of Health and Human Services said in
2007.
In a statement to Dow Jones Newswires, the FDA said it
"recognizes that the growing number of clinical trials" and "the
range of contract research organizations (CROs) who assume various
sponsor responsibilities create challenges for effective oversight
of trial conduct."
The agency said it has begun using software tools to analyze
data like the location of trial sites, financial disclosures made
by physicians, and the number of patients being studied, to make
more efficient use of its "limited inspectional resources."
On occasion, the agency has found errors. Inspections of two
different CROs found widespread errors that forced drug companies
to re-evaluate data or re-do studies completely, resulting in lost
revenues and lawsuits. The CROs have since been broken up and had
their assets sold.
The contractor implicated in Peregrine Pharmaceuticals's cancer
drug trial had past difficulties. Clinical Supplies Management Inc.
was a subcontractor on a separate study in which it was accused in
a lawsuit of giving out placebos that contained elements of the
study drug, invalidating the trial's data.
In September, Peregrine sued Clinical Supplies Management,
accusing it of committing errors in the coding and distribution of
study drugs during the cancer trial.
Clinical Supplies Management declined to comment.
Peregrine also declined to comment. Calls to its investor
relations hotline went directly to a voicemail message.
"The company is not making any further comments at this time,"
the message said. "Thank you for your interest in Peregrine
Pharmaceuticals."
Write to Joseph Walker at Joseph.Walker@dowjones.com
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