Why More Firms are Traveling 10,000 Miles to Conduct Early-Stage Clinical Trials
Guest Blog Post by Dr. Jason Lickliter, Medical Director of Nucleus Network
Congratulations! After years of research, several rounds of venture funding, unexpected setbacks and a small pivot, your early-stage biopharma company is ready to enter human clinical trials.
You’re starting to look forward to actual data from your experimental treatment – data that could lead to important value inflection points, strategic investments by industry incumbents, and ultimately a product to sell.
At the same time, you know how quickly clinical trials can burn through all that hard-raised venture financing. Trials are notoriously expensive and time-consuming. The need for prudent decision making is higher than ever. (Your CFO reminds you of this daily.)
So why are you thinking of starting your first-in-human safety and tolerability study more than 10,000 miles away, in Melbourne, Australia?
Simple: you weighed the options and came up with the most prudent decision possible.
Australia is increasingly becoming the destination of choice for early-stage clinical trials, with annual spending on contract research organizations increasing at a compound annual growth rate of more than 12 percent, according to consulting and research firm Frost & Sullivan. And the reason is that Australia ticks all the right boxes when considering options for Phase I trials:
- Lower costs
- Speed in starting and completing trials
- High clinical quality
One of our recent clients, Avalyn Pharma, a company in Seattle advancing therapies for pulmonary idiopathic fibrosis, said a big advantage was the time savings. “With the straightforward and fast regulatory process and ethics approval, we have been able to accelerate the timeline for a Phase 1 study by six months compared to a U.S.-based program,” Bruce Montgomery, M.D., chief executive officer of Avalyn, recently told us. “The studies were conducted in an expert and timely manner.”
Cost is clearly a prime concern to companies with limited capital and a long slog before the hope of any revenue. Australia presents a clear advantage. Costs for conducting trials are about 10 to 15 percent lower than comparable trials conducted in the U.S.
That’s just for starters. The government of Australia has a longstanding tax policy that significantly increases those savings. The typical early-stage biopharma company, with annual revenues of less than A$20 million that posts annual losses, get a 43.5 percent cash rebate on their clinical trial spending. This is not some hypothetical subsidy with numerous barriers or some tax credit against future revenues. This is a check cut by the Australian government that directly refunds 43.5 percent of R&D spending. Companies with annual revenues in excess of A$20 million are awarded a 38 percent tax credit against Australian profits.
It gets even better. The speed with which companies can start their trials in Australia is astounding. Compared to the U.S. processes, sponsors can save between two and six months of valuable time by avoiding the pre-IND meeting process and avoiding the seemingly endless pages of documentation that typically accompany an Investigational New Drug (IND) application to the U.S. Food and Drug Administration – a filing that will include FDA forms, study protocols, CMC data, pharmacology and toxicology data, and more – applying for approval to start a trial in Australia involves mostly an investigator’s brochure and some supporting data, typically less than 200 pages. It is common for trials to commence within five weeks of initial submission.
Clinical quality is paramount to all drug developers. Here, Australia shines. Australia maintains a well-developed regulatory framework that is accepted by the FDA and the European Medicines Agency. The 270-bed facility that Nucleus Network has in Melbourne is FDA inspected.
While the cost savings inherent in Australian trials is rightly celebrated, my experience with companies conducting early-stage trials down under suggests that it is not the most motivating factor. Time and again I have heard that it is the time savings – both in initiating and completing trials – that make the biggest difference to companies. Accessing trial data faster accelerates a firm’s clinical program, creating a virtuous cycle in which quicker achievement of development milestones and proof-of-concept leads to increased investment and faster attainment of higher valuations.
Downsides? There’s no getting around the fact that travel to Australia can be arduous. And the time difference requires a little more coordination for communications between clinical management and researchers. Increasingly, U.S. firms conclude that the minor hassles are just that – minor hassles.
Australia’s National Health and Medical Research Council estimates that U.S. firms will continue to increase the number of Phase I clinical trials conducted in Australia this year. I invite you to become one of our clinical partners in the future.