This Startup Is Bringing a $40 Billion Market Out of the Stone Age
While much of the research and development conducted by the global pharmaceutical industry relies on cutting edge technology, one aspect of the process of developing and testing new drugs is decidedly low tech: clinical research.
That's what Raymond Nomizu, a Harvard-trained lawyer and former management consultant discovered when he decided to launch a company focusing on this niche but critical part of the pharmaceutical value chain.
His company, Clinical Research IO, aims to take the paper-based, manual data entry approach to recording data from clinical research trials and digitize it.
To-date, Nomizu has raised close to $3 million in several seed rounds from Rally Ventures and NXT Ventures, a Boston-based venture capital firm.
The following are edited excerpts from my recent conversation with him:
How did you get the idea for Clinical Research IO?
After working as a management consultant for a long time, I realized that I ultimately wanted to run my own business. I didn't really have a great entrepreneurial idea, so I decided I would buy an existing business.
In 2012 I was looking for a business to buy, something with good cash flow, and I came across a clinical research site for sale. The cash flow was good and the industry fundamentals looked good.
When I acquired the site my plan was to just grow it by increasing the clinical study load that it took on. But as I managed the business I kept coming across a problem which was that all of the data that was collected was paper-based.
I observed the process and saw how much pain was involved with pharmaceutical companies having to contact literally hundreds of small research sites to recruit the patients and collect the data so statisticians could determine whether a drug was efficacious versus the placebo. All of the data was collected by hand, pen, and paper, then transcribed into an electronic system through a standardized, web-based data collection platform.
This is called "source data" in the industry. Local investigators and doctors have an obligation to keep data for 10-15 years. In Europe they have to keep it for 25 years. Pharma companies can't act on data entered into portals unless they can confirm the data.
They can't take on faith that data has been entered correctly; they must show to the authorities that the data entered into the portal is actual data. The only way they can do this is to send human beings. They literally have to get on a flight and fly all over the country and open up big binders of data and compare it with the data in the system.
There are also serious quality control issues with the sites. They can't get staff to record data accurately, and they often won't follow instructions, so data values fall out of range.
I realized I couldn't do it without technology. Paper is dumb technology; it's passive. I needed something interactive. So I asked my business partner if he could build a technology around this. In January 2016 he wrote the first line of code, and in September 2016 we deployed it on the site.
We went 100% paperless and have never looked back. Now data collection is more accurate, more efficient, and we can hire and onboard new coordinators much faster. We don't have to rely on people being very experienced. We just hire people who can use a tablet.
What's your value proposition?
The value proposition we bring to the table is very strong. I've been a consultant for many years, and the three things that matter for any process is cost, quality, and time.
We save costs because we don't have to pay a lot of people travelling all over the country to do things that don't have to be done. And, since there are none of the problems associated with having a manual process, we shrink the time to market.
We appeal to research sites because we improve the data being captured. That's a very important metric for site success.
For the sponsor, they've got a lot of sites using our technology and collecting data that is clean and accurate. They don't have to fly someone on-site to confirm accuracy. In fact, nothing is stopping us from sending data directly into your platform. You can continue to use the data collection platform as you used to, but now, because of technology, they don't have to have it physically transcribed. They don't have to have someone confirm it; they can confirm it remotely, with realtime access to the data.
The technology has been available for some time now. Why would research sites or pharmaceutical companies want to use your platform now?
As I talk to research sites around the country, I'm hearing a willingness to embrace mobile technology that was not there five years ago. People are used to it and expect it.
We have a couple of proof cases already. One clinical research site saved 20 percent of staff time by using technology rather than paper-based processes.
The regulatory environment is also very favorable. The FDA has been very vocal about their preference for electronic data capture. Regulatory guidance is clear and well established.
How many research sites have you contracted with so far?
We're on target to have over 100 sites by year-end. Were thinking if we hit 150 by year-end, that's a pretty good number. We are approaching 5% of the sites in the US, adjusted by volume.
What's the size of your addressable market?
The global market for clinical research is $40 billion. Pharma companies spend 20 percent, or $8 billion, on data monitoring and making sure data is clean. Can we save half of that? Yeah, I think so.
Is there a $1 billion market for us? I think so. The cost savings for pharma is meaningful, along with better quality and shorter time. There's big upside for us.
What other target markets are you approaching with your platform?
Right now, we're consolidating research sites onto our platform. Soon, we'll start marketing our system to pharmaceutical companies. Pharma companies have requirements that research sites don't have, but we can build very effective modules to address them because we have the source data flowing through our system.
(Note: Clinical Research IO is not a client of mine, nor do I have any other business dealings with the company.)