“We now observe that the number of study starts per month has been down year over year in recent months across all phases,” Wells Fargo analyst Tim Evans told Outsourcing-Pharma.com. “This explains a recent moderation in bookings over the past several quarters.”
Evans discovered the trend in a recent analysis of clinicaltrials.gov, the US website tracking clinical trials. All trial phases -- particularly in the preclinical portion of the market – have seen a downtick. But the decline in study starts for Phase II and III trials beginning in 2013 is “probably the most concerning trend as this phase accounts for the majority of public CRO work.”
In a recent investor note, Evans also said a dearth of Phase I trials should not necessarily be attributed to a dearth of compounds making their way through the pipeline.
“I think it has more to do with the way sponsors conduct Phase I studies,” Evans told us, noting that in the days when companies were “cash rich,” they could start 10 trials to evaluate a single compound but now they might “look into a few of those and evaluate them before leaping into others.”
He also said the shift to more studies in patient with the conditions the treatment is indicated for, and less studies in healthy volunteers is making the sector more efficient. The other driver is a shift in therapeutic areas – a lot more oncology compounds are in development and are more frequently studied in patients “who might not have the best prognosis.”
“The number of ongoing Phase IV [or post-approval] trials has been in a steady decline for several years, though we are less concerned about this trend as we believe the market is undergoing a transformation from a focus on large, simple safety studies to higher-value comparative effectiveness studies—a trend that may benefit well-positioned,” Evans said in an investor note.
But this general downturn in trials “might be off-set by a substantial increase in outsourcing starts,” Evans said. Pharmaceutical companies might be starting fewer trials but outsourcing is “probably” a higher percentage of those trials than in previous years, he added, noting that the new statistics is “not a negative call on CROs – the public companies are still going to grow their revenue a lot this year.”
He noted that the trend is “a data point that investors track and is important to ascertain the health of pharma space in general.” However, book to bills for public companies peaked in Q1 2012 and have been moderate since then, he said.