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Why the rare disease clinical trials space is so attractive to CROs: M&A activity

By Caron Dhillon 10 Apr 2019

Addressing unmet therapeutic areas in rare diseases is just one rapidly expanding area in clinical research. Pharma is consistently looking to partner with CROs who exhibit deep sector knowledge in the rare disease clinical trials space and trends demonstrate a strong M&A interest from large CROs attempting to acquire smaller companies with niche capabilities in this space.

What are rare diseases?

Within the EU, a disease is defined as rare when it effects less than 1 in 2,000 people. In total, approximately 7,000 rare diseases worldwide affect over 300 million people. Yet, despite this high prevalence, only 5 percent of treatments for rare diseases and disorders are approved by regulatory bodies.[1]

In spite of a small patient pool, rare diseases are becoming vital to pharma companies, who are able to charge high premiums for drugs that will have little impact on government health budgets.

Which rare disease CROs are most sought after?

The process of conducting a rare disease trial is substantially different than traditional drug development, and many pharma companies look for a CRO that demonstrates innovative strategies to manage a rare disease program. ArQule, a personalized medicine company working in the oncology space, only identified two CROs in its search for an outsourcing partner that met its criteria to develop a drug in the ultra-rare disease space[2]. Mid-sized CROs are often considered to be the sweet spot, where they are just large  enough to have the relevant expertise needed in rare diseases, while CROs that can take rare disease treatment from Phase 1 all the way through to approval are often the most sought after.

CROs specialising in rare diseases tend to not only have a clear understanding of the complexities of the trial process and all accompanying procedures but are also considered very patient-centric. They quite frequently have close links with patient advocacy groups, whose support is often seen as critical when creating registries and assisting with recruitment. These factors all played a key role in ArQule’s decision-making process.

Challenges of conducting a rare disease clinical trial

While CROs remain vital to bringing a new drug to market in the rare disease development process, conducting a rare disease clinical trial still comes with inherent challenges, namely from a small patient population and a wide geographical spread. Many rare diseases face various regulatory requirements in different countries; with no global consensus on the standard of care, this often leads to difficulties in identifying homogenous populations of these rare disorders[3]. Furthermore, with the limited data available from an incomplete understanding of the disease’s history, it is often difficult to identify meaningful outcomes for clinical trials. It is critically important for pharma that CROs in this sector have expertise in enrolling rare disease patients, and maximising site selection to create realistic study feasibility.

CRO M&A Activity in the Rare Disease space

M&A trends in the CRO market are being driven by an increasing need for CROs to differentiate and change the scope of their business model to meet the demands of sponsors. Trends in the last year demonstrate a slowdown of mega mergers as players are seeking to acquire companies with specific areas of expertise to build niche capabilities.

The September 2017 sale of rare disease CRO Agility Clinical to Precision for Medicine exemplifies the growing trend of large, diversified firms operating in the CRO market bidding on smaller projects in the $2m- 5m range. Agility’s expertise in rare and orphan research with its heritage in biostatistics and data management for complex trials complement Precision for Medicine’s existing research capabilities. This helps them to bring innovative rare disease treatments to market more effectively for patients and their families. Providers of specialist services will likely continue to be an area of interest for CROs and M&A activity in the space will likely continue to grow in this sector.

December 2018: Atlantic Research Group’s (ARG) acquisition of CCA Clinical Research (CCA)[4]

In December 2018, Atlantic Research Group (ARG) acquired CCA Clinical Research, a London-based rare disease-focused CRO with 20 employees. In doing so, ARG, a rare disease, immunology and oncology-focused CRO, gained access to CCA’s expertise in rare diseases. The acquisition will further increase ARG’s expertise and service offering in the rare disease clinical trials process, allowing them to access more clients across new markets. The union will further permit ARG to expand its workforce and serve a larger and more diverse client base in the USA, Western Europe, the Middle East and Asia, creating a global, clinical trial management solution for small to mid-sized biotech companies.

[1] https://www.modernatx.com/pipeline/therapeutic-areas/rare-diseases

[2] https://www.clinicalleader.com/doc/overcome-the-challenges-of-an-ultra-rare-disease-trial-0001

[3] https://www.outsourcing-pharma.com/Article/2018/09/26/Rare-disease-clinical-trials-and-the-shifting-care-paradigm

[4] https://atlanticresearchgroup.com/resources/news/press-release-atlantic-research-group-acquires-london-based-cro

 

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Caron Dhillon

Analyst

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