Post #3: No lab coat, no lab, no problem. The use of CROs in drug development

by Elaine Hamm, PhD, President and CEO, Ascend BioVentures


One key challenge pharmaceutical startups struggle with is where to do their research.  While traditional tech startup ecosystems have multiple incubators, accelerators, and coworking spaces, it can be hard to find “plug and play” laboratory space and services (especially outside of biotech hubs).  Chemistry, wet lab, and animal facilities are highly specialized and expensive to start from scratch.  In addition, your company’s needs will change as you make progress.  At the beginning you may need mass specs, fume hoods, and tissue culture equipment.  The next stage you may need ELISA kits and access to an animal facility. And it isn’t just equipment and pipettes…new founders soon realize that the readily available academic lab services such as IACUC committees, IRB panels, safety training, and even waste disposal are hard to find and even harder and more expensive to do by yourself.  And while some universities offer companies the option to do research in university lab space, not every university does this and for those that do, the process of working within the university can be a minefield of setting up the right kinds of legal agreements and conflicts of interest policies that protect the company AND the university (especially those that are financed with tax-exempt bonds).

Drug development is hard…but starting a drug development company can be as overwhelming as it is expensive, and frankly, can be a nonstarter for some.   So how does one do lab work without actually having a lab? Through the utilization of a contract research organization (CRO). 

CROs and what they do. While drug companies come and go, the CRO has remained a stalwart player in drug development since the early 1990’s, with continued market growth over the past few years.  From specialized niche services to a one stop shop model, CROs support the early stages of lead compound identification all the way through clinical development.  Over the years, I have been involved in startups that have used CROs to helps us:

  • Determine if our drug works-we have utilized several companies such as Transpharm and Charles Rivers to determine the efficacy of our drug. We have done studies in infectious disease models requiring specialized BSL-2 labs to specialized genetic mice in need of complicated care and diet. 
  • Determine if our drug is safe-companies like Absorption Systems, ITR, Eurofins have helped us with understanding how safe our drug is by testing for in vitro off-target effects, drug-drug interaction, chronic GLP toxicology work, etc.
  • Perform basic science studies- we have utilized several companies to help us with mechanism of action studies, formulation work, plasmid construction, compound generation, etc.
  • Perform clinical development studies- Like most startups, we have utilized companies like Pharpoint to help us with our clinical operations and project management, data management, biostatistics, and all of the other aspects of running a clinical trial.

CROs can fill gaps in development or serve as your entire lab from cradle to grave (er…or hopefully acquisition). As an added bonus, using a CRO provides important external scientific validation that potential investors and partners often ask for and can trust.

Is it worth it?

It may sound expensive to outsource your program…and it can be.  However, in some areas of drug development, it can even be free.***  In addition, when you crunch the numbers, CROs can actually be the cheaper alternative to doing it in-house when you factor in time, equipment, staffing, and training.  For example, at a previous company, Jortan Pharmaceuticals, we were developing a new treatment for diabetes and we needed to prove that our drug worked in an industry standard animal model of disease.  Unfortunately, the mouse model of this disease was very high maintenance and required special care.  In an effort to save money, I calculated out the cost and time to do the study in our own animal facility and the cost and time to do the study in a CRO.  Shockingly…it was much cheaper to outsource the whole study to Charles Rivers than it would be to run it in our own labs with our own people.  And, as another benefit, potential partners actually recommended Charles Rivers so utilizing them made sure that it was done in a manner that was “industry ready” at a place that industry representatives trusted.  But more than that, we got the deep expertise of Dr. Joseph Cornicelli, Senior Director of In Vivo Pharmacology at Charles Rivers. 

I met Joe years ago on the diabetes project and while we didn’t cure diabetes, he set the bar high for me on what to expect from a good CRO.

In a recent conversation, Joe told me that good CROs are “thought partners.” He went on to explain that quality CROs “take time to get to know you, to understand what you are trying to accomplish short and long term, make recommendations to you, and, importantly, they spend your money like it is their own.” These are important pieces to understand because while a CRO will do whatever study you pay them to do, good CROs serve as a collaborator and offer advice on sample size, controls, and model selection.  And…good CROs are honest.  “It is important to understand the difference between a CRO’s capabilities versus their expertise.” Joe explained. “CROs should be transparent and let you know how often they run a particular assay.  Really good ones know when something isn’t within their core capabilities.”  Not too long ago, I asked Joe to help on another metabolic disease program and he walked me through the pros and cons of each animal model.  Then when we dug into what our program needed…it turns out, it wasn’t Charles Rivers.  And Joe let me know as much. I appreciated the time and effort he took to understand what we wanted to accomplish and to let me know that it would be too costly and time-consuming to do it at their facilities. 

I asked Joe if he had advice for someone engaging with a CRO for the first time and below is a short list of his recommendations:


  • How often they perform the particular study you want them to do and what is the repeatability, variance, etc?
  • Will I have the same personnel working with me on all of my studies?
  • How will we interact as a project team (i.e. will someone from the CRO sit on my project team?)?
  • How will we address problems as they arise?
  • What can I expect in terms of updates?
  • How far can this company take my project and how do they handle internal hand-offs?
  • Who is your internal advocate and take the time to get to know them
  • How will the data be presented?

Oh…and get a professional email and physical address.

But using a CRO is a two way street. You have to be willing to divulge confidential information if it is vital to the execution of the study.   As Joe explained “the more you can do to be open and the more information you can share with me, the more I know and the more I can help.”  In a business where intellectual property is everything, it can be disconcerting to utilize an outside partner.  However, CROs are not in the business of stealing your stuff or divulging it to another client because their business model depends on their discretion and reputation. In addition, it is important that the company spends time understanding what their project needs to be successful (vs what experiments should they do).  Yes, it may be cheaper to run a study with 5 animals instead of 10 and it may be cheaper to not include a particular timepoint, but understand that you may not be able to trust the data you do get and you may be kicking yourself later, wishing you had included a specific control arm or assay.  Often, you end up running the study again (the right way) saving you neither time nor money. 

That said, “Quality CROs offer alternative ways to help you save money.” Said Joe.  “We offer full reports for every study we do, but sometimes a company just needs the raw data, which is much cheaper. In addition, if you plan on doing multiple studies, it can be helpful to utilize a larger CRO that has a variety of capabilities so they can bundle your projects and offer a discount.”  Using larger CROs can also help save time as your project progresses as they can help manage the handoff and transitions between each stage and department, without having to start from scratch at a different company for each experiment (this requires a good project manager within the CRO and the company…more on that in the next article). From the company perspective just starting the conversation with “this is our budget…what can you do?” can help everyone determine if the study is possible or not and if it is, can we get creative about how it is done or reported, etc.

Other CROs offer alternative ways to engage with their services beyond simple “fee for service.”  CROs such as Jubliant Biosys have a number of different models including a shared risk models.  Success fees, equity exchanges, licensing, co-development, and other types of partnerships can be another way that a startup can utilize a CRO without paying significant capital upfront. 

With creative business models, startups, investors, and even nonprofits can leverage the benefits of utilizing a CRO. Non-profit foundations (such as the Bill and Melinda Gates Foundation and the Michael J. Fox Foundation) have found ways to partner with CROs to help drive research and innovation for their areas of focus beyond the traditional “raise money and then give out grants to scientists” mantra (for more on this, there is an excellent article in recent issue of C&EN   

With the right team and right CRO, outsourcing research can feel no different than having it done in your own lab.  Heck, I have long term scientific colleagues that I send Christmas cards to…but have never met in real life (maybe we will all meet up one day at a very awkward BIO conference reunion…I will have the red rose in hand so you know it is me).  But before you fire your staff and close your lab, you should know that for every great CRO out there are several disreputable ones and our industry is fraught with horror stories of these experiences (raise your hand if you ever had your experiment get delayed not by weeks but by several MONTHS due to a CRO).  It pays to do your research and ask others about their experience with a CRO.  And, repeat after me, cheaper is not always better because you get what you pay for.  In addition, using a CRO requires skilled internal company project managers that make sure that the experiment is progressing and can anticipate challenges and respond quickly.  Plus, you must communicate very well verbally and electronically.  You should be incredibly detailed in what you hope to achieve as well as your scientific protocol descriptions and requests.  If the only way your test compound can go into solution is to vortex in 5 times in a glass tube with warm PBS while singing Lil Nas X’s “Old Time Road” (or whatever the kids are listening to these days)…then your protocol better describe that process step-by-step (though if that is what it takes you may want reconsider the commercial viability of your compound).  It is better to over communicate than under describe.

As with all professional work relationships, CRO utilization requires excellent communication skills and a talent for working with people…something for which we scientists are NOT always known.  J

We will delve into this topic in the next article!

*While Ascend and its portfolio companies utilize the services of several CROs, neither Ascend nor I received compensation from the companies mentioned in this article.  Although Jubliant did give me some cupcakes and Joe and I are friends, I do not get paid nor explicitly endorse any particular CRO.

***(Yes.  FREE.  In an effort to help support the development of new antimicrobials, the National Institute of Allergy and Infectious Diseases offers a collection of preclinical and clinical services to help create new therapeutics

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