Nothing like a pandemic to illuminate a thing or two about human nature. For example, people apparently spend way too much time wiping their butts. Or, at the very least, are very inefficient in their use of toilet paper. We also learned quite a bit about clinical trials, though the COVID-19 vaccine studies were atypical in many ways. Thousands of participants, for instance, eagerly signed up to participate so they could
earn up to $2,000 contribute to the advancement of science. But that’s the exception, not the rule. About 85% of clinical trials fail to attract enough participants, despite the fact that pharmaceutical companies reportedly spend 40% of those research dollars on recruiting guinea pigs patients. On the flip side, it’s not very easy for patients to find clinical trials. Those failures and inefficiencies are driving a trend known as decentralized clinical trials.
It’s yet another riff on the telehealth theme, which has hit warp speed over the last 16 months or so, with record amounts of funding pouring into the space. One example we recently wrote about is Babylon Health, which provides virtual healthcare through apps, chats, and video consultations. In the case of decentralized clinical trials, the idea is to shift away from brick-and-mortar sites to remotely controlled studies that allow patients to participate from home using digital tools like apps and wearables.
A Los Angeles-based firm called Science 37 thinks it has the best platform for decentralized clinical trials. The company is so confident in its Decentralized Clinical Trial Operating System (OS) that it’s going public using other people’s money to make the case through a reverse merger with a special purpose acquisition company (SPAC) called LifeSci Acquisition II Corp (LSAQ). The deal is expected to value the new company at about $1 billion and add about $250 million in cash to the war chest. Let’s conduct our own clinical trial on the potential of Science 37.
Funding to Science 37
Founded in 2014, Science 37 has raised $147.5 million to date from a baker’s dozen of investors. The list is pretty impressive in that it includes some big names from biotech and pharmaceutical circles, including Amgen (AMGN), Sanofi (SAN.PA), and Novartis (NVS). All three are also customers. Another prominent investor is PPD (PPD), a $16 billion global contractor research organization (CRO) that collaborates with Science 37 on clinical trials for drug development. Google’s parent company Alphabet (GOOG) and Lux Ventures have both participated in multiple rounds, including a $40 million venture round last August. That’s also when co-founders Belinda Tan and Noah Craft both stepped down from their leadership roles as chief medical officer and CEO, respectively.
The guy now at the helm is David Coman, who spent the better part of a decade as a former senior vice president at Quintiles Transnational, another multi-billion-dollar CRO that merged with a health information technology firm called IMS Health shortly after Coman departed. The new company, IQVIA (IQV), is a $46 billion behemoth that we’ll return to a little bit later.
We first profiled Science 37 and its technology for bringing clinical trials into the home almost four years ago to the day. There have definitely been some tweaks to the platform (no longer called NORA, for one thing) and progress toward building meaningful revenues (defined as $10 million annually or more), so let’s recap the approach and technology before hitting the hard stuff like financials and risk.
What is a Decentralized Clinical Trial?
The old-school method of conducting clinical trials usually involves setting up a pretty complex infrastructure of disparate brick-and-mortar sites with varying levels of technology and expertise, according to Coman. Data is still captured on paper, he said during the investor presentation (a claim we find a bit hard to believe…