Wisconsin-based Spaulding Clinical Research A Top Phase I Facility: The FDA Awards a $5m Contract

Wisconsin-based Spaulding Clinical Research A Top Phase I Facility: The FDA Awards a $5m Contract

Spaulding Clinical Research, a West Bend, WI-based clinical research site, and a declared full-service CRO, operates a 200-bed facility while specializing in Phase I trials supporting the first-in-human clinical proof-of-concept, cardiovascular, and NDA-enabling clinical pharmacology studies. Founded in 2008, it recently initiated work that is part of a $5 million contract with the U.S. Food and Drug Administration (FDA). They are included in TrialSite News’ “Site Watch Leading” category.

Clinical Research Site Facilities

Biopharma and medical device sponsors or the contract research organizations (CRO) that often conduct studies on “PharmaS” behalf, don’t typically share publicly how well their research sites perform, as high-quality, high-performing clinical investigational sites represent a competitive advantage in the business of drug development. 

When it comes to privately held, early-stage clinical research sites and facilities, little publicly available information exists concerning performance. There aren’t public websites funded by the government or even private sectors that rank and profile research sites by performance or quality. There are some third-party database companies that work to aggregate research site information—and most big industry sponsors sign up for these—however, they often get mixed reviews and are expensive. TrialSite News, in part, exists as an objective digital media source covering sites, site trends, and current events related to these important organizations for that very reason—that there isn’t enough available information for such an important industry. Research sites and centers are incredibly important. This is where the clinical trial occurs—the frontlines of research—where the physician investigator, clinical nurse, or coordinator meets the patient (“subject” or the preferred “participant”). 

Hence why it is newsworthy when a clinical investigational site secures a $5 million contract with the FDA itself. After all, the FDA is the regulatory authority in the drug development ecosystem—the authority that evaluates the sites’ actual practices in regard to quality and patient safety in formal inspections. The FDA entering into a five-year pact with Spaulding Clinical Research is one indicator that this is an exceptional operation.

A Productive Partnership with the FDA

A $5 million, five-year contract, the firm reports on its website that it was awarded the contract with the FDA’s Division of Applied Regulatory Science to conduct multiple clinical trials in various therapeutic areas of interest. In this formal arrangement, Spaulding Clinical Research is responsible for providing the necessary support services, including clinical trial recruitment, conduct, and laboratory assessments. The FDA selected Spaulding, in part, due to its sophisticated flexibility, offering the federal agency a site that can conduct the research in a variety of differing therapeutic areas with the goal of helping the agency address questions about various classes of drugs; but it also serves as CRO where the firm can provide other turnkey trial services such as patient recruitment.

Spaulding Clinical started working with the FDA seven years ago, according to their CEO Cassandra Erato, who recently succeeded her father, Randy Spaulding, company founder and present-day company chief visionary. The site first collaborated with the agency “to explore a model to screen new drugs for prolongation of Q.T.” quotes Dr. Jay Mason, Spaulding Clinical Research chief medical officer. Dr. Mason also notes, “Through this work and resulting publications, we have developed a productive partnership.”

The Firm

Founded in 2008, Spaulding Clinical Research appears to be on a good track. Recently profiled in the Milwaukee area’s BizTimes, the firm is capitalizing on robust demand for early-stage Phase I site and study support. After all, drug development and associated clinical research activity is at an all-time high, and that has translated into record revenue for Spaulding Clinical Research—on track to double their bookings.  

As the firm operates as a clinical trials site and a boutique early-stage CRO, it handles early-stage trials for not only the U.S. government, but also biotech startups receiving large infusions of the capital of late. Spaulding Clinical was designed by Mr. Spaulding, a biomedical engineer by profession, and clearly an exceptional businessman and visionary. From the beginning, he sought to design a research center from the ground up for high quality and efficient execution of Phase I clinical trials. Built on fully electronic, integrated data systems (e.g., electronic data capture and clinical trial management systems) to support Phase I studies, they operate a 200-bed Phase I clinical pharmacology unit and bring concentrated expertise in the conduct of TQT studies. They purport to have introduced the industry’s first fully automated TQT study and analysis option. They then leveraged their core expertise in cardiac to expand to offer Phase I-IV Core ECG Laboratory services, including what they position as a “revolutionary 12-lead Spaulding Electrocardiograph” inclusive of a centralized ECG solution supporting accurate, reliable, and easy to access ECG information for expedited analysis. They have expanded to offer expertise on study design, medical writing, clinical data management, biostatistics, and PK/PD analysis; not to mention a patient recruitment service.

The Founder

Mr. Spaulding founded the research site in 2008. An engineer by training, he spent many years working in electrical engineering in the medical device space after securing his Bachelor of Science, Cum Laude, in Biomedical Engineering from Marquette University. He went on to complete M.S. level course work and learned the medical device industry from the inside out. While working as an engineer at Mortara Instruments, Spaulding saw a great need for automated cardiac testing. As a vendor to Phase I testing units, he witnessed first-hand the errors associated with paper-based data collection. A visionary seeing the need for “eSource solution-driven facilities” a decade before others, Spaulding went about building a “paperless CRO.”

Know Thyself

Spaulding Clinical Research doesn’t appear to be moving into a costly and competitive race for nationwide scale (such as is the case with some of the “Super Sites) or for that matter, interested in directly taking on larger CROs’ early-stage clinical operations business as its core mission—and this, according to their CEO Ms. Erato, is a good thing. After all, with too much emphasis on growth and scale, the connection to the client can be lost. This incredibly important bond is what keeps a small venture in business. Although they were acquired by a private equity interest (more on that below), as a small venture (about $15—20m and approximately 100 employees) Ms. Erato sees the benefits of concentrated focus for competitive advantage—centering on core strengths and carefully expanding the business based on the execution of studies where the firm can maximize value for its clients. Hence those firms operating in the Super Site model must seek scale for national presence (e.g., be able to recruit, enroll, and test patients at multiple locations) and hence require bigger deals to cover expanding costs. Spaulding Clinical concentrates on operating as a focused, high-end niche player in clinical pharmacology solutions—dedicating project teams and subject matter expertise to clients—offering them “the attention they need on the project” reports CEO Erato. Its relationship with the FDA has contributed exponential benefit to this firm, enabling the company to not only lend its expertise in particular therapeutic areas based on ongoing results from this collaboration, but also leveraging and re-purposing lessons learned, best practices, and insights for the many well-funded biotech upstart clients. A truly valuable partnership and tool for growth. Undoubtedly in business development pitches, that partnership adds credibility.

Reviews

TrialSite News represents an objective, unbiased, and balanced source of information for those interested in clinical trials. The research team conducted a review of Spaulding Clinical Research via government databases, such as those associated with Health and Human Services, the FDA, literature review, and legal databases. 

Overall, the company, still small and only 12 years old, has developed sophisticated infrastructure on par with firms many times bigger. With a solid identity, they home in on and classify their sphere of excellence (“Clinical Pharmacology Solutions”) and, from the ground up, built the research site/CRO for 100% digital operation in what traditionally is a conservative industry.

Twelve years of operational experience, they have now participated in hundreds of trials and undoubtedly subject to many sponsor audits and FDA inspections. Of the many clinical trials they have participated in, the TrialSite News team found only one incident of an FDA 483 observation—and these were not major. It is nearly impossible for any operation to have no findings over time. A review of legal databases found a couple of cases involving truly immaterial civil actions not worthy of further mention.

Their overall Glassdoor rating of 3.0 places them at just below average in terms of employee satisfaction. On this topic, the company now faces a transition with a relatively new private equity owner that will seek a targeted return on an investment after a five to seven-year period—undoubtedly, via a future M&A transaction to perhaps a CRO or other interested and relevant concern. The culture will continue to evolve from that of a relatively new, family-owned and operated venture to a more routinized corporate model as the firm seeks to grow from the $15m-$25m size toward the $50m turnover category. Although they have declared significant revenue growth, they will encounter fierce competition as they strive for the $50 million mark and above. Hence the ongoing evolution into a dynamic, mid-market research center and targeted CRO standardizing processes and nurturing and developing talent for the ongoing transformation of the culture and labor force. Growth is not easy, and the right kind of management must be in place to ensure a holistic and comprehensive plan can be executed effectively.

Private Equity Ownership by Salem Investment Partners

In late 2018 with little fanfare, Spaulding Clinical Research was acquired by Salem Investment Partners (SIP). This kind of transaction typically occurs when the founder seeks to step aside and retire (or in this case, take a less active day-to-day role). This appears to be the case here, although Mr. Spaulding is still involved with the firm to focus on vision and innovation. In many cases, private equity will purchase an asset and then use that asset as the platform to acquire other assets “tuck-ins” for scale and value building. Perhaps SIP is considering this model?

It appears that SIP, based in North Carolina, is working with Spaulding Clinical and leveraging the mid-market model to grow organically and carefully. SIP is currently working with its third and fourth funds, representing a combined committed capital allocation of over $250 million.

Conclusion

With a goal of working with clients (sponsors, FDA) to “take research beyond results”, this small yet growing focused research facility focuses on generating high-quality data while ensuring adherence to the highest standards of safety while adopting the most advanced technologies on behalf of clients for efficiency and effectivity conducting clinical trials. With a private equity owner/partner, the firm should have sufficient operating capital to fuel ongoing organic expansion. A five-year, $5 million contract represents evidence that this quality research center can support the most demanding of clients.