Icon CFO Brendan Brennan said the company achieved “strong gross business winds,” in the third quarter (Q3) of 2018, with net awards in the quarter reaching a new record of $605m.
“With the addition of these new awards, our quarter three 2018 backlog grew to $5.3bn, representing a year-over-year increase of 10.5%,” he explained on the company’s Q3 2018 earnings call last week.
CEO Steve Cutler said Icon continues to see a strong demand for its services, adding that “key growth drivers” remain in place, among which includes robust R&D investment from biopharma.
“Biopharma R&D spending continues to strengthen at an estimated 3% per annum, while increases in the number of trials and outsourcing penetration rates will affect further increases as customers look to improve the productivity and efficiency of their drug development programs,” he explained.
As a result, Cutler said Icon expects the CRO industry to expand by approximately 6% per year over the next four to five years, with market share continuing to shift to larger CROs “that have the global footprint, breadth of services, and patient access necessarily to run increasingly complex global trials.”
- Net business wins in the quarter of $605m, a book to bill of 1.27
- Closing backlog of $5.3bn, an increase of 10.5% year on year
- Reported revenue of $655m
- Reported income from operations was $97.9m, or 15.0% of revenue
- Reported earnings per share of $1.54
Per customer concentration, Icon’s top customer – Pfizer – represented 13.1% of revenue, compared to 16.6% last year. Also this month, Pfizer CEO Ian Read announced that he is stepping down, handing the position to Albert Bourla, effective January 1, 2019. With this, Icon is in discussions about any change in strategy, explained Cutler.
Additionally, Pfizer recently announced layoffs, which could be an opportunity, he added. Icon’s master service agreement (MSA) with Pfizer is in place until the middle to next year. There is an opportunity to extend the agreement and discussions are in the “very, very early” stages, said Cutler.
Strategies for patient recruitment and partnerships
To meet demand, Icon will continue to focus on partnerships such as with TriNetX, EHR4CR, and Practice Fusion. These partnerships provide the company with data access to improve patient recruitment – the strategy for which is threefold, said Cutler.
In addition to technology and analytics, the first component of this strategy, the second involved Icon’s integrated PMG site network. Cutler explained, “These sites have dedicated trial support teams and their own patient databases to help maximize recruitment.”
Within this network, there has been a 60% increase in the number of patients recruited over the past year and growth is expected to continue as Icon looks to expand the network.
“Finally, our patient recruitment services team uses traditional and non-traditional digital methods such as advertising in social media to attract patients to our trials,” added Cutler.
Icon’s partnership focus also encompasses mobile or wearable technology to enable virtual clinical trial capabilities, he explained.
Cutler said, “Mobile health blends seamlessly into the goals of Icon’s data strategy to provide patient-centric convenience and care that can improve patient retention, while giving access to large volumes of real world data for the trial.”
As part of this, Icon’s partnered with Intel to gain access to the company’s AI-driven technology to enable remote patient monitoring and continues data capture.
The ICONIK Informatics Hub, which integrates a range of technologies and data sources, also plays a role in the company’s data strategy.
Global opportunities and challenges
Cutler said the company has been “looking hard” at a number of assets over the year, addressing the potential for acquisitions.
“We recognize there is an opportunity there,” he said. “We want to make sure we deploy that capital in a way that obviously adds clear value, but we’re not going to pay crazy prices for assets that we’d like.”
In China, Icon has grown approximately 50% over the last year. The country represents a significant opportunity, Cutler said, as the Chinese FDA has been making several regulatory changes as of late.
“We’re seeing significant opportunities for growth and we’ve been recruiting very actively [in China],” he explained, noting that hiring challenges exist globally.
Icon has graduate programs in Japan to address these challenges and is making “very significant investments in new graduates in both those parts of the world to bring in new people.”
Regarding Brexit, Cutler stressed the global nature of the industry. “We don’t tend to look at European pharma as a separate segment, we tend to look at pharma as a global industry,” he explained.
“We’ve looked at our business, we don’t see any material change in terms of the number of clinical trials being set up or being started over the last 12 months in the UK,” added Cutler. Though the movement of clinical trial materials may be affected.
“But at the end of the day, if the UK steps out of the European Union ... even if it crashes out of European Union ... it would become another country within which we do a clinical trial,” he added.