Darshan: Hey, everyone. Welcome to another episode of Darshan Talks. We have a special guest. We have Dan Sfera. He is the clinical trials guru. I've known him for, I want to say over 10 years at this point, and we've been on his podcast several times and I figured it's time to return the favor.
Narrator: This is the Darshan Talks podcast. Regulatory guy, irregular podcast with host Darshan Kulkarni. You can find the show on Twitter @darshantalks or the show's website at darshantalks.com.
Darshan: How are you Dan?
Dan: I'm good. How are you?
Darshan: Good. So before we get started, Dan, do you want to introduce yourself, because I'm sure I didn't do enough justice. The many, many-
Dan: I think it's fine, man. People have Google [inaudible 00:00:44] like a dance fair. I've been doing clinical research stuff for 10 years on YouTube and podcast. The site level sponsors hero. So everything lately we've been getting into some biotech stuff, some of the stuff in the news I've been covering lately. I found a new way to hack the YouTube algorithm. So I've been getting more discovery. We can talk about that off air Darshan, because it's been working well for me.
Darshan: Oh, we definitely got to talk about that. That sounds interesting. But we have a really interesting topic to get us started and that is going to be talking about SMOs. It's one of those topics that people love, people hate and people sometimes love and hate. So let's start from the beginning, Dan. What's your take on SMOs?
Dan: So site management organizations, for those that don't know, basically it's the closest thing to a franchise model you can haves in research, I think. They got really popular in the late '90s in the research space. I got involved in research full-time in the early 2000s. So '05. And I remember SMOs were already mature by the time I entered the industry. So I go back and look, mid to late '90s they were starting to become a thing. And basically it's the model is, I have nothing against the model and actually I have nothing against SMOs themselves, but they do have a negative connotation to them. And that's starting to change a little bit, I think, in the last several years, but basically, mid 2010s, it was a bad word to say that you were an SMO.
If you're a site, and I still advise my sites to not advertise themselves as SMOs. And I tell them, look, there's nothing wrong with their business model, but the way they're perceived, at least the way they were perceived in the industry was all about fast cash and let's not pay attention to quality. And that really killed them, the first wave of the SMOs, probably before 2010. So right around mid 2000s. I don't think they lasted that long. They lasted from the mid '90s to the mid 2000s. And then a bunch of them went bankrupt because sponsors just stopped using them. They found problems with them. If the FDA would audit one of the sites and then they realized the sponsor's using 20 sites from this SMO, they basically invalidated the entire study from the sponsor. So now sponsors actually ask on the surveys, is your site affiliated with an SMO.
And inexperienced sites do not answer that. In my opinion, that's a negative thing. They're trying to trap you there. So you don't want to be part of an SMO. You can create an SMO in the background, but don't call it an SMO. The smart ones now are calling it site networks. And even though it's almost the same business model, SMOs, again, nothing wrong with the business model. I think it's good. I think the way they were run in the late '90s, early 2000s basically ruined the opportunity for anyone else who wants to start an SMO. And you have people that want to start at SMOs all the time because they see it as a quick way to make money. It's generally a bad idea to get into becoming an SMO if you don't know what you're doing at the site level.
Darshan: So you raise several questions there, Dan. The first thing that you mentioned is it's the closest way to become a franchise. So my question for you is, I know you are very well-placed and you'll often talk to people. Have you actually looked into that? Because I would have thought you could do a separate franchise model itself.
Dan: I'm talking to someone now about doing this. It's possible to do, I'm not ready to do this. You need to invest in an infrastructure and it has to be very tech heavy, as far as tracking everything, all metrics. Of course, the revenues and all that-
Darshan: [crosstalk 00:04:47] for a SMO?
Dan: I would say for both, for the franchise. I'm looking into the franchising model now, just because I have the bandwidth with the inflow of leading. But I'm going to take it easy on that, because you really have to have the infrastructure down as far as track... Obviously the studies that are coming through, you don't want to not count the studies that you're bringing in for your sites. But also everything else, like quality, like how quickly are they entering data, all those metrics that sponsors track, to do it right, in my opinion, you need to invest in this infrastructure and we're just not ready for that.
Darshan: Fair enough. Is there anyone else who's actually done a true franchise as far as you're aware?
Dan: If they have, I'm not aware. Wen I go to conferences, remember when we used to go to conferences Darshan?
Darshan: [inaudible 00:00:05:43].
Dan: [inaudible 00:05:43] Yeah. Back in the day we used to get on a plane and go to conferences. Miss those days. But yeah, I would walk around the exhibit hall and all the big sites are there, they're not doing franchising. And the last one I went to was interesting. It was DIA in San Diego last year, 2019, and they're doing site networks. And what they have is an alliance of really big sites. And basically they are able to negotiate better budgets themselves. And so that's the closest thing I've seen. They didn't get into detail as to whether they share revenue. I'm sure they have something going on in those regards, but you have to be a member of their alliance to be privy to that. And they probably wouldn't let you talk about it on Darshan's podcast.
Darshan: I actually represent a few SMOs and there are different models out there. Each one has its pros and cons. Some look at, do we want to actually, if pay versus pay when paid. Do you know the difference between the two?
Dan: So you're talking about the SMO, the corporate, when they need to pay the doctor?
Dan: Yeah. Yeah. So there's two. You're exactly right. I didn't know that's what it's called, but essentially you can prepay your doctor or you can pay them hourly. Or if they're a partner, you could pay them just profit sharing, like all the other partners get. But yeah, I know the concept. You either pay as you get paid from the sponsor or you pay them beforehand and then you take a little bit extra for yourself because of that risk that you're doing.
Darshan: And there's actually a third option, which is if you never get paid, you never pay out. So there's that. If paid, when paid. And different states look at that differently. So you've got to look at your contracts.
Dan: You know what? Those parts of if you get paid, I've heard horror stories, but I've been in this industry since '05 as a entrepreneur. And I've never not gotten paid from a sponsor, even the smaller ones. Maybe I just got lucky, but I have heard stories of when they go bankrupt, you got to be careful with the small biotechs. But I actually haven't experienced that. So is that actually a real problem?
Darshan: Oh yeah, for sure. Because think about it this way. The SMO is getting paid from the CRO. I actually had a client who did not get paid by a sponsor who went out. And I've had situations where the CRO said, "The sponsor hasn't replenished our money, so we can't pay you yet." So it all comes down to how you set up the contract and you'd need to read the language to make sure not only is it okay for you, but it's actually legal. So you'll often find these situations where certain states will say, "It's illegal to set up a pay if paid contract." So that would show up on a federal law, but just keep your eye out for that.
Dan: That's interesting. Actually that I think of it now, you're an attorney, you deal with these things. So you're called in only for those problem cases really, right?
Darshan: Not necessarily I get sometimes called in because they just don't want to deal with contracts. I'll have CROs and SMOs sometimes call me and go look, I'm interested in the budgeting. I'm interested in the actual overseeing of work. Can you just take care of the contracting? So we'll set up some times where either it's per contract or per hour or something else, where I just get paid overall, or a monthly retainer or the like, and that saves them a lot of headaches and a lot of issues.
Dan: I got you.
Darshan: So the other version I've heard, and this is coming up again with certain SMOs, is the data hungriness, have you dealt with that yet?
Dan: So as far as the SMO wanting to get, yes, as far as getting the access to the EMRs from the sites?
Darshan: Not only access to the EMR. Who owns the data that comes out of that EMR? Is it the site, is it the SMO? Is it the CRO, which can then give it onto the sponsor itself?
Dan: Yeah. I haven't dealt with that because the sites I use, again, I'm not doing SMO. So I haven't dealt with that. And the clients that we work with, we don't get access to their data. But I do know that's where the future of the industry is headed is that data. That patient database and those EMRs and everything that that tracks. And now when you integrate research into it, the question becomes well, what's research and what is standard of care, who gets what. Basically, who's going to take the responsibility to separate the two, because they're going into this database? The database could care less if it's a researcher or private practice. It's just the data that it stores. This is going to get complicated. I have actually met several companies that are hired. You want some juicy news there, Darshan.
So at DIA, check this out, I went, I was walking the booths. That was the last conference I went to, that's why I keep talking about it. So I was walking the floor and I've run into all these virtual trial companies. And I'm curious, so I'm like, "Okay, what is this? What does this actually mean?" Because that could mean a whole bunch of things. So what does this actually mean? Well, in these vendors' cases, there was two or three of them there that I talked to. They basically are hired and they're financed by the way, by big CROs, which we won't mention, but they're big. So you have five guesses and you'll get one right. They finance them. And then they go out there and they go to doctor's offices and they tell them, "Hey, you want to participate in a virtual trial? We'll give you three grand." I think it was somewhere between three to five grand. "You participate in this virtual trial." And I'm using air quotes when I say participate, because what they're doing is they're just accessing their database in perpetuity.
And so they're saying the virtual trial is they're doing retrospective reviews whenever a sponsor comes to them. It could be in 10 years and say, "Hey, we want to do a retrospective study. How many sites do you have in your network?" And they have all these sites that they've basically bought and siphoned access to. It's a little shady in my opinion. But this is what's happening. And big CROs are funding this, but they're not putting their name on there. And he wasn't supposed to tell me that, but we talked and it came out who their biggest funder was.
Darshan: That's crazy.
Dan: So this is where the industry is headed.
Darshan: I think that's going to be a huge play. The problem is that when you start dealing with national and international laws, whether you're talking about CCPA, or you're talking about Nevada's upcoming law, Maine and New York have laws coming up. Or even, I think it's called [CIPRA 00:12:43], which is the new law that California is talking about. Or if you go into a global level, you start talking of GDPR. The big question becomes, can you actually access that data? And can you use it the way you think you can use it? And then more appropriately, if you have all of those things figured out. With CIPRA, you may actually have to land up paying the people anyways. So those become real questions. The big thing GDPR did was it forced people to go, you can't just willy nilly hold data. You've got to say, "I'm going to hold your data for X amount of time until we need to delete it. And then we'll delete it at this time." So that's going to be a huge problem for companies that just hold data for no good reason.
Dan: But wasn't there always loopholes for research?
Darshan: There weren't loopholes in research. So for example, HIPAA says that there are certain exceptions for research, but they aren't as big as people think they are. So you can just hold data because you want it. And even in the case of research, you may still withdraw your consent. So things to think about. You're obviously a guy who's been part of the industry a long time. My question to you is, what would convince you to be part of an SMO?
Dan: What would convince me to be part of an SMO? Nothing. I would want to be the SMO once it comes back into favor with sponsors, but to be. I think the advantage of joining an SMO is mainly for clinicians who don't want to do the heavy lifting, and they just want to treat patients. They want to do research, but they don't want to do any of the business stuff. And I think that's the main advantage to joining an SMO. If you are an entrepreneur, I don't know if there's much advantage for you to join, because you still have to deal with you [inaudible 00:00:14:37]. And so basically now you have the SMO doing what's supposed to be your job and you're getting squeezed somewhere because you're going to ultimately have to pay the doctor what's fair. So for me personally, there'd be no incentive to join an SMO if I were a clinician. I had very bad grades, couldn't get into med school, so we'll never learn that alternative reality. But if I were a clinician, there would be an interest in me joining an SMO, but not as entrepreneur.
Darshan: Okay. But here's my question for you. In this specific scenario, sorry, I'm getting a whole bunch of LinkedIn messages as we-
Dan: You're a busy guy, man. We're in a group on LinkedIn and that group's been going crazy.
Darshan: But here's my question. One of the things you said that you, you do very, very well is that you get leads. But let's say you were the guy who goes, you know what, I don't want to deal with doctors. I just have a great bunch of leads. What I'd like to be able to do is connect with the right SMO to manage it, connect with the right doctors who want to execute on it, and therefore all I'm doing is providing leads and I'm middleman. Is that a value?
Dan: Me providing the leads and then having my doctors join the SMOs? Is that what you're saying?
Dan: So, here's why. Typically you're going to end up paying your doctor, your PI. Up to 30% of the study budget, from my experiences, give or take. If you're using their office and their infrastructure maybe even more, maybe even as high as 50%. When you're starting them out, it's closer to 10% because there's a lot more handholding. So if I'm getting the leads and I'm sending them to a corporate entity that's going to take care of all the other stuff, who's going to have to pay that doctor? I've just become, basically what I'm already doing without needing to work with SMOs. To answer your question, we actually are, we have some clients that are SMOs that are paying us a monthly fee to get them leads. So technically I'm doing it, but I'd do that for anybody. It doesn't necessarily have to be an SMO.
Darshan: Interesting. So what you're saying is... I guess what I'm exploring is what are the different permutations and combinations to it? So talk to us a little bit about how do you find SMOs or anyone else the right leads? It's obviously one is because you are a brand name and you've been doing this for so many years and people trust you. Where do you actually find it? You mentioned YouTube earlier as well. So talk to me a little bit further about that.
Dan: Okay. So there's different leads. There's eLeads for study opportunities, which we get internally. We have a team of BizDev people that basically scour clinical trials.gov, use Zyme wire, network, build relationships. We're building more alliances with sponsors, too. There's a big project. Fingers crossed, Darshan, I'm going to learn this week whether we get that or not. I got to talk to you about that off air. So that's the leads as far as study leads.
As far as the leads from people watching YouTube or listening to the podcast that want to start their own sites, yeah, I get, I get plenty of those leads too, and I don't need a biz-dev team for that. They just reach out. And so they usually reach out and say, "Hey, I'm a doctor or I know a doctor. We want to start a research clinic in wherever, Houston, Texas. We want to start a research site. How do you work?"
And we tell them, "Well, we find you studies, you pay us a monthly fee. It's 1,200 bucks a month. We get studies for you. We don't guarantee you anything, but we apply. You see every week, what we've applied for you for. Once you get the studies, we negotiate your budgets for you. We help you with you creating your source, your SOPs, basically anything, it's just a flat fee. We don't take any percentage or anything." So that's the consulting side of the business.
And then we have to service those clients by actually getting them. So now we're talking about leads. I'm talking about study leads now. So there's two different leads that we generate. Either the clients that come in to me to become clients of my consulting group or the sponsors and CROs, the leads that they send for study opportunities.
Darshan: Interesting. So how did you find the right mix of ways of getting leads do you think? Was it just your experience or you hit the wrong places?
Dan: Study leads, you mean like study opportunities?
Darshan: Yes, study leads.
Dan: The study leads came from the own clinics that we have and run. Things I have done. I don't do biz-dev anymore, but when I was doing it, I basically wrote manuals. I wrote SOP. This is how you go on clinical trials.gov. This is how you try to find the contact. This is how you go on LinkedIn and try to network with them. This is how you network with other sites when you can't find the contact. So over time you build this system of getting leads. And we're lucky, in the 2019, 2020, it's been a very busy year. It's a very site friendly year for leads. There have been years like 2009, 2012, 2013, where it was not site friendly. It was sponsor friendly as far as the leverage was all theirs, as far as budgets and who they could be selective of.
I just put a quote on Instagram, it's never been a better time to be a research naive physician. If you're looking to get into research, it's never been a better time than right now. Never. The study supply is way too crazy, way too high, and there's not enough sites. And there's nowhere near enough patients to enroll into all these studies. And especially when you put in COVID studies into the mix. It's just tons of studies. So they industry needs research naive physicians. And so I think a lot of doctors are seeing this too, because a lot of the private practices are having to go lower capacity with COVID. And so they're looking at ways to generate additional revenue and they stumble across a YouTube video, or maybe a colleague tells them to look into research. And now they want to do research, too. So it's never been a better time to be research naive physician than now.
Now you can get in. Sponsors are less picky about who they're going to bring on because it's supply and demand. And by the time the study supply shifts into the other direction, you're going to no longer be research naive. So it's the best time to get in now. And I don't know if that answers your question, but that's basically... The leads take care of themselves on that end for the clients. And on the study side, the leads also are right now taking care of themselves because there's more studies than there are sites able to do them.
Darshan: So that really raises the next question. If I was starting a new study or if I was a new physician, how do I reach you to find out more?
Dan: Just you can email me Dan, at theclinicaltrialsguru.com, or you can text me, (949) 415-6256. And we'll get a conference call set up ASAP, Usually in a few days and get you started if that's what you need. And a lot of doctors are surprised when they find out there's not that many requirements needed to be a research investigator. If you have a private practice, if you have an office, you already have 80% of what you're ever going to need. You may just be missing a refrigerated centrifuge, for example, or a refrigerator to store your investigational product that's needs to be refrigerated. It's simple things. They think it's so complicated. It's really not.
You need to get your CLIA in order, you got to get GCP training. You got to find a coordinator. A lot of the costs are going to be on the human resource side. Obviously the study coordinator, they don't grow on trees. So you got to either find a good one or cultivate one yourself, develop one internally. And that's where our CRC Academy comes in too. We'll help you. Every doctor has that one person that has potential. These private practices, their front desk people, some of them are amazing. They have potential. They just don't know the first thing about research because they've never done a research, but if you put them through a program like CRC Academy and they already know how to draw blood and take vitals and all that stuff, they make a perfect coordinator. So that's been the experiences we've had with these physicians. It's really not that complicated to get your first research study.
Darshan: Perfect, Dan. This was awesome having you on. I'm glad we flipped roles. We're probably going to end up doing one for you as well. So you guys should stay tuned. And you can always subscribe to Dan. Dan, where do you normally put up your podcasts and your YouTube videos?
Dan: YouTube is youtube.com/in Dan's cipra. And then the podcast is everywhere where you like podcasts, Random Musings from the Clinical Trials Guru.
Darshan: Awesome. Thanks everyone. Thanks, Dan.
Dan: Thank you.
Narrator: This is the Darshan Talks podcast. Regulatory guy, irregular podcast with host Darshan Kulkarni. You can find the show on Twitter @darshantalks or the show's website at darshantalks.com.