Specialist
Former EVP at Icon plc
Agenda
- Developments within the CRO (contract research organisation) space, highlighting clinical research advancements as it pertains to Icon (NASDAQ: ICLR)
- Q3 2022 results and Q4 2022 performance expectations, discussing new business wins, net book-to-bill ratio and closing backlog
- Breadth of clinical research services offered across various therapeutic areas – early-phase clinical development, decentralised and hybrid clinical trials and RWE (real-world evidence), among others
- Icon’s competitive positioning relative to alternative CRO conglomerates post acquisition of PRA Health Sciences
- 6-12-month company outlook, highlighting near-term technological and ancillary growth opportunities
Questions
1.
What major developments have you been tracking in the CRO [contract research organisation] and outsourcing pharma space as it pertains to Icon? What has changed since our last Forum Interview [see Icon – CRO Competitive Positioning & Q3 2022 Outlook – 22 June 2022]? What factors would you chalk up to the company’s success or stagnation?
2.
What headwinds could potentially impact Icon? You mentioned difficult macroeconomic situations such as the biotech funding slowdown. Would you say the company has been able to progress steadily despite this?
3.
You said Icon’s book-to-bill looks pretty good – Q3 2022 average was approximately 1.21x with a reported closing backlog of USD 20.2bn. What has driven this growth and what are your expectations for the company’s Q4 2022 performance? What discrepancies might indicate a hindrance?
4.
How big a risk is it for customers to potentially walk away given the new Icon and PRA Health Sciences combined entity?
5.
Syneos had an abysmal Q3 2022 with decreased revenue and a large decline in book-to-bill ratio. Do you think this is an indication of where the CRO industry is headed? Could Icon potentially follow suit or is this a one-off for Syneos?
6.
Has Icon been able to significantly move its market share after acquiring PRA, either from a revenue or service offerings standpoint? You were extremely positive about this PRA deal really strengthening Icon’s positioning in the FSP [Functional Service Provision] space. How has that evolved over the past couple of months in its fruition?
7.
What do you think is the play with FSP given Icon isn’t providing everything and it is a less-profitable segment overall? How do you expect the company to drive more profit margins in this? How sustainable is the model?
8.
Do you expect a degree of segment saturation and potentially becoming a commoditised model for a lot of companies to adopt? What is the outlook given the spend for this kind of acquisition?
9.
In the January 2023 JPMorgan conference, Icon claimed to be on track for USD 100m in revenue synergies exiting 2024, and has accelerated cost synergy realisation with a total USD 150m target realised in 2023. Do you share the company’s confidence in achieving these goals?
10.
Sales and contract closures are post-merger metrics worth noting, as you mentioned, with customer uptake and so on. Do you think there has been a significant uptake in new business wins for Icon after the PRA acquisition? You said we are starting to see a slight jump now. Do you think there would be challenges with getting more customers on board?
11.
Icon’s portfolio seems to have shifted to more of a biotech focus from larger sponsors after the PRA acquisition. Could this expose the company to risk given other companies are IPOing too early and not receiving sufficient funding? What is your outlook here?
12.
What is your outlook for Icon partnering or merging with another CRO conglomerate down the line? Syneos has been an acquisition target for the past year because of its recent financial downturn, or maybe another preclinical research organisation. What are your overall M&A expectations? Has there been enough time for Icon to digest the PRA deal and start shopping for other tuck-ins or acquisitions?
13.
What tuck-ins would make sense given that focusing on one big one seems unlikely?
14.
What is your updated overview of Icon’s competitive landscape? Everyone is hitting the same dead ends, as you said in June 2022. How has the company differentiated itself in global reach, therapeutic specialty and breadth of services? Which players should it be worried about?
15.
What do you think of the mid-market CROs at the moment going very fast and taking market share, such as Medpace? Should we expect them to eventually catch up with the larger CROs?
16.
In June 2022, you described Icon’s decision to rebrand as a healthcare intelligence organisation as a marketing ploy. Do you still believe that or has your view changed over time? Has the company surpassed your expectations in that regard?
17.
Do you believe Icon has sufficiently addressed the pain points of clinical trial management and patient recruitment or retention across the patient journey in various clinical trial methodologies? What challenges still need to be overcome to ease site burden as well as patient recruitment? You touched on AI and data analytics – could you elaborate on that?
18.
Do you believe Icon has effectively been able to reorganise sites to be more accepting of hybrid trials? Has the company started to move the needle in this space, at least to a surmountable amount? Has there been a strong impetus to do so?
19.
It’s been noted that Icon is very conservative when it comes to spending and capital preservation. Could this conservatism potentially hinder the company’s growth on the innovation front? If you were to invest in certain measures to improve growth, what would they be in terms of leveraging tactics?
20.
Could you discuss the therapeutic modalities that Icon has been focusing on? You said the company has been doing pretty much the same as everyone else, with a couple of nuances. What operating model has it built when it comes to facilitating the growth of C> [cell and gene therapy] modalities? It seemed to be the leader mid-2022, even ahead of Iqvia.
21.
Do you believe Icon has been able to tick all the boxes in terms of customer KPIs? Premium pricing is one issue that comes up repeatedly. Is the company fairly priced for the quality of services offered or are the high costs of running a clinical trial passed on to customers? How is that received by the customer? Is it a normal price hike?
22.
What 2-3 metrics should investors pay attention to with Q4 2022 results being released in February? What nuances should be made explicit to our clients that might have been overlooked?
23.
Is there anything we overlooked that you would like to highlight about Icon?
