Raises $24M for “Pharma Markets” that Outsource R&D

Xconomy San Diego — 

San Diego’s set out in 2006 to disrupt part of the pharmaceutical business by providing an Amazon-like approach to the business of hiring contract research organizations (CROs). The company, which operates a network of online markets for outsourcing biomedical research services and supplies, has raised $24 million in a new round of venture funding.

Founding CEO Kevin Lustig said will use the additional cash to expand its operations. In particular, he wants to sign up more pharmaceutical companies to use the Web-based platform, which enables CROs to bid on pharma research projects and automates the contracting process.

Lustig argued in a recent interview that the offers a way “to solve the fundamental problem facing the pharmaceutical industry, which is trying to do more with less.” By commoditizing drug R&D services in the same way as Amazon, Airbnb, and Uber, Lustig contends that can dramatically accelerate a pharmaceutical company’s drug development cycle and substantially reduce costs.

A cell biologist by training, Lustig has lived on the West Coast for decades. But he grew up in New York and went to college in Boston, and sometimes reveals his New Yawker roots by making it hard to tell whether he is talking about “farmers’ markets” or “pharma’s markets.”

“What can do is really transform the pre-clinical process of getting a drug to market,” he said. Through improved operational efficiencies, Lustig said the process of finding and qualifying a vendor, negotiating a contract, and getting it set up for billings and payments can be reduced from 60 days to 10—and “you can get to clinical stage on a tenth of the money.”

Boston’s Leerink Transformation Partners and 5AM Ventures led the Series C round, according to a statement from the company. Bootstrap Ventures, the Heritage Provider Network, and Hollywood producer Jack Giarraputo also invested in the new round, which brings total funding for the company to $31 million since it began in 2006 as Assay Depot. (Lustig changed the name to last June.)

“We are a matchmaker,” Lustig said. “We make it easy for a scientist to have an idea, and then to translate that idea into experimental results.” With the new cash, the company plans to add 10 to 15 employees, mostly to expand what he calls the company’s “concierge service,” which helps users and pharmaceutical partners select suppliers, ensure that suppliers respond, and troubleshoot problems that arise. currently has 40 people, including 10 consultants.

Kevin Lustig generates most of its revenue from pre-clinical research projects, Lustig said. But the company is moving increasingly into clinical studies, matching scientists with CROs that can meet industry (and regulatory) requirements for good laboratory practices and real world evidence, for example, in biomarker analyses of samples from human clinical trials. The company’s menu lists 3,626 research services, including studies for drug-drug interactions and cytotoxicity, CRISPR gene-editing, cancer xenografts, and in vivo pharmacokinetics.

With the additional capital, Lustig said the company also will be able to extend its online offerings into adjacent biotech industries, including crop sciences, animal health, cosmetic testing, and consumer health.

He said he also plans to use the new venture capital to “complete the land grab, and get other pharmas on board.”

In recent years, has signed multi-year partnership deals to create and host private online marketplaces for 12 of the 25 biggest pharmaceutical companies—including Pfizer, Novartis, AstraZeneca, Bayer, Takeda, and Bristol-Myers Squibb.

Operating private networks for pharma partners as a Web-based service enables the to accommodate a recent industry trend among pharmaceutical companies for working more-or-less exclusively with select groups of “preferred providers” of supplies and services. Scientist also operates a shared biotech marketplace called CREX, the collarborative research exchange, and an online marketplace for the National Institutes of Health.

On the other side of these online markets, Lustig said more than 1,900 commercial suppliers and CROs have joined the network.

Across the entire platform, Lustig said scientists, pharmaceuticals, and institutions spent almost $40 million last year on project contracts with CROs—and he estimates that number will at least double this year. generates revenue by charging a 5 percent commission to the CRO that wins a research project contract. helps pharmas save money, Lustig said, because “we often see a 10x difference between the low price and high price” that CROs submit for listed research projects. For the scientist or institution listing a project, Lustig said, “If you get more than one price quote, you save about 26 percent on average, or about $5,000 on an average order,” he said.