Innovation Pharmaceuticals Inc (IPIX)

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Miseta: Are cost overruns and change orders a challenge for you?

Smith: Yes and I think that is primarily due to two things. First, there are times when we are forced to change or amend the protocol or add patients. Obviously that will result in a legitimate change order. It is not a problem and I am happy to pay for it. But I have been involved in projects with CROs where we seem to be paying for project management, and those charges can be really steep.

I have seen CROs submit change orders for things such as sending a memo to a site. Something came up, they had to let the sites know, and they submitted a change order as a result. To me, that is simply project management. It’s ridiculous to think a sponsor should pay you extra for having to send out a memo. Situations like that make me feel like I’m being nickel and dimed.

Here is another situation that came up recently: We went to a CRO and asked them to give us a fair per-patient price. We have very aggressive timelines and we wanted to produce a budget that was reasonable and would not require a lot of negotiation. We used the amount provided but still ended up having to negotiate every budget. Overall we were about 30% lower than what the sites ended up agreeing to. That is frustrating because the CRO knows the patients, they know the sites, and they know their costs. We admitted up front we didn’t know and wanted to prepare a fair budget. They should be able to produce a more accurate estimation of costs.

Very INTERESTING Indeed...