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Allergan alumni launch FDA compliance firm

By   /   Friday, December 12th, 2014  /   Comments Off on Allergan alumni launch FDA compliance firm

Though the services provided by 123Compliance may not deliver the behemoth employer that could replace Allergan’s big footprint, the company, with 20 employees worldwide, has been growing exponentially.

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The exit of cosmetic-pharmaceutical juggernaut Allergan from the South Coast dealt a blow to the region’s biotech industry, but some of the left-behind talent is already working on launching a new enterprise.

Though the company’s Goleta facility has yet to close officially, a group of former employees in Allergan’s product surveillance department has founded the startup 123Compliance in Santa Barbara. The company’s niche focus is helping companies ensure drugs remain compliant with the U.S. Food and Drug Administration, once research has moved on to a new area.

Though the services provided by 123Compliance may not deliver the behemoth employer that could replace Allergan’s big footprint, the company, with 20 employees worldwide, has been growing exponentially. Its game plan, which combines existing software with IT savvy, hints at another path for the region in building successful niche companies.

The team behind 123Compliance, Plarent Ymeri and Rosalind Beasley, began growing the company three years ago while still working at Allergan. Both have since moved on to helm the new company, which now has offices and clients across the globe.

Ymeri, the company’s CEO, came to Allergan via Minnesota specifically to work for Beasley in the Goleta location’s product surveillance department. Beasley, meanwhile, spent nearly her entire career in IT and the last three years specifically in the life sciences, primarily as a consultant.

The pair quickly developed a strong working relationship and, despite both being fairly recent transplants, decided to plant business roots on the South Coast outside the confines of Allergan.

“It’s one of those things where it’s always the same problem with whatever tool you’re working on and we thought, ‘There’s gotta be a better way to do this,’ ” Ymeri said. He said the biggest challenge in launching the startup has been “growing fast enough and finding the right people.”

“The big thing about it is, there’s this pool of talent right now that didn’t exist before. You just have to find the exact people you’re looking for,” Ymeri said. “We stayed in Santa Barbara looking for these people.”

After shedding all 300 jobs at its Goleta facilities in July as part of cost-cutting measures to ripen the company for acquisition, Botox maker Allergan announced last month that it has agreed to be bought by Actavis for $66 billion. If the deal goes through, it will be the largest ever for Actavis and the third-largest health care deal ever in the United States, according to Standard & Poor’s Capital IQ.

Irvine-based Allergan entered the county in 2005, when it acquired breast implant operations in Goleta with the purchase of Inamed. The facility is now a bare-bones operation, with many of its remaining staff working from home this month.

Allergan spokesperson Bonnie Jacobs said the company could not provide “any updates on timing or number of transfers given [the Goleta location] is now part of the broader Actavis acquisition.”

Left in limbo, Ymeri and Beasley found another way to monetize their specialized expertise. “We could see that the work we used to do before was different,” Ymeri said. “But it wasn’t about Allergan for us. There was a problem that needed to be solved, and we were able to go out and do it.”

123Compliance specializes in ensuring medical companies’ products achieve continuing U.S. Food & Drug Administration compliance once research efforts are diverted to the next generation of development.

“The FDA says, ‘Okay, I’ll let you sell the product, but we need to keep track of what’s happening with the product after it’s been approved. These are the rules you need to follow internally, and when we ask you, show me how you follow that,’ ” Ymeri explained. “So our software takes part of it that shows how these companies followed that.”

So far, the company has 20 employees internationally, including five Allergan alumni at its Santa Barbara headquarters, and services more than 20 accounts.

Its services run $10,000 annually for small companies and $50,000 for growth companies. The budget for larger projects is determined on a case-by-case basis.

Ymeri said 123Compliance grew between 600 and 700 percent over the last year, and though contractual agreements bar the company from disclosing specific clients, they said its range of small- and large-scale companies includes some of the five largest pharmaceutical and medical device firms.

“I think what surprised us the most, from the very beginning, was that it was the large ones that were reaching out to us,” 123Compliance President Beasley said. “We weren’t calling them, they were reaching out to us.”

Since compliance officers are closely involved in the drug monitor process, one of 123Compliance’s selling points is the extensive industry knowledge the group carries. “These companies don’t have to teach us about their business. We know exactly what to do from day one, and I think that’s what makes us unique,” Beasley said. “Others have to come and spend months trying to figure out what these companies do; we walk in and we’re hitting the ground running.”

But according to Beasley, the firm has gained a competitive edge so quickly largely thanks to its platform’s use of cloud hosting, a first for a medical compliance consultancy.

“All these other applications [on the market] run on servers within their organization, and they hire legions of people to support the hardware and software,” Beasley said. “Whereas we’re saying, ‘We don’t need legions of people to support this thing, it’s just there. It just works and it meets the requirements.’ That’s a big difference for them, and something we’re doing that no one else is doing.”

123Compliance chose to use cloud-hosting giant Salesforce as the foundation of its product. Since the company’s program is simply run by installing an app on the trusted third-party host, 123Compliance can augment operating revenue with savings on research and development, Beasley said.

“I think one of the big things that makes us stand out is that the other plays can’t inject the amount of revenue that Salesforce does into their R&D. We’re talking less than $100 million versus $6 billion,” she said. “We have that engine, so there’s no way that they could innovate at the same speed.”

And since Salesforce handles the site’s sales and customer service, 123Compliance has been able get off the ground with less in-house manpower, achieving greater growth margins.

“The platform has all the baseline functionality, which we don’t have to invest in,” Ymeri said. “As a business, the biggest thing that we’ve always considered is functionality. So that allows us to sort of bring more functionality to the software.”

Ymeri said while most other companies also use a proprietary application, these systems rely on out-of-date server and database connectivity. “All the tools these other companies use have been in place, but we don’t think they cut it. We had trouble working with them,” Ymeri said. “So that’s why, on top of us bringing the knowledge, we also bring the product.”

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