In a recent podcast with Malcolm Lui, BioAgilytix’s President and CEO, Jim Datin, sat down to discuss the exciting trends and projected growth in large molecule development, and how BioAgilytix is growing in kind to support the increased need for specialized bioanalysis to accelerate these innovative therapies to market.
You can listen to the podcast here and read the transcript in its entirety below:
Lui: Welcome to the High Value Sales Show of Eversprint.com. I’m Malcolm Lui, the Managing Member of Eversprint, and today we’re speaking with Jim Datin, the CEO of BioAgilytix, a bioanalytical testing laboratory specializing in large molecule bioanalysis. Welcome to the show, Jim.
Datin: Thank you, Malcolm.
Lui: Jim, you grew your company’s revenue from $10.4 million in 2014 to $35.9 million in 2017, a 245% increase, and in 2018, you hit just under $60 million. Before we talk about how you grew your company so fast, can you briefly share what your company does beyond my quick intro, and how your company differs from the competition?
Datin: Sure, Malcolm. So our focus is to help pharmaceutical and biotech companies get their lifesaving drugs to the marketplace quickly and safely. We’re obsessed with customer satisfaction and helping our customers, particularly in the large molecule bioanalysis space, to get projects like the next cures for cancer, for eye diseases, heart diseases, HIV, and other critical illnesses to the marketplace. We’ve been around for 11 years, and we’re headquartered just outside of Research Triangle Park, North Carolina.
Lui: And can you describe in layman’s terms what your company really does – when you say bioanalytical testing laboratory for large molecule bioanalysis?
Datin: Sure. When you think of the pharmaceutical world, it’s commonly defined as small molecule versus large molecule. Small molecules are older drugs like chemical entities where they would screen different chemical libraries to come up with a drug like aspirin or an antihistamine. Our projects are much more complex. We’re working with living cells, and we’re working to help cure diseases. When you think about a lot of the cures that have come up recently, our focus is on projects like biomarkers, immunogenicity, cell-based assays, and PK. We focus on all different testing modalities to help pharmaceutical and biotech companies work on their projects to help them with the regulatory agencies to help them get their products to the marketplace.
Lui: So when your company does bioanalytical testing, what kind of testing are you doing?
Datin: Well, it varies. We work with projects like biomarkers, immunogenicity, cell-based assays, and PK. When you think of all the large molecule drugs that have come to the market – in fact there were 18 of them approved by the FDA last year – we worked on eight of them, which is pretty amazing. Of the 40% of all the drugs that came out in the marketplace last year, we had some input or help to get those drugs to the marketplace.
Lui: So are you testing for FDA approval, or even before then when they’re developing the drug and you want to test for certain conditions or outcomes? Is that also what you do?
Datin: We’re helping them get their drugs to the marketplace so that they can be approved by a regulatory agency, whether it’s the FDA in the US, the EMEA in Europe, or other regulatory agencies around the world. We’re helping them bring that molecule or compound from prediscovery before it’s in demand, all the way to getting it approved so it can be sold commercially on the marketplace and help save millions of lives.
Lui: Right, and then you said that eight of the 18 drugs that were approved by your company was involved on the testing side of things. Now, is that an indicator of your market share as well that your reach is so broad that you’re working with 40% of the drugs that are in progress right now?
Datin: So we have about a 5% market share, but to my knowledge, we are the fastest-growing company in our industry today. Yet, 40% of all the drugs that were approved came through us, which just shows great momentum in our current business, great confidence by our customers, and great customer satisfaction where they want us to scale and be able to take on more projects for them globally.
Lui: Right. Now Jim, you grew your company’s revenue from $10.4 million in 2014, and then four years later, you’re at $60 million. So you grew six times your revenue during that period. What were the three biggest drivers during that period?
Datin: I think it all comes down to people. We’ve got a world-leading scientific team with strong leadership and renowned scientists that are shaping the biological best practices in the industry. They’re highly sought after, and they’re experts in their fields and in the industry. It’s our motto. We put the customer first; it’s at the top of our pyramid. We’re obsessed with customer satisfaction. We want to find a way that our employees have an amazing experience here, and that their engagement is positive, and it shows in a couple of different ways. One, our retention rate is around 93%, and that is to my knowledge, the best in the industry – very high customer retention rate. It shows when 99% of our customers continue to place work with us year after year and grow year after year. They want us to be able to take on more, and as a result, we’ve had to expand our facilities and expand globally and geographically to be able meet our growing customer demands.
Lui: How much did you say was your retention rate again for your customers?
Datin: It’s just over a 93% retention rate for our employees, and a 99% retention rate for our customers, which to my knowledge, both of those are industry leading.
Lui: I mean 99% is huge, and by retention rate, you’re talking about year after year they work with you?
Datin: That’s correct.
Lui: That’s a huge retention rate.
Datin: And not only do they continue working with us, but they continue growing and steadily giving more work to us, which is a real tribute when customers are happy. They want to place more of their valuable assets with us, and plus, it’s simply all about the science. We try to find the best people in the world that we can hire. Last year alone, we hired over 120 new employees worldwide. In the US, we happened to move people from 11 different states. Today we have employees from over 40 different countries, which I think is a real strength of ours – the diversity that we’re able to find the best scientists and leading industry experts that have a similar culture who want to come work with us and make a real difference in the world.
Lui: Now, when you do your testing, do the drug companies send their products to you to do the testing in your facilities, or do you somehow set things up on their site on site?
Datin: Predominantly, they send it to us; we partner with them. We have our scientist team work with their team. We form a joint plan as to how we go about getting their projects in the marketplace. We’re quite proud that we’ve had multiple rescue projects at our site here. A rescue project is where we will get a project from another lab or contract research organization (CRO). We had 11 of those over the last couple of years. In every case, they have failed to gain regulatory approval, or another CRO could not get it working. We had great success in every one of those cases. We were able to get the project working and get it approved by the regulatory agent.
Lui: Let me recap driver number one then. The first driver is the people. You have a renowned set of experts who are working at your company, and your team is able to provide fantastic service to your customers. Indicators that reflect this is you have a 93% retention rate of your employees, and you have a 99% retention rate of your customers, both as far as you know – and it sounds it probably is the case as well – is well above industry norms. Is that right for your first driver?
Datin: That’s right.
Lui: Ok, great. How about drivers number two and number three behind your sales growth?
Datin: We’ve been fortunate that there’s a lot of external factors driving our growth. There’s been a trend towards large molecule bioanalysis. Twenty years ago, when I left a large pharma company, 1% of the global pipeline was focused on large molecules. Today, that number just exceeded 50%. It’s been growing, and it’s expected to be over 70% in the next five years. The trend is to get a lot more precision medicine, custom therapeutics, and large molecule drugs, and we’re at the forefront of that – clearly one of the world leaders.
The second trend has been the growing demand in outsourcing. A lot of the pharmaceutical and biotechnology companies do not have a team of experts or scientists on staff to do what we do. They’d rather find a partner like us that they can entrust their valuable assets to that they can look to turn up and turn down depending on what the volume or need is. You’ve seen a lot of pharmaceutical biotechnology companies want to outsource what they’re doing to partners like us. We’ve seen the outsourcing trend growth to north of 50% as well. And then finally, as we are inquisitive, we’re looking to acquire other companies in the industry today. We’ve recently been acquired by a large firm in Europe – a private investment firm – that has set aside significant capital for us to expand, and you’ll see us adding additional services and geographical coverage just to be able to support our global customers.
Lui: Now when you said growing demand for outsourcing greater than 50%, are you saying that more than 50% of the direct companies out there have outsourced their bioanalytical testing?
Datin: Yes, and that number has grown substantially. It’s been a double-digit increase year after year the last five years. So think of the large pharmaceutical companies and biotechnology companies as an example – I’ll talk about Cambridge or the Boston area in Massachusetts. There’s over 400 different biotechnology companies there. Many of them are starting up and getting funding from venture capitalists or spin outs from universities or other companies. They’ve got drug targets in mind. They need a company like ours to be able to do the testing for them. It’s not economical for them or wise to spend their money to have those capabilities in house. They’d rather spend their money on research and partner with a company like ours that can get their assets to the marketplace quicker.
Lui: Is the investment to do what you do primarily on the people side, or is it also on the equipment side?
Datin: You know we always say, Malcolm, that our IP is our people. We try to hire the best and brightest people we can find worldwide and bring them in here to help us. So, it really is on the people side. Although, in the last couple of years, we’ve spent millions of dollars every year to upgrade our facilities to add different platforms and equipment to make sure that we have the leading edge technologies to better solve our clients’ toughest challenges.
Lui: When you do work for your clients, how does it work? Is it the same machine and testing tools being used on products, or are you isolating each area and it’s like a space for each of your customers or clients?
Datin: We have over 30 different platforms, leading edge technologies that we can leverage. But at the end of the day, we’re platform agnostic. We really work with our clients on individual solutions to see what platform would be best for them. We leverage those platforms depending on what the outcome is, what the need is,and we customize it to what they’d like to see done and what we think will have the best chance of success. So the equipment is not necessarily dedicated to our customers, but rather, it’s our employees that make the real difference that create the value there.
Lui: When they do testing work for your clients or your customers, is it a full-time job and project for your employees where they’re totally devoted to one of your customers, or is it something that allows them to manage a few different projects with different customers at the same time?
Datin: That’s a great question, Malcolm, and it varies by customer. Today, we are working on over 500 different projects, and we have over 140 different customers in large pharmaceutical/small pharmaceutical/biotech companies around the world. Our employees have some models where they are dedicated solely to one customer, and they focus on everything that that customer needs. We have other ones that are leveraging multiple different customers, but it certainly allows us to carry industry best practices – to know where the client’s current scientific challenges are, where the best practices are, and to have great deep domain knowledge within those areas where we can help companies get their products to the marketplace.
Lui: Right. So for drivers two, three, and four, I have here that you benefit from the trend toward more large molecule bioanalytics – that’s number two. Number three is a growing demand for outsourcing the bioanalysis testing, and number four is that your growth is also related toward acquisitions – that some of your revenue growth came from acquiring other companies. Is that right over the past few years?
Datin: That is right. The only thing I would add to that is, for us, it’s all about the science and the people. We’re dealing with new, exciting drugs where there is no standard cookie-cutter approach. We’re doing research with our customers to better identify issues and collaborating in a scientist-to-scientist approach to determine the best fit. It really comes down to the passion of our team. Many of our employees have had loved ones affected by very serious diseases, and they have a mission in life to try to get a lot of these diseases cured. That leads to the high retention rate that they have here, the high employee engagement, and really wanting to make a real difference in the world of health care today.
Lui: Right, now let’s talk a little bit about these these four drivers that you shared about. Now, 93% employee retention rate, 99% customer retention rate – I mean, has it always been like that from day one, or have you implemented policies, hired smart, hired right, or were there other things that led to that?
Datin: It’s a multipronged answer. Certainly, when we’re hiring, for every 10 resumes we get, we’re bringing one of those people in-house. For every 10 people we bring in-house, we ultimately hire three of them. So, it’s a very thin window. We want to make sure that they have the right culture, that they share that passion for science, passion for meeting customer expectations, and that their culture is similar to ours. It’s not just a factory where you’re trying to grind things out for us. It really is a culture of wanting to make sure the customer is happy, wanting to make sure you’re aligned, and finding the right person. When we’ve got them on board, we then want to make sure that we’re performing at industry best practices, and that’s highly regulated in our industry in terms of data, what you do, and how you do it. The bigger issue is just a real commitment from our employees to make sure that they can meet our customer expectations.
Lui: Is there a company compensation structure that encourages them to be a long-term participant in your company, like stock options and that sort of thing?
Datin: Yes. Every employee in our company receives a stock option, and that’s very important to us because we’re all shareholders. Every employee in our company is also measured by customer satisfaction. We want to make sure that we’re meeting expectations, whether that’s the pharmaceutical and biotechnology customers, or when we have regulatory agencies in here that we’re complying with on all standards for quality and federal guidelines. From our perspective, it’s very important to make sure that we’re all aligned in achieving customer satisfaction, and that we are maintaining a high level of quality for the regulatory agencies.
Lui: How are you measuring customer satisfaction? Are you doing surveys on a regular basis with your customers?
Datin: We do. We do two things. Every quarter, we send out a four-question survey to our customers just asking how happy they were, any feedback they have for us, would they recommend us to other clients, etc. That goes out every quarter to all the customers we’ve done projects in, and we have a very high response rate. It ranges between 20% to 35%, which in our industry, is quite good.
Lui: That’s pretty good in all industries – that’s a really high response rate.
Datin: Yeah, I would agree. Once a year, we contract out to an outside agency that does a formal net promoter score, and about a third of our customers last year responded to that, and they placed us in the top quartile of all companies out there for an NPS score in terms of customer satisfaction and quality as compared to the industry.
Lui: What number did you get?
Datin: We received a 42 NPS, which in our industry was the highest.
Lui: Fantastic. What’s the industry average?
Datin: The industry average is in the low 30s. It’s a tough industry because when you think of all the demands for science for a lot of projects that don’t work for meeting tight deadlines – when you think of our company where we have over 500 projects going on at one time and 99% of our customers continue to return to us – it shows that they’re very happy with who we are, what we stand for, and how we support them.
Lui: That’s a big difference as well – 42 versus the low 30s for the industry average.
Datin: Yes it is, and we’re happy with that. Metrics are important to us. We want to make sure that we start projects on time, that we finish projects on time, that we’re communicating well with our clients throughout the process, that we’re collaboratively working with them, and sharing ideas when issues come up. This is science – you can’t predict that. We have open dialogues, we brainstorm, we work with them, and the goal is to ultimately help patients get these lifesaving drugs by getting them to the marketplace quicker. We are approaching 300 employees today globally. I mentioned we hired just over a hundred and twenty employees last year. Some of our employees today wouldn’t be here if it were not for the medicines that we help put on the marketplace the last several years, so we’re highly committed to improving the world health care.
Lui: Fantastic. For number two, the trend toward large molecule bioanalytic testing – forgive me if I’m getting the terminology wrong here -how long do you see that trend continuing?
Datin: Well, the trend has been strong. As I mentioned, 20 years ago, it was less than 2% of the global pipeline, and last year it just crossed over 50%. Frost and Sullivan estimate that in the next five years, it will be over 70%. We see precision medicine, custom therapeutics, the trend towards living cells, and biologics being a very strong trend that will continue. In that way, you’re not spending unnecessary money on people taking drugs that they don’t need. There have been several cases where people are taking oncology drugs where they’re not effective, and it only works for a subsegment of the population. If we can help our customers find out who those drugs will most benefit from, and have them customized for each patient, it will take cost out of the health care system as well.
Lui: For driver number three, the demand for outsourcing testing, is this something that you see continuing as well, or can you imagine a scenario where companies might want to bring it back in-house?
Datin: You know, everything is cyclical. There are trends, but this is one just from a cost perspective that shows it’s a lot more efficient to partner with a company like BioAgilytix since we have different resources. When you’re working with over a 140 customers, sometimes they need your services, sometimes they don’t, but it would be highly inefficient for them to maintain a team of dedicated people to be able to do this all the time. In many cases, they wouldn’t have the expertise that we have. We have deep domains within these therapeutic areas that we can provide the expertise on, and so from our perspective, we see that trend continuing and even growing to be the industry norm – that you outsource services like ours in the future.
Lui: Now is it possible for a company to outsource this sort of work to another company that’s on the other side of the globe?
Datin: Yes, it is. Today, we work and receive samples from over 30 countries around the world -the major companies that are focused on outsourcing different drugs. From our perspective, we see a lot of these continuing where we’ll be getting samples from around the world where we’ll be getting projects from different companies. That’s why we’ve set up a large operation in Europe, and why you’ll see us expanding to other global sites as well to serve our customers.
Lui: Right. Are there any sort of logistical issues, like do you need to be within two days FedEx of your clients to get the materials quickly enough, or can you literally be on the other side of the world when they send you the drugs and tests?
Datin: That’s a great question. It really depends on what you’re testing for. For some different elements of testing, yes, speed is critical and of the essence, and you have to be able to get live samples to be tested. For the majority, there’s great carriers out there that can put these on ice and make sure that they’re within your site within a couple of days so that they can be tested. When you’re dealing with serum and plasma, it makes it a little bit easier. From our perspective, we today have a stronghold in Europe and North America, and you’ll see us expand to other parts of the world to be in service for our global customer requirements.
Lui: For number four, you talked about acquisitions, and earlier in the conversation, you mentioned you have a 5% market share right now. This sounds like a lot of acquisition opportunities for you down the pipe here.
Datin: Yes. We continue to look at different areas. Today, we think we’re one of the leaders in selling gene therapy. You’ve seen a lot of drugs continue to expand in those areas, and you’ll see us acquiring other technologies and companies so that we can support that growing demand. You’ll see us continue to invest in other areas of the globe so that we can support those customers as well. M&A and acquisitions to support our customer needs will be a critical pillar for us moving forward.
Lui: So typically when a company like yours does acquisitions, is it typically the targets are much smaller than you or do you sometimes go after much larger ones and do a merger of sorts?
Datin: We are open to both scenarios. Our first acquisition was for a company called IBM Biotech in Europe. That was a much smaller company that was done in February of 2016, and three years later, it’s grown by over four times within three years. It’s quadrupled its sales, and that’s because we’ve been able to build it a brand new lab. The number of people there has increased by fourfold, they’ve got more capabilities, and there’s high demand for these services in Europe as well.
Lui: Sounds like a really good acquisition.
Datin: It has been, and most importantly, there’s great scientific talent, great people – we’re all aligned, and that’s what makes it work so well. We can work with pharmaceutical companies that sometimes want to have samples done or work done in Europe or the US, and depending what our lead times are to start a project, they can move assets back and forth, which makes it very nice.
Lui: Right. Looking a bit ahead for say 2019 or even 2020, say we have this conversation again one year from today. What has to have happened over the past year for you to be happy with the company’s progress? In particular, what obstacles has your team overcome? What opportunities have they captured? What strengths has your team continued to leverage?
Datin: I think from our perspective, it’s a couple different pillars. The first is employees, and our employees are well-trained and highly motivated. They’re having a great experience here. We’re gonna do great because happy employees will create happy customers. I mentioned that we hired over 120 new employees last year. We expect to hire more than that this year – new employees – to support continued growth, and those are leading edge scientists. They’re people in data review, they’re people in operations. We also have several initiatives that we’re putting in place this year, including going paperless with electronic lab notebooks with new systems, enhancing our automation systems so that we can handle larger sample analysis projects in both Europe and the US, and other different automation projects as well that will allow us to not only handle larger projects, but be much more precise and accurate with the work that we do.
Lui: How about on the marketing and sales front in terms of getting more customers or doing more work with their existing customers?
Datin: We’ve under invested probably in marketing and business development because we’ve put most of our capital into science, the facilities, and people, and so there are opportunities for us to expand our marketing presence. There was a survey conducted four years ago that talked about the leaders in the marketplace, and we see that we’ve got a lot of work to do to increase our marketing presence, or our name recognition, worldwide. You’ll see that be more of an objective for us in the future. Given a choice, we’ve chosen to put more capital into science, people, facilities, and training rather than marketing and business development, but that will evolve over the next couple of years.
Lui: Right. What will be the driver or the tipping point when you decide that it’s time for us to maybe put more resources into marketing and sales?
Datin: Malcolm, we’ve been fortunate that we’ve had such high referrals from our current customers and employees, that we haven’t had to do that as much up until now. But, we have a growing demand from our customers where they want to be managed globally. So, a large pharmaceutical company that has operations all around the world would like one person on our end to better manage those and coordinate everything globally. And so that’s going to be a high priority for us that we focus on moving forward – to be able to have key account managers and directors who can oversee and be intimate with our customers so that we understand what their growing needs are, and what their future requirements will be so that we can be proactive to help support them as well.
Lui: Right. I mean you’re working with, I imagine, the largest global pharmaceutical companies out there, so they probably have a lot of products that you can help them with.
Datin: We work with over the top 25 pharmaceutical and biotech companies worldwide today.
Lui: Earlier you talked about hiring, and you gave me some numbers. You shared that one out of 10 people that come through your front door is brought in for a closer look, and then for every 10 you bring in, you hire three. So pretty much, it’s like a 3% hiring rate – you look at 100 people, you hire three. Does that indicate that you might have a constraint on the hiring side that might be limiting your growth?
Datin: We’ve been fortunate that we’re based here in Research Triangle Park area of North Carolina. It’s a great place to bring employees. I mentioned that we brought people in from 11 different states and two different countries to come work here. People are getting to know about us. There’s high demand – they like the culture that we’ve created. They like the facilities and collaboration with their team members with their customers. And so, we’ve been fortunate that we’ve got a growing demand of people who are willing to relocate here. We’re also fortunate that in our area, we have major universities that we can pull from. Within a short drive of us, there’s USC, University of North Carolina, Wake Forest, Duke University, North Carolina State – there are multiple, great academic institutions that we can recruit from as well. The same is in Europe at our European headquarters in Germany. Our official language of the lab is English, and we have a lot of people that we group that have moved there from all over the world to be part of this culture.
Lui: So hiring is not a problem. You’re still able to hire the sufficient number of quality people to fuel your growth.
Datin: We have an amazing HR team and recruiting team that has been very effective at helping us find the right candidates and bring them in and screen them, and then ultimately help train them. We’ve been fortunate with the leadership we have in the team.
Lui: Three final questions for you. If BioAgilytix were to have a billboard somewhere, whether it be in Europe or in the United States, what would be your billboard message? Keep in mind that people who are driving by a billboard only have about six seconds to read your billboard before they drive by. What would be your punchy billboard message?
Datin: We enable the breakthroughs of tomorrow, today. So, you think of all the scientific breakthroughs that are occurring, the ones that are going to be coming out in the future, we enable those breakthroughs to have a tomorrow to happen today by helping the pharmaceutical and biotech community bring their products to the marketplace safely and quickly.
Lui: Right. That’s a good one. Enable breakthroughs of tomorrow today – all right. Who are your ideal customers, and what’s the best way for them to reach you and your team?
Datin: Pharmaceutical and biotech companies looking to accelerate their large molecule drugs to the marketplace that need accurate quality testing to ensure that their efficacy and safety is in line with stringent industry regulations. Those interested can contact us by phone at 9 1 9 3 8 1 6 0 9 7 or by email at [email protected], or they can go to our website at www.bioagilytix.com. We certainly look forward to working with future pharmaceutical and biotechnology companies.
Lui: Would you mind spelling out BioAgilytix?
Datin: Yes, it’s a mouthful. BioAgilytix came from biology, agility, and analytics. Those three words. It’s B I O A G I L Y T I X.
Lui: Jim, it’s been awesome having you on my show today. I really enjoyed hearing how you grew your company so fast.
Datin: Hey Malcolm, thank you. I enjoyed talking with you and hopefully if we get a chance to talk in the future, we’ll be sharing additional lifesaving medicines that we’ve helped bring to the marketplace, which is what we’re all working for.
Lui: That sounds good. Let’s put that on the topic list when we talk again, perhaps, next year.
Datin: I look forward to it, Malcolm.
Lui: We’ve been speaking with Jim Datin, the CEO of BioAgilytix, about his company’s rapid growth. For interviews with other fast-growing, high-value sales companies, or to learn how we can accelerate your firm’s high-value sales through automation, visit Eversprint.com.