Note: The Skinny blog is written by Rick Smith, editor and co-founder of WRAL Tech Wire and business editor of WRAL.com.

RESEARCH TRIANGLE PARK, N.C. – Management at Cetero Research in Cary say they replaced their chief executive officer, fired six employees (“immediate termination”), and made numerous other changes long before the FDA leveled a barrage of criticism at the life sciences services company earlier this week.

In a Q&A with WRAL Tech Wire, Cetero management defended itself while also pleding to cooperate with the FDA.

1. At your website, you list a change in management that post-dates your internal investigation. Was that change a result of your own probe and the FDA’s as a corrective step? What other steps were taken? Were any employees disciplined or fired?

Cetero diligently pursued a resolution upon learning of these events. The extensive investigation, spanning more than 18 months, involved:

• Immediate termination of six employees who misreported the date and time that samples were extracted, followed by a management reorganization, retraining, enhanced supervision and implementation of unannounced third-party audits.

• The following senior appointments were made after the investigation was launched in June 2009:

o Dr. Troy McCall joined as Chief Executive Officer in January 2010.
o Dr. Roger Hayes joined as President, Bioanalytical Operations in December 2010.
o Mr. James Dixon joined as Senior Vice President, Quality and Compliance in April 2011.

• In addition to personnel changes, process improvement actions have been implemented to ensure that Cetero continues to operate state-of-the-art facilities and practices.

2. Did you have any advance warning that the FDA was going to issue the letter and the announcement? How did you first learn of the news? Were your surprised?

Cetero Research received the Untitled Letter via fax on July 26 with no advance notification. For more than 2 years, Cetero has made requests for a face-to-face meeting to discuss the matter with FDA. The meeting request was not granted until after receipt of this letter.

3. How is the company reacting other than the letter provided to us? Are you proactively reaching out to clients?

Cetero continues to be in continuous communication with our clients throughout this process. We began proactively reaching out to clients as soon as we received the Untitled Letter on July 26, 2011 and have been in constant communication with them since then.

4. What response did you send to the FDA?

The response period for an Untitled Letter is 15 business days. We are taking this response very seriously, as we have the investigation over the course of the last 2 years. We have a team of internal and external experts fully engaged in preparing a complete response.

5. How could this kind of action from the FDA be damaging to your company? Have you experienced negative reaction already from clients and potential clients? Will there be financial fallout?

Cetero has many long-standing relationships and intends to work closely to support our clients throughout this process. Our initial responses have been sympathetic and supportive, and we believe it’s too early to predict long-term effects. Cetero is committed to scientific integrity of all clinical trial data collected at each of its 7 North American sites and plans a diligent and comprehensive follow up process with the FDA, clients, employees and other company stakeholders.

6. What recourse do you have in addressing this matter, given your points made in the letter and the FDA action? Can you seek to have the FDA tor rescind the comments and actions? Can you sue?

Cetero takes this matter very seriously and intends to fully cooperate with the FDA to bring this matter to successful closure.

7. This would seem to be a David vs. Goliath situation – a small company against a mammoth bureaucracy yet someone your firm must deal with as a regulator. How do you move forward in your relationship with the FDA and with clients in a tough competitive market?

Cetero fully supports and respects the FDA’s mandate to ensure that all approved and marketed drug products are safe and effective. . We want to work with the Agency to resolve this. We will resolve the issue through the FDA’s process, providing transparency to our clients on the progress of follow up actions.

Read about the FDA charges here.

Read Cetero’s initial media reaction here.

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