Panel Discussion: How CMO Business Models Have Adapted to Meet the Challenges and Opportunities of Protein-Based and Emerging Therapy Markets

On Tuesday, 20 June 2017, BioProcess International presented a panel discussion from 1:20 to 2:00 pm as part of the “Emerging Therapies” session of its BPI Theater at the BIO annual convention in San Diego.

Left to right: Gil Roth, Michael Riley, John Foy, Mark Wright, and Victor Vinci (PHOTO BY LEAH J. ROSIN)

Moderated by Gil Roth (president of the Pharma and Biopharma Outsourcing Association), the panel comprised John Foy (vice president of business management for biologics at Patheon), Michael A. Riley (vice president and general manager of Catalent Biologics), Victor Vinci (vice president and chief scientific officer of Cook Pharmica), and Mark Wright (site lead for antibody–drug conjugates at Piramal Pharma Solutions).

Development and manufacture of emerging therapies follows a path similar to that of protein-based therapies. But many unique equipment, technology, logistic, and scientific challenges must be addressed early in these processes to increase their chances of commercial success. Contract manufacturing organizations (CMOs) and Contract development and manufacturing organizations (CDMOs) have enhanced their experience and capabilities in this niche, making outsourcing development and manufacturing a viable option for many sponsors.

Discussion
Roth asked the panel a series of questions.

What are the biggest opportunities for CMOs in biologics right now? There is tremendous growth in the development pipeline, with a lot of new challenges for biologic developers creating opportunities for CMOs. Clinical time lines are accelerating. Chemistry, manufacturing, and controls (CMC) are critical to approval. That increases the importance of partnerships between CDMOs and innovator companies.

Another trend is an increase in complexity, with new therapeutic modalities combined with the speed of and need for fast development. This raises the premium for companies that can apply expertise in a number of areas to help sponsors speed their products through the clinic and to market.

The industry needs to look at different business models for providing long-term supply. Wright said that his company sees more products using conjugate technology. Such drugs are expanding from oncology into a broad range of different payloads on tight development time lines. One challenge is that each project is bespoke.

The panelists also agreed that managing risk is a new priority. Clients and CDMOs should have early discussions to make sure that all parties understand and mitigate risks contractually.

Are you seeing a shift in customer base? Cook sees growth in all areas — small companies and large companies — and is doing more commercial production. Piramal is gaining more European customers. Companies overall see wider adoption of new technologies. More small companies now are looking for a “complete package” from CMOs rather than having discrete operations performed. Even while building internal capacity, big pharma also is increasing outsourcing. Strategic outsourcing is partly to move fast and partly to access specialized technologies. The Asian market is growing fast. Many companies in China are focused on both domestic and global markets.  Other Asian countries are showing growth in their biologics portfolios, especially Japan and South Korea.

Will big biopharma’s increased investment in internal capacity cause you to adjust what you are doing? Some very large companies are building out capacity (12,500-L to 15,000-L bioreactors). CMOs aren’t going to compete at that scale. However, many new technologies work at smaller scales 1,000–2,000 L for which disposables provide flexibility. Panelists said that most of the pipeline will need <5,000-L scale production. With the necessary speed of development, it makes sense in many cases for large companies to outsource; in other cases, it will make sense to build as a strategic investment. Niche areas don’t justify expensive investments unless a company has a large related pipeline. Some big companies have gone down that road, but the majority are planning to outsource (e.g., conjugates).

Are CMOs looking for other business models, new ways to structure agreements with customers? John Foy said that when thinking about scaling-up or scaling-out, some might consider multitenant “condominium” arrangements that could soften the risk profile for individual customers based on build-outs and how capacity is managed across a portfolio of customers for a given space.

It depends on a customer’s specific situation. The available range of models covers a spectrum from pure fee-for-service to fully dedicated suites to fit different challenges. There is no standard program now; every partner’s needs will be different, and CMOs need to decide how to invest with them to get to the right solution. This is not just a capital/facility question; they also need to consider how to staff their organizations. A key point is to make sure that contracted projects represent areas of expertise that a company wants to continue with, not onetime investments.

Are development-only models shading into commercial scale in new ways? Michael Riley agreed that lines are blurring between development and commercial biomanufacturing. With accelerated clinical time lines, companies are thinking about commercial development far earlier than in the past. Catalent’s site in Wisconsin started out as a clinical development facility but is now becoming a commercial facility. Many customers are moving rapidly through phase one and phase two, already preparing for process validation and commercial launch. Single-use technology has helped to blur the lines, with 2,000-L scales now standard. From phase one to commercial scale “you can scale-out rather than scale-up.”

What other technologies are transformational? Continuous processing requires development and regulatory solutions before it becomes a reality in this industry. Starting with single-use technologies and higher expressing cell lines, dramatically increasing the amount of protein produced in a smaller footprint over a shorter time frame than before would be transformational.

A truly transformational development would be a synthetic biology system that is completely cell free. Such systems would require stockpiling of cell machinery in large amounts, trading one logistical problem for another. The trend in conjugate production is toward increased potency. Overall volumes might decrease, but adapting to the more potent materials will be a challenge.

What would you want the US Food and Drug Administration (FDA) to tell you in terms of its understanding of continuous manufacturing? Both economic and quality arguments support continuous processing. Enhancing quality will interest the FDA. Every new technology requires communication between industry and regulatory agencies to determine the best approach to it. Patheon currently uses continuous manufacturing to produce small molecules, so it hopes that can be used as a pilot to help determine standards that can be applied to the biopharmaceutical space.

In your experience, how have customers matured? What do they understand better now? Customer expectations on how to set up a winning partnership have matured. They understand the importance of good communication throughout a project and have a more sophisticated understanding of risk. In certain areas (e.g., conjugates), there is increasing experience. Levels of sophistication regarding new modalities have increased quite a bit.

Are biosimilars meaningful for CMOs at this point? Many companies are pursuing biosimilars, for which regulatory submission requirements are complex. The analytical and comparability requirements create a need for partners with expertise.

Audience Questions
How do you define a batch with continuous processing? There isn’t an answer for that right now, but it is a question that needs answering and is up to the industry (together with regulators) to figure out.

What trends do you see in the CMO sector (e.g., consolidation)? The industry is still relatively fragmented, and you see sponsors seeking to partner with providers that have broader-based solutions. Patheon is being acquired by Thermo Fisher, and it does look like that will be complementary. Three companies represented on the panel have engaged in consolidation, but Cook has stood alone in its space. From watching the sector since 1999, it has seen consolidation come and go in waves.

Although CMOs aren’t responsible for pricing drugs, what impact can they have? For managing cost of goods, CMOs know their clients need to achieve certain requirements for commercially viable products. Ultimately, treatments are developed for the good of patients; CMOs want to help sponsors make better treatments. The more efficient the whole drug development process can be, the better the return for innovators and potentially the lower the cost of drugs.

What CMC issues do you see on the critical path? It is specific to what you are doing. In autologous cell therapy, for example, the paradigm is to go from vein to vein in 22 days: Take someone’s T cells, perform genetic engineering, and return them to the patient in 22 days. Other therapies take 15–18 months. Everything needs to be mapped out and planned ahead. Sometimes what complicates matters is the analytical side. Assays are complex to develop. You can get close to the end and realize that an assay doesn’t work. In many cases, that is when CMOs get involved — when a difficult assay needs to be developed. With time lines shortening, companies need to think about testing earlier than they used to.

Alison Center is editorial assistant ([email protected]) for BioProcess International, PO Box 70, Dexter, OR 97431.