The Make-or-Buy Decision for Cell and Gene Therapy Manufacturing: Implications for Overcoming Manufacturing Bottlenecks and Challenges

Left to right, panelists Heikki Jouttijärvi, Adam Haskett, David Fontana, and Brad Stewart, with moderator Stephen Orosz.

On Tuesday afternoon, 4 June 2024, consultants from BDO USA brought together a panel of leaders from up-and-coming biopharmaceutical companies to examine “make or buy” decision-making for manufacturing of advanced therapies. Moderator Stephen Orosz (managing director at BioProcess Technology Group, BPTG, part of BDO USA) led the discussion with Heikki Jouttijärvi (senior vice president of manufacturing and supply chain management at Adverum Biotechnologies), Adam Haskett (senior director and head of external manufacturing for Cargo Therapeutics), David Fontana (chief business and operating officer at Umoja Biopharma), and Brad Stewart (market managing principal and national life-sciences leader at BDO USA).

Three of the panelists were executives from companies that make cell and gene therapies (CGTs). Orosz explained that such products present significant challenges related to cost, complexity, quality, and lead times — all of which sponsors consider when deciding whether to outsource or build in-house manufacturing capability. The financial implications can require balancing critical company milestones against maintaining adequate funding for early development.

Speaking from Experience

“When I was at Spark Therapeutics,” Orosz said, “we decided to split the decision. We kept the AAV [adenoassociated virus] bulk manufacturing in house and bought drug-product manufacturing/fill–finish from a CDMO [contract manufacturing and development organization] in the United Kingdom. At the time, there was very little CGT capability in the United States, and we wanted someone with some commercial experience in that field.”

“I usually approach this problem from the perspective of funding,” Stewart said. “We’re challenged to understand what scientific and clinical milestones we can hit and how to fund those in a way that makes sense for our capital structure (while maintaining our competitive advantage in the market).”

Fontana’s company makes the VivoVec lentiviral vector and is filing investigational new drug (IND) applications for two new products this year. He described Umoja’s rationale for building its own manufacturing in Boulder, CO. It began with the desire to own fully the complex new technology involved. “One of our founders was at University of Colorado, and there’s a ton of talent in Boulder. . . . We’re a platform company, and we wanted to build our portfolio through partnerships. There’s nothing better than a partner saying, ‘I can hand this off to a company who can get us all the way through clinical trials before we have to engage our own resources.’”

Haskett said that his company went with external manufacturing for its products based on chimeric antigen receptor (CAR) T cells. But he previously worked at Kite Pharma when it chose to internalize viral-vector manufacturing for CAR-T products. “That was driven by a long-term vision for cost of goods reduction, platform synergies for future programs, and a collaboration with Gilead.”

Most of Jouttijärvi’s experience has been with small molecules, but his current company is developing a gene-therapy product. “You learn from your mistakes and when you do something that is not working,” he said. “I was involved in transferring production from Europe to India, and after two and a half years, we realized that it was not going to work. I’ve also been involved in building owned manufacturing and realizing that it was not really our core competence, that it made more sense to buy that service.”

Orosz brought up risk management as an essential part of the decision process. Stewart said that investors play a key role here. They look for capable management teams and want to know about regulatory, clinical, and reimbursement risks. Capital risk is a challenge. “Smaller companies are focused on deploying capital to get a product to market.” The costs of clinical trials themselves can overshadow those of manufacturing, and timelines can be a limiting factor. “‘What skills do we need to own internally so that we can control and meet our timelines?’ When you contract out to a third party, you’re subject to their schedules, which very rarely meet your schedules.”

“A few months back,” Fontana said, “we were planning to go to Asia with one of our products.” Although Umoja usually packages and ships final products, one country required fill–finish to take place locally. “Imagine working with a CDMO to get that turned around.” Umoja was able to perform freeze–thaw studies for drug substance in one month, then develop a formulation and process, and ship the necessary equipment to the receiving organization. “Within two months, we’re back on track without a big hiccup in the overall plan. I don’t think a CDMO could have figured that out as quickly.”

Jouttijärvi agreed. “If something is strategically important for you, then if you have the capabilities and expertise, it pays back to do it in house.” He added that strategic alignment between sponsors and CDMOs is important. “You create a shared pricing strategy, for example, so that you can gain the benefits of improvements and share those to add value — not just today, but also five years from now. We are in an industry where we cannot switch quickly, and it’s always costly. This is not making commodities.”

Haskett said that innovation is a focus of some CDMOs operating in the CGT space. “Access to technology is important, and also the economics that go with it. You may be able to internalize that innovation through licensing that comes with milestones or royalties. But it may be more favorable to access technology through a CDMO partner. Automation technology is improving. A number of new CDMOs are well versed in such platforms.”

“I was thinking about regulatory risk,” Orosz cautioned. “If you do build a facility, you’re going to have that first inspection. You’re going to be inspected again and again, and you have no history. If you go to a well-established CDMO with a regulatory inspection history, they might waive the PAI [preapproval inspection] requirement.”

“If the quality is not built into the processes,” Jouttijärvi said, “then you can’t pass inspections. Everything might look great on paper, and you audit extremely well. But you have to align culturally” about expectations for quality.

“That’s the other side of the coin,” Orosz agreed. “When you’re involved from the beginning of a facility construction, then you can do it right.”

“It’s not only building a facility, but building quality systems, building teams, and so on,” Haskett said. “At a start-up company, all that can be a distraction from product development.” That factor highlights the value of partnering with a CDMO that has all the infrastructure in place already.

Stewart agreed that young companies need to focus on core competencies. “Even building a quality management system from scratch, that’s going to take forever. Is building a research and development staff the biggest value creator for the company, or is it building a manufacturing team? These are critical thought processes because you can only execute so many of those well and be successful at the same time. You have to put them in an order that you can execute.”

An audience member spoke from the perspective of a cleanroom builder, noting that although start-up companies need to develop core competencies, they also must establish experts in key functions. For instance, if a start-up does not have people representing quality, facilities, and related functions, then installing production capabilities will not go well. Another attendee said that start-up companies face particular difficulty in analytical development. “It can take months to get assays qualified.”

Jouttijärvi emphasized the need to plan ahead. “Qualification and validation of analytical methods can be extremely time-consuming.” As with manufacturing processes, it’s important not to transfer something that isn’t ready to go. “If you have a broken process, don’t try to transfer that.”

Orosz said that the “make” decision must take everything into consideration, including logistics and warehousing, waste management, and so on. “It’s a much bigger question” than it may seem.

Prompted by an audience question, the panel discussed recent advances in gene therapy from companies such as Cartesian Therapeutics, Regenxbio, and Juneau Biosciences. Orosz said that automation is making a new generation of manufacturing processes possible, especially at CDMOs. “We’ve made tremendous progress on the lentiviral-vector side. We’re seeing scale-up to 200-L serum-free suspension [cultures], with some even talking about 500 or 1000 liters. We’re seeing perfusion processes.” Such yields encourage outsourcing, not only to access the technology. “There’s just not enough volume that makes economic sense to insource.”

“It’s extremely capital-heavy,” Jouttijärvi agreed. “Building even a pilot plant can be prohibitive.”

On one hand, Haskett said, “you can build to accommodate all your future jurisdictions and commercial potential, but there may be nonutilization and wasted cost in the near term.” Outsourcing provides flexibility. “You can find a fit-for-purpose solution for your needs today and then find another solution for tomorrow’s needs.”

Jouttijärvi highlighted the value of market proximity. “Having the drug-product fill–finish process in Singapore, in Japan, and in Europe — that’s one way to manage supply risk for more security.”

“One thing I’ve learned in consulting,” Orosz concluded, “is that every client is different.” For example, some companies are reluctant to outsource because they’re keen to protect their own intellectual property. So no final answer to the make-or-buy question works for all companies.

Cheryl Scott is cofounder and editor in chief of BioProcess International (part of Informa Connect Life Sciences); 1-212-600-3429; [email protected].

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