How To Approach C&G Therapy Outsourcing In The Make Vs. Buy Era
By Anna Rose Welch, Editorial & Community Director, Advancing RNA
The world moves pretty fast — especially if you’ve been reading the many articles outlining the C&G industry’s feverish push to bolster and/or establish capacity.
Arguably, there is one question garnering a great amount of hype in the C&G manufacturing space, and it boils down to these three seemingly simple words: Make or Buy? The number of headlines loudly proclaiming, “We Chose Make!” could (misleadingly) suggest that, at this point in history, the “makes” have won this game of tug-of-war. Given ongoing capacity concerns and evolving scientific learnings, many innovators emphasize the importance of controlling your own manufacturing destiny. But running undercurrent to these calls to build and own is a great scurry on the supplier and CDMO side to establish the capacity the industry needs to efficiently advance.
This confluence of actions on both the innovator and CDMO sides raised a few questions in my mind. In particular, how should the rapidly growing C&G industry approach this mad dash to create additional capacity — especially on the outsourcing side? And, even more importantly, what should C&G companies striving to outsource in this ever-accelerating world keep in mind as they establish these critical manufacturing partnerships?
Mark Davis, founder and principal of NegotiumBio, shared his insights to these questions — and more. A few weeks ago, Davis and I, along with a handful of C&G manufacturing SMEs, sat down for the first of what I hope will be many future C&G Collaborative forums on manufacturing and outsourcing-specific topics. During this conversation, Davis shared his thoughts on the ongoing evolutions of the C&G outsourcing space, as well as how companies should evaluate and strengthen their CDMO relationships throughout their therapies’ development.
The Cell & Gene Partnership Construct
The (often) autologous nature of cell and gene therapies today lends itself to a particularly intimate partnership between the patient and the C&G company. But given the amount of scientific and manufacturing learning that is ongoing in the industry as a whole, the relationships between a company and its suppliers/CDMOs also have their own unique nuances.
As Davis nicely summed up, the cell or autologous gene therapy spaces require a much more complex partnership model than we’ve seen thus far with small and large molecule therapies. For example, if you look at the model for a monoclonal antibody or a protein, the needs are relatively straightforward and standardized. A manufacturer will need their cell lines and media, reaction technology, downstream purification, and sterile fill-finish capabilities. Innovator companies and CDMOs have spent the past 25-plus years standardizing this manufacturing paradigm and the necessary technologies.
For cell therapies, on the other hand, each treatment comprises multiple elements (i.e., cytokines, plasmids, vectors, genome editing proteins, etc.), all of which require their own development schemes and materials. All of those materials also need to be available and produced to GMP standards, which opens up a whole new level of complexity depending on the overarching regulatory guidelines. Depending on which guideline the vendor and company are working with, that material could be considered a device, an ancillary material, or a drug substance. (And you bet the regulators have differences in opinion around how they define and categorize these things.)
“Making a cell therapy can be akin to making a monoclonal antibody eight times,” Davis shared. “And this is just the process needed to make all the different materials that, once combined, must provide the desired clinical effect in the patient. Assembling all these materials doesn’t include the other required steps, including harvesting a patient’s cells upstream, preconditioning, mobilization, collection, purification, release testing, and cryopreservation. You don’t have this complexity in other therapy development partnerships, and that’s what makes C&G outsourcing partnerships so unique.”
A Consolidating CDMO Marketplace: Consequences For The C&G Industry
In order to best understand the current CDMO and outsourcing partnership landscape, Davis rewound the clock back a few years when the Novartis-UPenn partnership put the fledgling C&G industry on the map. At the time, the supply base to support the early movers for these therapies was quite nascent. Partnerships were defined by what you could call more “creative deal-making.” As Davis explained, margins were lower and, given the steep learning curve of both innovator and CDMO together, there was more risk embedded within the fabric of these earlier partnerships.
In recent years, the swift growth of the innovative industry has encouraged a proliferation of new cell processing and plasmid manufacturers. (Fun fact: there are upwards of 26 plasmid manufacturers on the market today; Davis recently counted.) As Davis explained, this growth is primarily fueled because of the capital growth of the industry, the novelty of cell & gene therapeutics, and the technological development experience found in the EU and U.S. markets.
“There’s still growth in small molecules and large molecules, but the growth rate for CDMOs in the Western markets today is tempered by the prominence of Chinese and Indian manufacturers which drives the costs down for these established technologies. The cell and gene market is still very strong in the EU and U.S. markets, so we’re starting to see the CDMO firms with deeper pockets acquiring the smaller players resulting in a degree of consolidation in the industry.”
This is a logical progression, Davis explained, given the ongoing quest toward standardization (and cost reduction) in the C&G manufacturing space. Though we’re unlikely to arrive at true standardization for another 10-plus years, CDMOs and suppliers are striving to find their own technological edge today in what is an IP-heavy, innovative space. As you may have noted, a number of the leading CDMOs have announced their first platform technologies, which Davis anticipates will serve as the impetus for other suppliers to create their own versions of these technologies. This ongoing innovation will drive the industry toward efficiency improvements and a more standardized landscape and, in some cases, (from an idealist view) relatively interchangeable technologies in the future. But we need to be careful we don’t assume standardization in the C&G industry will look the same as that of mAb technologies, given the biological complexity of these treatments. As Davis pointed out, starting cell types (and their quality) are often different from company to company, especially for autologous and allogeneic therapies. As such, these treatments will likely always be burdened with some level of unpredictability — even upon reaching a more “standardized” future.
When I asked about some of the potential challenges the ongoing consolidation of the CDMO industry could pose for innovators striving to establish outsourcing partnerships, Davis pointed to a few factors to keep in mind. One, of course, is the overall development cost. The fewer options there are on the market, the more likely innovators will pay higher prices to use certain platforms or add specific line-items to the contract (e.g., dedicated project managers). Similarly, as smaller suppliers/CDMOs are acquired by larger firms, the innovators most likely to have the resources to pay for these improved end-end capabilities are those with bigger, deeper pockets competing for available resources and capacities.
In turn, this consolidation poses a potential impact to the partnership dynamic — especially for smaller innovator firms starting out with their C&G programs. For example, smaller biotechs starting out with a single or limited number of programs may be more inclined to partner with larger suppliers due to the appealing simplicity of single-party engagements. Davis believes smaller innovators should be thoughtful in their partner selections. Though quality, infrastructure, and technical risks are commonly cited cons to partnerships with small/fledging suppliers or CDMO partners, Davis sees a nice symbiosis in partnerships between similarly sized firms.
“I often find there’s a better match when small C&G companies partner with a supplier/CDMO that is close to the same size,” he explained. “If your program is only one percent of your CDMO’s revenue, the power dynamic will not be same as it would if your program is worth 15 to 20 percent of a partner’s revenue. You’ll be on more equal footing.”
Stay tuned for part 2 in which Davis provides several best practices around establishing C&G outsourcing relationships, especially in the face of surging demand for C&G-therapy-specific development partnerships.