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Jun 1, 2010 (Vol. 30, No. 11)

Due Diligence Essential in Selecting CMO

Firms Must Look Beyond Credentials to Find the Right Partner for Their Manufacturing Needs

  • Importance of Onsite Visits

    “An onsite visit is where you meet the potential team members and learn who the company is rather than what it can do for you,” Badal said. Valeant’s team usually includes representatives from its quality assurance, regulatory affairs, and manufacturing departments, as well as the company’s point of contact.

    Typically, Valent conducts two site visits for the top contenders, Badal noted. The first visit is simply to get acquainted with the site, to ascertain the age and condition of facilities and equipment, and to get to know the people and their style of operations and communications.

    That includes understanding both the regional or national culture and the corporate culture. For example, in a highly hierarchical culture, will a junior associate  challenge a senior associate to resolve a potential problem? Will the need to avoid embarrassment cause issues to be handled without input from the client? Synergy between the CMO and the prospective client can alleviate many quality concerns  simply because the two organizations will have similar understandings and approaches.

    “Experience matters,” Dr. Sabouni insisted. “A Ph.D. with five years’ experience is very different from a Ph.D. with 25 years’ experience in terms of depth of knowledge.” That difference can be very important, particularly when novel compounds are being manufactured.

    Dr. Sabouni also recommended working with a CMO whose staff members have experience at both big pharma and small biotechs. Those with large company experience tend to know the regulatory environment better than those with small company experience, simply because they are more likely to have taken several drugs through the approval process.

    “They also will have an eye on development issues and the eventual product launch,” Dr. Sabouni said. Those are issues that emerging companies too often overlook in the excitement of pushing the developmental envelope.

    On the other hand, he continued, “individuals with small company experience are especially important to biotechs because they know how they think.” They also better understand the need for speed and the financial constraints that can make or break a small company.

    The second visit is a quality audit. Typically, Badal said, a team will investigate the CMO thoroughly, examining its internal operations, production floor, equipment, and maintenance records, as well as its scale-up process and capabilities, regulatory affairs track record, and standard operational procedures. “Learn how they handle out-of-spec findings,” Dr. Sabouni suggested.

    This is also an opportunity to examine the CMO’s external linkages. “We look at their supply chain and sourcing activities and relationships,” Badal said. “If they’re not strong, you risk hiccups in the future, in terms of quality issues, delays, and delinquencies.”

    Some firms (in other industries) will interview the CMO’s suppliers, ascertaining their quality procedures, financial strength, and ability to handle the additional business. Also, the team will determine whether a local or regional disaster to one of the suppliers would halt or significantly slow production, or whether the supply chain is sufficiently broad to adjust to fluctuating conditions.

    Badal also recommended using the trip to verify the local reputation of the CMO and its key staff members. “You’re doing a lot of evaluation on the people at this point including calling and checking references.”

    Look at past products, too. Dr. Sabouni advised examining a CMO’s regulatory track record. “Were there warning letters or reprimands? How were they resolved? Check their 386 records and the results. When were they last visited?” he asked. Whether the visit was six months ago or six years ago matters. “Were there regulatory issues? Were the products delivered on the expected timeframe, and if not, why? If issues arose during production, could the CMO realistically have been expected to have anticipated and resolved them proactively?”

  • Communications

    Issues are most likely to arise in areas that weren’t addressed during the due diligence process, Badal said. “Timelines may become longer, suppliers may have issues, communications may not be clear.” Therefore, Badal advised extreme diligence early in the selection process.

    Ensuring clear communications can prevent complications. “Over communicate,” Noll advised. “Leave nothing unsaid. If a team is working, leave it in place. If it’s not, don’t worry about hurt feelings. Get different people in there.”

    Having a single point of contact for communications—the production manager or business development manager—can minimize misunderstandings. “The worst-case scenario is casual communications, where perhaps 60 people communicate between the organizations. They have good intentions,” Dr. Sabouni said, but, from the project manager’s perspective, this creates chaos. “Communications should be streamlined.”

    In Badal’s experience, having a single point of contact hasn’t delayed operations although, “sometimes it’s difficult to relay information through the organizations.” In such cases, it may help to have the counterparts communicate directly. This may be especially true for regulatory affairs. In fact, Noll added, “regulatory affairs is the only area where customers really have to work to accommodate their CMO.”

    The protocol for communications should be established up front. Generally, that means establishing weekly project meetings and a schedule for regular meetings at the vice-president level. A framework for dealing with problems also should be established as early as possible. While negotiations are progressing, establish who is responsible for communicating issues.

    Assumptions can form a potential pitfall. “Some customers, biased by a past disaster, can focus on one aspect of the project and unwittingly give it greater emphasis in the eyes of the CMO,” Noll said. Therefore, “tech-transfer meetings should be a formal exchange of information; anecdotes are for dinner.”

    Noll said that analytical issues are one of the biggest stumbling blocks for emerging pharma. “A good CMO lays out all the hidden issues early, so the customer doesn’t need to worry, for example, about validated stability-indicating methods or making sure the polymorph screening work has been done.”

    Another area is route optimization. As Noll explained, “spending a little money early can lead to big savings later on. When a funding window opens up, companies go into overdrive, and some things that could make a product a viable drug rather than a funding vehicle can become imperiled. Doing the grunt work as early as is practical makes sense.”

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