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Sep 1, 2005 (Vol. 25, No. 15)

Outsourcing Drug Discovery & Development

Finding the Right CRO Partner

  • Representatives of some of the leading contract research organizations (CROs) overwhelmingly encourage young biotech companies to begin at least thinking about and planning for the time when they will need to outsource a variety of drug development and clinical testing activities as early as possible.

    Before a company even has a drug candidate to test, when it is still devising its business plan and is concerned with matters such as financing, infrastructure, and early-stage discovery, it should begin researching the services available for outsourcing, the economics of pursuing an outsourcing strategy, the various contract and collaborative partnering opportunities, as well as the scope of services offered.

  • Never Too Early

    Basically, from the CROs perspective, it is never too early to build outsourcing opportunities into a companys business model.

    Small companies that eventually will need to outsource should get some experience early on working with service providers and finding a partner that they are comfortable with, says Trent Carrier, business area manager at BioReliance-Invitrogen Bioservices (www. invitrogen.com). Tapping into the experience of a service provider can help avoid pitfalls down the road, adds Carrier.

    The sooner, the better, is the simple answer, says Fred Pritchard, Ph.D., vp of drug development programs at MDS Pharma Services (www.mdsps.com), a full-service CRO and sponsor of The Biomarker Alliance.

    When a company is acquiring its financing and trying to marry its business plan with its development plan, it is crucial to have a timetable in place and to know where the resources are coming from before making promises to investors.

    If an outsourcing strategy is not established at the outset, then it will usually have to be addressed before beginning GLP work at what Dr. Pritchard calls the develop-ability assessment stage. IND-enabling studies done at this stage would include an assessment of a prospective product for genotoxicity, overt toxicity, metabolic stability, and ease of manufacturing.

    Advances in technology and miniaturization have allowed many aspects of product evaluation, including metabolic, toxicology, and pharmacology testing, to take place earlier in the development process.

    The availability of human enzymes and the hERG potassium conductance assay for assessing cardiotoxicity, for example, are enabling metabolic and tox studies historically done in animals to be carried out as in vitro screening studies.

    Daniel Galbraith, Ph.D., head of biosafety services at Covance Laboratories (www.covance. com), would advise an emerging company to start looking into outsourcing opportunities when setting up its business. A small company needs to establish a realistic overview of costs and process flow or it may run into unanticipated problems later.

    How extensively it will need to rely on contract services will depend largely on its horizon and how far it plans to develop a product before looking to partner the drug. Typically a company will want to take a lead candidate through Phase I clinical testing and demonstrate proof-of-principle, which will entail extensive preclinical testing, including toxicology, immunogenicity, and pharmacokinetic studies.

    As small biotechs have a limited budget and a high burn rate, it is critical that they have a good sense up-front of how long it will take and how much it will cost to get the job done.

    Biotechs should start thinking about outsourcing at the lead optimization stage, says Fred Eshelman, Ph.D., CEO of PPD (www.ppdi.com). When devising an outsourcing strategy they should consider their internal capacity, experience, and particular expertise.

    Prior to having marketed products, these companies shouldnt plan on supporting much activity internallyits a cash burn; they should concentrate on their discovery efforts.

    The early involvement of a CRO ultimately leads to a more practical, flexible approach to drug development and operational efficiencies resulting in reduced cycle times, says Simon S. Higginbotham, vp and chief marketing officer at Kendle International (Cincinnati, OH).

  • Deciding What to Outsource

    From a drug development perspective, companies should define their unique competitive advantage and outsource around that to free up resources so that they can then focus on their strengths, suggests Carrier. Trying to do everything in-house can dilute a companys competitive edge.

    Invitrogen recently launched PD-Direct, which includes a range of process development services from vector construction, to media and cell line optimization, process characterization, and scale-up for manufacturing. These services support projects involving viruses, recombinant proteins, antibodies, or cell therapies.

    The best development activities to outsource are those for which staffing would be cyclical, depending on project needs, and these would include regulatory submissions, clinical trial management, data management, statistical support, and medical writing, says William K. Sietsema, Ph.D., vp, clinical regulatory strategic planning at Kendle.

    Early on, as soon as a biotech company has identified a lead compound, it should focus on AME profiling of the compound, in the view of Tom Bradshaw, CEO of Ricerca (www.ricerca.com).

    Most companies will have either expertise in studying the biology of the compound, with limited chemistry capabilities, or extensive chemistry expertise and little in-house knowledge about how to probe the compounds biological activity.

    By outsourcing all or part of this work and completing a thorough ADME screen the company will be less likely to discover unanticpated problems with absorbance and toxicity later in development.

    For small molecule drug development, another critical consideration after adequate ADME profiling is completed on a lead compound, is to focus on issues related to process development scale-up in preparation for an IND.

    The chemical synthesis process will change as a result of scale-up, and as it changes, the characteristics of the compound may change in subtle, but important ways, says Bradshaw.

    Whereas emerging biopharma companies typically have a strong discovery platform and skills they can apply to target identification and validation, identification of lead compounds, and some mechanism of action work in animal and tissue models, they generally lack the infrastructure and resources needed to conduct a thorough assessment of a compounds specificity for the target, its off-target activity, and its toxicology profile.

    Dr. Eshelman identifies several development activities that a company should consider outsourcing: process development and scale-up, integrated pharmacology, pharmacokinetics (ADME) and toxicology studies, clinical trial planning and management, regulatory consulting on IND preparation, market research, and consultation for labeling and product launch.

    Dr. Eshelman points to PPDs agreements with Takeda for dipeptidyl peptidase IV inhibitors and with Johnson & Johnson for dapoxetine as examples of the companys successful partnering strategy.

    Small biotechs will want to outsource the manufacturing and testing of cell banks, as regulatory bodies (in Europe, with the introduction of the European Clinical Trial Directive, and, more recently, in the U.S.) are requiring that development work earlier and earlier in the pipeline be done under GMP conditions.

    Outsourcing demands are also increasing for characterization testing of biotherapeutics that relies on HPLC and mass spectrometry and for toxicology studies, according to Dr. Galbraith.

  • Finding a Good Match

    Rikki Hansen Bouchard, president and CEO of RH Bouchard & Associates (rhbassociates.com), advises biotechs to select a CRO for its expertise, adding that depending on the therapeutic area or the nature of the compound being developed it may be difficult to select a CRO partner for preclinical work that will also be a good choice when it comes time to take a drug into the clinic.

    Bouchard also suggests that a biotech carefully weigh experience against globalization when selecting a CRO to guide it through clinical studies and the regulatory approval process.

    Whereas a small niche CRO might offer the scientific expertise needed for a special type of drug compound or therapeutic application, if a successful business plan depends on obtaining regulatory approval in multiple countries, or the target therapeutic area requires a global approach to patient recruiting to attract a sufficient number of clinical subjects, then it may be wiser to seek out a partner with a more global reach.

    The earlier in the drug development or preclinical process a company is looking for an outsourcing partner, the more critical the fit of the science, says David Harris, business development director at Southern Research Institute (www.sri.org), which offers discovery and development services on a contract basis, including safety assessment, bioanalysis, and formulation services.

    Further down the pipeline, the contract services provided become more routine, and other metrics may be more useful for evaluating a potential partner.

    A large part of a successful relationship is having the right chemistry with the CROs project team, says Dr. Sietsema. Get to know the project team and determine whether they are compatible with your companys philosophies, personalities, and work styles.

    Also, determine if the CRO provides a single point of contact, or if your company will be required to interact with an ever-changing mix of people as your drug proceeds through the project.

    Since the last funding boom came to an end, the biotech industry has seen the tremendous growth of virtual companies, which look to CROs for essentially all aspects of drug discovery, in-licensing interesting compounds, and seeking the in vitro and early animal study data that will determine whether or not they take a compound through to the next level of development.

    This trend has blurred the lines between CROs and biotechs, according to Harris. He describes a survival model in which young biotechs move back and forth between operating as a biotech company and as a CRO, offering services that exploit a proprietary technology platform, scientific expertise, set of targets, or compound library collection to fund their internal research efforts and remain financially solvent.

    Similarly, CROs have figured out that the financial sweet-spot is to participate in an IP stream, says Harris, and they are looking to get involved earlier in the discovery process, working alongside the biotech in a collaborative partnering capacity.

    CROs are moving upstream, he notes, offering more preclinical and discovery services and linking up with clients earlier in the hopes of establishing a long-term partnership and sharing in the royalty stream, and for contract providers such as Southern Research Institute, pursuing their own in-house drug discovery efforts.

    From the perspective of a specialty testing firm, such as IBT Reference Laboratory (www. ibtreflab.com), which partners with CROs, giving them the capability to offer a range of immunotoxicology testing, including measures of immunogenicity, hypersensitivity, immunosuppression, adverse immunostimulation, and autoimmunity, a key driver of the growing demand for contract testing services is the FDA.

    John F. Halsey, Ph.D., president, CEO, and CSO at IBT points to the FDAs guidance document that calls for immunotoxicology as part of the preclinical studies and Phase I clinical testing of a drug candidate. These are not off-the-shelf types of tests; they require specialized resources and expertise, and a CRO would either have to develop this capacity internally or contract out the work.

    Depending on the type of drug in development, Dr. Halsey recommends that when selecting a CRO partner, a biotech firm should ensure that the CRO either has the staff and specialized laboratories to perform these tests or access to that expertise.

    He advises companies to probe beyond the knowledge base of the typical academic investigator when devising a drug development plan and to seek scientific input from a CRO or reference testing lab before taking a drug into clinical trials.

    Recognizing the need to test for immunogenicity and immunotoxicity and understanding how to tailor those tests, as well as understanding their limitations, can save a biopharma company that is developing a protein or peptide therapeutic significant time, expense, and potential problems down the road, according to Dr. Halsey.

    Dr. Halsey highlights two key advantages of working with a reference laboratory such as IBT, both early in the development of a biopharmaceutical, when the contract lab can formulate the appropriate biomarkers and begin measuring their levels to monitor for immunotoxicity, and later, when a product begins human testing, and the reference lab can help design the clinical trial and guide patient selection to increase the probability of demonstrating efficacy.

  • Evaluating a Prospective Partner

    Experience working with a particular type of product is the most important factor in selecting a CRO partner, in Dr. Galbraiths view.

    The biotech [firm] should ask for metrics on specific experience per development phase in the targeted therapeutic areas, says Dr. Eshelman. Evaluation of a CROs capabilities, quality, and efficiency can be based on publicly available information, references form other companies, and an evaluation of the CROs experience in a particular therapeutic area.

    Another important metric used for evaluating a potential outsourcing partner is financial stabilityhow long has the CRO been in business and how has it grown?

    Taking a close look at a CROs culture is also critical, according to Bouchard, making sure it is a good match with the biotechs; that teams from the two companies will work well and seamlessly together and that open and effective lines of communication can be established.

    Size is often not as critical in differentiating service providers as understanding their financial modelsdo they have large fixed operating expenses; how do they make profits? says Carrier. Understanding the models will illustrate where a service provider will want to focus their attention and therefore their talents.

    A large CRO will usually bring to the partnership a wealth of knowledge and experience, and often the respect of regulators and other clients. They will typically have a larger infrastructure, though, which may make them less flexible than a smaller provider.

    Larger, more full-service types of CROs might also be able to manage more of a project internally, streamlining the process, and involving fewer subcontractors.

    When evaluating a CRO as a potential partner it is important to ask about their capacity for handling a particular project. Do they have the staff and resources to be able to meet the established timelines? Furthermore, economies of scale become important during the development process, especially in the area of animal testing.

    Less tangible questions may also help in the evaluation process, such as, Are they really interested in me as a small company? says Dr. Pritchard. Do they have the people and resources needed to guide us through the process? And does the CRO understand my product and is it passionate about developing my drug?

  • Learning From Mistakes

    What is the most common mistake companies make in deciding to outsource or selecting a CRO? In Dr. Eshelmans view, it is micromanaging and not allowing the CRO to apply the expertise for which it was hired in the first place. Furthermore, he urges companies not to sacrifice performance, quality, and meeting timelinesat the expense of unreasonable cost controls.

    For biotech companies, the biggest mistake they tend to make is waiting too long to select a partner, which can waste time and money, says Bouchard. Small companies might not realize how much expertise is available to be tapped.

    From the perspective of the CRO, their biggest mistake may be sticking to a traditional partnering model, which may not always be the best way to interact with emerging biotech companies. Many of these firms, particularly the growing number of virtual companies, have minimal internal resources, and with a greater measure of creativity and innovation, the CROs could explore new, mutually beneficial, collaborative opportunities.

    In the future, Bouchard predicts continued growth in the CRO sector, particularly for large, global CROs and, on the other end of the spectrum, smaller specialized CROs, with consolidation among the mid-tier contract services providers that try to bridge this gap.

    CROs need to focus on quality, she emphasizes. They face a continuing challenge of attracting, hiring, and retaining a qualified staff.

    According to Carrier, the two most common mistakes are selecting a provider solely on proposed price or timelines, as those metrics should be more the objective of an outsourcing partnership rather than the driver; and waiting until outsourcing is critical to create a track record with a service provider.

    The key mistake is to outsource individual projects or components of a project on a piecemeal basis rather than developing a broad outsourcing strategy early on, in the view of Bradshaw.

    Companies often come to us with unrealistic timeline expectations, says Dr. Pritchard. They may be up against a cash burn, and the bomb is ticking. He cautions companies not to just shop around until they hear what they want and then believe it. He advises them to be realistic about costs and to be willing to pay for quality.

    Finally, Dr. Pritchard emphasizes the need for flexibility throughout the development process, to be able to make changes and to adapt, but at the same time to be willing to commit to a plan of action to make decisions in a timely manner, understanding that these will be risk-based decisions.



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