October 1, 2013 (Vol. 33, No. 17)

Contract manufacturing has experienced several notable twists and turns over the last two decades. Particularly in biopharmaceuticals, the distinction between development and production services has blurred.

In addition, the rise of “biotechs”—a term that has come to mean almost any pharma/biotech startup—has created unprecedented demand for full-service outsourcing.

Contract manufacturers have sprung up in the U.S. and all over the globe. Faced with a desire to speed pipeline drugs into the clinic, many startups no longer bother acquiring in-house manufacturing capacity. These factors would normally create a seller’s market for pharmaceutical outsourcing services.

Yet, with the entry of major innovator companies into the CMO marketplace, outsourcing has become a highly competitive market. Moreover, the inclination to outsource pharmaceutical manufacturing overseas may to be slowing, according to Tye Spillum, principal at consulting firm Spillum & Associates. Spillum refers to the current trend as “re-shoring.”

“Sponsors have encountered oversight, compliance, and quality assurance challenges,” he says. Concerns apply to upstream and downstream operations alike. “In addition, labor rates are rising in places like India and China. Foreign manufacturers are coming under the U.S. regulatory microscope, so bringing these processes back to the U.S. reduces risk.”

Ingredients and raw materials have become an area of great concern since Baxter’s massive 2007–2008 recall of nearly all its heparin products, which contained contaminated ingredients sourced to a Chinese company. It is believed to have caused nearly 100 deaths.

This story has perhaps been over-told but its lesson cannot be overstated. “If you begin with bad starting materials, you must live with its consequences,” Spillum says.

What and Why?

Monoclonal antibodies comprise approximately half of outsourced projects, which accurately parallels biopharmaceutical pipelines. The remainder is divided among antibody fragments, recombinant, and viral vaccines, cytokines, and therapeutic enzymes.

Outsourcing decisions are purely economics-based. “Early and mid-stage companies usually lack manufacturing capacity or experience, particularly with respect to GMP compliance” says Richard Hetrick, formerly director of business development at Benten BioServices.

Startups are more likely to devote precious capital to getting their molecules into the clinic than on constructing and commissioning GMP facilities, and hiring a dedicated production staff.

For larger companies, electing to outsource comes down to facility utilization, timelines, anticipated sales, and the stage within the product’s lifecycle. Balancing these considerations and distilling them to a cogent bottom line can keep a large sponsor’s accounts quite busy.

Companies new to biotherapeutics have additional reasons to outsource. “They may have an issue with expression levels, or have no system at all,” Hetrick explains. “Or the protein may have inherent problems related to upstream or downstream processing.”

Poorly expressing cell lines are common reasons for concern and, ultimately, for seeking out a contract manufacturer. But low-producing cells are not necessarily a stumbling block, Hetrick says.

“It doesn’t make sense to spend two years optimizing a cell line before entering Phase I, when you can simply increase the production volume, get the material you need, and enter the clinic.”

Optimization can occur in parallel to early trials, or even better, after the risk of failure becomes more manageable. “Why spend time developing a perfect expression system when that’s not the issue,” Hetrick adds. “Getting the product into clinical trials is the real issue.”

Hetrick goes so far as to say that almost no organization should develop manufacturing capacity in house, from scratch. The exceptions are low-dose products like vaccines. But even there, the cost of acquiring GMP and regulatory expertise is often cost-prohibitive for startups.

Selecting a CMO

Through dealing with sponsors of all sizes and a variety of biological molecule projects over the years, Peter Pekos, CEO, Dalton Pharma Services, concludes that CMO selection is best viewed as a decision based on “fit,” defined as a compatibility of culture, size, and services offered.

“When a sponsor signs a contract for our services, it is usually because we have the best fit of size and capabilities for the needs of the sponsor at a particular stage of development,” says Pekos. “This ideal fit may or may not change as the development stage of the project advances.”

Providing a full range of integrated services—chemistry, analytical, formulation, process development, fill/finish, cGMP clinical sample manufacturing, low-volume commercial manufacturing—is a necessity for small to mid-size CMOs, Pekos explains.

“Most sponsors are well aware that a CMO that offers seamless transfer of development steps can save them six to twelve months over the normal five- to six-year period from preclinical to Phase II. Large CMOs may also offer a complete range of capabilities, and the choice of a large CMO may make sense in some situations.”

A potential drawback in the case of the large CMO is often that the divisions supplying a specific service are themselves in different geographical locations, and so large that the sponsor may find that it is much like dealing with separate companies.

Discussions of important factors in CMO selection invariably stress flexibility.

“It would be difficult to overstate the importance of flexibility in the case of early-stage sponsors,” Pekos adds. “I have seen work plans change ten or more times as information about the product was acquired during development.”

Inexperienced, equity-based sponsors often want assurance that a smaller CMO will be able to produce the quantity of material required for Phase III trials or beyond, so they will not have to transfer to a larger CMO as they move through clinical trials. This can be a mistake, according to Pekos.

“In many cases it makes more sense to focus on getting to a new valuation point like Phase II as fast as possible, and this requires a CMO with a very high level of flexibility combined with a full range of integrated services.”

Dalton Pharma Services analyst performing identification of protein sequence by LC-MS/MS.

“In many cases it makes more sense to focus on getting to a new valuation point like Phase II as fast as possible, and this requires a CMO with a very high level of flexibility combined with a full range of integrated services.”

Sponsors, particularly early-stage companies, most often look for process development services to precede manufacturing. So, explains Patricia Caplan, director of business development at Olympus Biotech, the first step for the CMO is to determine the degree of sophistication and robustness of the sponsor’s process. “They may be far along, or may still be at the research stage.”

Building in robustness during process development, and instituting process tweaks at that stage, increases the likelihood that scale-up and clinical manufacturing will proceed smoothly.

Formulation development is another area where a CMO’s expertise becomes critical. Biopharmaceuticals that are not optimally formulated sometimes fail in Phase I due to stability or bioavailability issues that might have been avoided using an optimal formulation.

“The earlier improvements occur, the less expensive it becomes down the road,” Caplan says. “You don’t want to make changes in Phase III.”

Olympus has had an interesting history. During an earlier incarnation it acquired a bone morphogenic protein product, a recombinant protein approved in Europe and Australia, from Stryker Biotech. That successful product is segregated, within Olympus’ 180,000 square feet of manufacturing space, from the firm’s CMO activities.

Olympus focuses strictly on mammalian cell processes at working volumes of 35 L, 500 L, and 2,500 L in stainless-steel tanks. It also uses single-use bioreactors at scales up to 250 L.

Building in robustness during process development increases the likelihood that subsequent scaleup and clinical manufacturing operations will proceed smoothly. [Olympus Biotech]

Tech Transfer into a CMO

Technology transfer, which involves making process and molecule data available to a CMO, is an essential part of working with a contractor. Its success, says Susan Dexter, principal consultant at Latham Biopharm Group, depends on how well the sponsor understands their molecule, the process, and the extent to which they share that knowledge.

“Tech transfer goes well when sponsors are knowledgeable and open. Historical information is useful if the project is being transferred into development at the CMO, to get a sense of what worked and what didn’t,” explains Dexter.

“The more the sponsor shares with the CMO, the more likely the tech transfer goes well. Sharing information helps mitigate risk of failure.”

Tech transfer comes in two main varieties. One involves well-defined processes destined for manufacturing. The other, which is riskier, occurs during development, where the CMO is expected to develop and optimize the process. In either case, Dexter says, successful tech transfer demands presenting all available process and molecule data, historic and current.

Some CMOs initiate a project through a formal questionnaire that covers expression, cell lines, media, process conditions, scaleup, purification, analytics, and other relevant aspects of the project. This gives CMOs a better idea of knowns and unknowns of the sponsor, so facilitates dialogue.

“It boils down to openness and communication,” notes Dexter. “It’s critical that the receiving party understand what has worked and what has not, so as not to repeat activities that have been non-productive.”

Try as they might, CMOs do not always receive all the data they need to conduct a development, scaleup, or manufacturing campaign. The reasons for sponsors holding back vary.

Foremost is the sponsor’s corporate culture. Biopharmaceutical companies are trained to be protective of their intellectual property and know-how, even when aspects of it are public.

“Holding back may not even be deliberate, sometime it’s just habit,” explains Dexter. “Just as technical manuals often assume end-user familiarity that may not exist, sponsors may believe that CMOs should already know certain aspects of development or production, even if they are specific to that product. A good deal of what should be ordinary communication is based on assumptions.”

One way to avoid this situation is for the CMO to spend time at the client’s facility and to work with the sponsor’s team. This, according to Dexter, can help foster trust and understanding, and overcome some of the inherent communication barriers.

“It’s more like showing the CMO how to do something instead of explaining it,” says Dexter.

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