A positive outlook for outsourcing biologics

Characteristics of an effective CMO

• An effective CMO should have access to significant amounts of capital – of the same order as the large biopharma companies.
• An effective CMO should build reputation to help attract top talent in all aspects of biologics manufacturing.
• Biologics manufacturing technology is expected to change rapidly. In turn, the CMO should have access to top research, with a goal of being at the cutting edge in its field.
• The first few products for each plant will likely produce financial losses. The CMO should be able to absorb these initial shocks. For the conservative model we used, the CMO will have to produce at least four products in a plant before it becomes an overall positive NPV investment.
• To help CMO manage its operational risk, it should effectively collaborate with drug development companies. This relationship should facilitate process development and the effective transfer of the drug from clinical development to large-scale production.
• Finally, the CMO should be well-versed and experienced in advanced risk management techniques. The risks inherent in biotech products require tight risk management through contracts and appropriate selection of customers and products.

The outsourcing case study

For CellCure, a Danish biotech company that develops cancer therapy, building their own factory to manufacture GMP materials was not an option. They could not fund it. Instead, they chose Angel Biotechnology, a UK CMO, to provide them with cells to be further evaluated in the treatment of patients diagnosed with metastatic malignant melanoma. Julia Puppe spoke with Anders Trojel, CEO of CellCure, to find out more.

NGP. Why did you choose a contract manufacturer to provide you with GMP materials? What are the benefits?

AT. As a small biotech company we would not be able to fund our own factory, so we had to choose a CMO. There are many advantages to outsourcing, though. We can easily adapt the production to the ongoing development work. We don’t know everything that is going to happen to our upscaling project, so we need to work with experienced people. The obvious solution is to subcontract the manufacture to a CMO.

NGP. Does the handover from in-house facility to contract manufacturer present any issues with regards to technology transfer? What areas need to be addressed? And how can this transfer be managed effectively?

AT. It is a crucial step. It can cause delays and confusion if not handled properly. My advice is to collect the essential documentation and have the right people nominated to be in dialogue with the CMO.

Our case was a special situation since we are no longer cooperating with the original founder and scientific head of Angel Biotech, who had chosen to part with the company about a year ago. Noone in the company had hands-on experience with the manufacturing of our lead product. Ideally I would have liked to have somebody on site when the early development work started, to get them up and running. The most effective way is to have experienced staff at the CMO at the start of the project.

NGP. Compliance is another critical consideration. How do you ensure that your outsourcing partner’s manufacturing operations meet quality and regulatory requirements?

AT. We simply asked the British authorities for a copy of the latest version of Angel’s GMP authorisation. This was easily available. You can’t manufacture pharmaceuticals in a facility that is not approved by the authorities, so if somebody does not want to show their authorisation, it sounds like they have no licence.
In addition, I would strongly advise that you either use your own staff or hire a consultant to do an audit of the factory.

NGP. To ensure a win-win situation, it is vital that the outsourcing company is financially stable, that it has the necessary technology and that its own products are different to avoid conflicts of interest. What were the deciding factors in choosing Angel Biotechnology?

AT. Angel Biotechnology has been able to secure our technology and know-how in a very satisfactory manner. There is no conflict of interest. Angel were listed on the AIM (Alternative Investment Market) in London last year, which has given us far better access to information about the company. Now we can get more regular financial updates and through the press releases they provide we can get frequent information about their people. This helps us understand what the financial situation of the company is. If there was no deal flow, it would indicate that they are not generating new projects.

Of course you can always get a balance sheet or buy yourself financial information about any company but that does not really show you what their situation is going to be tomorrow. So the access to stock exchange information and deal flow information is crucial to build confidence in a company’s financial capabilities.

NGP. There are two different approaches to outsourcing. One is to outsource jobs on a case-by-case basis to alleviate pressure. The other is to integrate outsourcing into the company’s business strategy and work with steady partners over a longer period. Which is your company’s approach and why?

AT. Our company’s approach is the latter. It should be for small developing companies and biotech firms because taking the production from the lab up to large-scale manufacturing requires a lot of development work and expertise. By working with a CMO, a lot of knowledge can be gained to the advantage of both parties.

If you are a large pharmaceutical company, the other situation often applies. They have to look at capacity issues and they may want to manufacture drugs outside their own facilities to manufacture low margin products with a company that can easily manufacture large quantities of what they order. They keep their high margin and very profitable products and manufacture them in-house.