Cell & Gene Therapy COGS: Progress & Pitfalls In Our Quest For Affordability
By Anna Rose Welch, Director, Cell & Gene Collaborative
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In December 2021, an hour-long conversation with Dark Horse Consulting’s COO Katy Spink fortuitously led to the creation of five new year’s resolutions for the ATMP manufacturing space.
Of course, I wouldn’t go so far as to say these resolutions became less important or irrelevant at the stroke of midnight on January 1, 2023. If anything, each one of these resolutions is likely to be on our list of to-dos for as long as we have active cell and gene therapy pipelines.
A lot can be accomplished and learned in a year — and 2022 was no exception. But when it comes to understanding our products and establishing the internal/external capabilities to support them, we are an industry dedicated to “relentless incrementalism.” Hence why I jumped at the chance to invite Spink to rejoin me and a handful of Cell & Gene Collaborative members to discuss where incremental progress had been made in chipping away at some of these resolutions. While our 2022 outlook conversation tackled everything from communication about risk to analytical bravery to capacity planning, our 2023-facing discussion — like our evolving understanding of our products — was more fine-tuned.
We regularly talk about “getting to know” our products. This can mean a lot of different things depending on the functional area in which we work. But as conversations about affordability and commercial sustainability increase pressure on manufacturing teams, I wanted to get Spink’s thoughts on how we can understand our products from a COGS standpoint and how this will continue to challenge us in the years ahead. Despite the industry’s looming economic limitations, our conversation made it clear there are still plenty of leadership and technical opportunities available to CMC teams. However, such long-term advancement will only be possible so long as education and communication on the importance of CMC remains a core corporate tenet.
A Glimmer Of Hope Through The Financial Caution
Before we dig into the topic of COGS, it’s important we first take a step back and look at the current financial ecosystem in which we’re operating. After the past few years of Oprah-style resource allocation (“You all get funding!”), we’ve found ourselves feeling the insecurity that comes with greater investor scrutiny and/or risk-aversion. We’re facing high development costs, shorter financial runways, the threat and/or reality of deprioritized programs, and even more pressure to get our products successfully into and through the clinic.
While the headlines regularly showcase the pains of this subdued funding environment, Spink is still cautiously optimistic about the overall strength of the industry. Though it may seem as though the sky is falling, she argues we’re simply returning to a “normal” world of funding and business/pipeline development following the “drunken sailor” days of 2020-21.
There are a handful of reasons supporting her optimism. For one, as she pointed out, 2022 — particularly the first half of the year — was not without its big CGT deals, especially on the outsourcing/technology side. Resilience, Ori Biotech, Lykan, and RoslinCT all celebrated new funding.
Similarly, after years of supply chain constriction and inaccessible capacity, we’ve started to use the term “normalizing” much more regularly in reference to our supply chains and outsourcing capacity. On the capacity side, not only did we see previously offline (i.e., in construction) capacity finally become available, but the expanding CDMO industry was also occasionally the answer to cash-strapped innovators’ excess capacity and/or inactive facilities. This “mini-trend” was arguably one of the most interesting dynamics in the CGT space to observe over the past year. As I argued in an article from early last year, FujiFilm’s, Oxford Biomedica’s, and Resilience’s acquisitions of several different biotech manufacturing facilities hinted that we are venturing away from the more cut-throat, individualistic “wild west” and moving toward a much more symbiotic, rainforest-style existence in the CGT space.
Metaphors aside, I certainly don’t wish to dismiss the genuine concerns, precautionary measures, and layoffs that are impacting the ATMP space today. We are all experiencing a particularly vulnerable inflection point in the broader industry. But as my conversation with Spink underscored, though the tap for funding may no longer be turned up to “Niagara Falls” levels, the increasing normalization of the supply chain and outsourcing sector indicate a notable shift in the industry’s power dynamics. Such a shift — however understated it may be compared to the check-writing frenzy of 2020-2021 — is still cause for innovator celebration. Fewer constrictions and normal demand promise gradual movement away from a “seller’s market” into that of a buyer’s market with (hopefully) greater biotech negotiation power and development efficiency.
Understanding Our CGT COGS Drivers: The Challenges Ahead
When we think of controlling COGS in the CGT manufacturing sector, we typically set our sights on two broad efforts: Shortening the manufacturing timeline and reducing the number of resources (human, material, financial) needed to make, package, and deliver a therapeutic to the point of care.
Over the past few years, we’ve been chipping away at several efforts — namely automation and next-gen platform development — to speed up timelines and streamline operations. In particular, Spink pointed to the development of Novartis’ T-Charge platform as a great example of a next-gen innovation that could lead to more favorable COGS profiles and enable patients to benefit from autologous therapies without delays. (If you’re interested, my colleague penned a great article on the inner workings of this platform last year.)
“I’m also pleased to see more incremental progress toward automation being made — not just in manufacturing, but also in the analytics sector,” Spink added. “There are new manufacturing systems being developed that pay greater attention to automated analytics — for example, we’re seeing more bioreactors or standalone platforms coming to market that incorporate inline analytics. There are also more efforts to design individual pieces of analytical equipment with automation capabilities.”
But what Spink and members of the Collaborative continued to emphasize throughout our conversation is that “the need for speed” mentality is only one piece of our industry’s journey toward greater product affordability. Manufacturing speed and operational simplicity will only be meaningful if our therapeutics are efficient in treating or curing our patients’ conditions. Achieving advances around potency, durability, and/or dosage sizes will be another critical way we can better control and/or adjust our therapies’ COGS. However, as Spink reminded us, amassing the information necessary to achieve such scientific advancements and reduce COGS ultimately requires long-term investment in process development and process understanding.
In other words, we need to embrace the seemingly antithetical notion that, to move quickly, we must first slow down and, yes, spend more.
To Spink, this oxymoron is one of the biggest challenges we’ve faced and will continue to face in the future of the CGT development space. After all, it often feels as though the odds are stacked against us when it comes to moving more slowly and thoughtfully. Not only are we an inherently ambitious industry, but thanks to a variety of financial, regulatory, and patient-focused reasons, we’re pressured to establish a process and whisk it as quickly as possible into the clinic. We also can’t ignore that funding is typically tied to a regulatory and/or clinical milestone. This milestone-based funding — especially in times of financial strain — ultimately incentivizes us to go against our oft-proclaimed motto, “Begin with the end in mind.” Instead, we’re encouraged to train our eyes only on the next most important step.
Despite its prominence in company slide decks and webinars, “beginning with the end in mind” remains an Everest-sized hurdle for us to clear thanks to one hard-to-ignore reason: the entire industry is still largely naïve to what “the end” looks like. In this age of great turnover, development hang-ups, and limited product approvals, we’re rarely privy to the entire development lifecycle of our ATMP products and what sustainability will mean/look like beyond the clinic. In turn, there can be a certain amount of manufacturing-related “sticker shock” around making significant investments in CMC development before clinical proof-of-concept (POC) has been secured. However, the accelerated clinical timelines associated with ATMP products often mean there isn’t time for these investments once POC is obtained.
Similarly, as companies grow more cautious about their finances today, Spink expressed concern we could be at even greater risk of “sticker shock” stifling our (often much earlier) pursuit of product/process knowledge. Such caution could translate into less knowledge about our products and ultimately discourage us from employing the costly but critical COGS levers early enough in development.
“Historically, CMC is the first team asked to make sacrifices to stretch out the financial runway,” Spink explained. “My biggest concern for the space as we move into this period of greater financial conservativism is that companies will be less keen on making the long-term investments necessary to ensure our manufacturing is more scalable and cost-effective. I certainly hope I’ll be wrong about this; we’ve developed a much greater understanding of how critical CMC is for this space. But we also cannot ignore historical patterns.”
Stay tuned for Part 2 in which I’ll share a handful of best practices that arose from my discussion with Spink around what teams need to do and/or consider to “keep the end/COGS — in mind.”
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