From The Lion King To Cell & Gene: "The Circle of Life" For Sustainable CGT Products & Businesses
By Anna Rose Welch, Editorial & Community Director, Advancing RNA
Last fall, I had the great fortune to speak at the 2022 AGC CDMO Summit in Boulder, Colorado. What I didn’t anticipate when I boarded the plane for the conference last November, however, was that I’d have such a great time I’d end up pleading (in a very dignified fashion, mind you) to return as an attendee for the 2023 Summit a few weeks ago in Copenhagen.
Admittedly, the agenda for the Copenhagen summit was more focused on the antibody development world as opposed to cell/gene/mRNA. However, the presentations on industry investment trends, technology advancements, supply chain management, and sustainability are just as critical in the less standardized ATMP space. Though I’ve argued the mAB industry is not the be-all-end-all model of success for the modality-diverse ATMP space, I saw this conference as a great opportunity to identify where these two different therapeutic development ecosystems do align and can inform each other. What ultimately came to light were several ways in which we can begin to clarify the hard-to-define concept of sustainability that is impacting both the antibody and ATMP spaces.
We tend to think of sustainability predominantly in terms of environmental/social initiatives. However, the CDMO Summit presentations also shed light on three additional types of sustainability — and the mindsets underpinning them — that are essential for establishing an efficient business without placing our manufacturing and quality initiatives at risk. Whether it be defining what a sustainable product and company means to us; navigating turbulent financial waters; or managing our relationships with our suppliers, I walked away from this event with a handful of learnings on how we can meaningfully define what sustainability means within our own technical operations.
Product/Platform Sustainability
Throughout this antibody-focused conference, I couldn’t stop marveling at the cyclical nature of the biotech industry. (In fact, I dare say if our industry’s life cycle had a theme song, it would be “The Circle of Life” from Disney’s The Lion King. You’re welcome.) In every therapeutic sector, there’s a “the sky’s the limit!” period of scientific curiosity followed by the long (& often soul crushing) pursuit of scientific/technological standardization. Once we arrive at that coveted, efficient standardized manufacturing paradigm, however, I daresay our endless need as R&D and CMC professionals to “self-improve” wins out. In turn, we often find ourselves straying from the order of standardization and stepping back in front of the scientific and technological drawing board.
On the one hand, we see this return to the drawing board very clearly with the rise of brand-new modalities, like the AMTP players. We talk endlessly about the complexities arising in our daily lives thanks to accelerated clinical and CMC development and the need for tighter-than-ever cross-functional collaboration. But what I found particularly interesting is that this same conversation is, believe it or not, also being had in the antibody space today — “standardization” aside. In addition to the ever-increasing market/competitive pressures facing all innovators, antibodies continue to become more complex, thanks to potency-enhancing modifications and the rise of antibody drug conjugates and bispecific and trispecific antibodies. (Bispecifics, BTW, are shaping up to be prime competition for CAR-Ts, according to these doctors). As the design of antibodies and their mechanisms of action become more complex, the antibody space, similar to that of the CGT industry, is striving to clinically “de-risk” products even more quickly, while, in parallel, making the CMC more efficient to get to the market faster. In other words, boredom is not an option (or a reality) in the life cycle of any biologic (antibody or CGT), regardless of how commoditized its manufacturing may become.
This biotech “circle of life” raises a few interesting product and platform-related sustainability challenges for smaller companies exploring novel modalities in both the antibody and CGT spaces. Of course, a common milestone in a biotech’s life can be the company’s or its lead product’s “adoption” by a big or mid-size pharma company — and the next few years will be no exception to this biotech rule. Thanks to imminent patent expiry on some enormously profitable biologic products (i.e., Opdivo, Humira, Keytruda, etc.), it’s expected that Big Pharma and mid-cap companies will have big appetites for new clinical assets or commercial infrastructure M&A over the next 12-24 months as they strive to recoup commercial losses from their “golden goose” products.
But as common as this acquisition “fate” is for early clinical products and pipelines, I was also surprised to learn from Kevin Eisele of William Blair that 20 to 30 percent of drug launches in the past couple years have been from first-time launchers, as opposed to large pharma. As we discussed during the conference, it’s hard to pinpoint the reason(s) behind why a greater number of small biotechs are carrying out commercialization themselves, as opposed to being considered a de-risked and desirable acquisition by a Big Pharma. We could venture that the small market sizes and/or commercially unvalidated indications we ATMP companies have been targeting could be a factor here. But, as Eisele surmised, larger companies looking to acquire products may be willing to pay more for a molecule that’s been “de-risked” not only clinically but also commercially.
Admittedly, only a small number of CGT companies have reached the commercialization finish line on their own. However, considering the percentage of first-time launchers (i.e., “new” companies) commercializing products, I think it’s important to reemphasize the importance of “quality first” development. As we continue to face increasing pressure to establish proof of concept and speed through the clinic, it can be easy to fall into the mindset of “good enough,” especially if we’re hoping to offload our lead product(s) ASAP to another company. It bears repeating here that a sustainable company is not just one with a solid financial runway, but it’s one that also creates a solid quality runway.
We’re often told to begin with the end in mind. As we strive to be the answer to commonly overlooked patients’ needs, we as smaller companies should be striving to build a business and a manufacturing paradigm that can stand the test of commercialization — regardless of whether it will be our own internal development platform or someone else’s that takes our molecules to patients.
Financial Sustainability
Just as our industry’s drive to innovate is cyclical, we know quite well by this point that investors’ appetite for risk goes through similar fluctuations. As many of us are painfully aware, the past year or so has been far from stellar from an investment standpoint. However, there are a few things worth celebrating. Though we’ve seemingly been through a particularly long funding “winter,” current trends in the financial markets suggest we may (finally) be on the cusp of spring.
As Eisele explained, 2022 was a problem year for most of the biotech sector, regardless of the therapeutic modality or indication(s) in which companies were working. However, as we start to see small and midcap companies now outperforming their large cap peers, Eisele feels confident enough to declare that “risk is back on investors’ menu.”
There are, of course, some nuances to note. For one, we need to distinguish between private and public investments, the latter of which are more in vogue today. That said, however, funding rounds for private companies have been getting much more sizable. It’s not surprising to see series A funding range anywhere from $50 million to $200 million. I liked Eisele’s thesis around why this may be the case: investors are increasingly understanding of just how much it can cost today to reach certain development and funding milestones — particularly proof of concept.
“On the private side, it used to be that investors would supply just enough capital to ensure a company could nominate a candidate, and that was about it,” Eisele explained. “Now, given the emphasis on speed to market, investors are keen on making sure companies are well funded so they can accelerate into the clinic and hopefully get approved and commercialize their product.”
How long of a financial runway we may have as companies (public or private) can be a sensitive subject; indeed, 60 percent of public companies have less than two years of runway. Admittedly, this percentage has not changed much since Eisele presented this data at the AGC Summit in November 2022. That said, we’re starting to see greater consolidation in the biotech space — a factor which, as painful as it can be, enables investors to better concentrate their funding overall on fewer players and support them with greater amounts of funding in the longer term. In fact, as Eisele anticipates, by the end of the year we will see fewer companies in the danger zone of having less than 12 months of funding because investors will have more bandwidth to ensure these companies are well funded.
“More often than not, the focus is now on making larger, more concentrated bets on the companies that investors have high conviction in,” he concluded. “Should the market be bad in the next two or three years, investors don’t want to be caught relying on outside capital to keep a company on track. They want to make sure they can help ‘their children’ get on their feet after college rather than leaving them out to the wolves and hoping someone else takes them in.”
Supply Chain Sustainability
When we think about lowering our candidates’ risk profiles and reducing time to market, it’s easy to get bogged down by the smorgasbord of commonly professed regulatory, CMC, and clinical development challenges (and, yes, grievances). However, as ProDeMaCon Consulting’s Dave Cady articulated well throughout his presentation, we cannot and should not shirk our supply chains in our quest to build more sustainable manufacturing platforms.
To be fair, it can feel as though the market is a bit stacked against us in our quest to improve our understanding of and supply of raw materials in the ATMP space. After all, as Cady shared, most of the critical raw materials and quality testing materials are available from only one supplier in the entire universe (i.e., sole source). This is not to be confused with a single source material, in which we’ve made the choice to hitch our wagon to only one supplier’s star for the course of our product’s development and commercialization. But let’s be honest with ourselves — we are no strangers to this latter approach, either. There is no such thing as an overstaffed (or well-funded) process development team that also has the “free time” to qualify additional raw materials and demonstrate comparability. It’s also rare to find a small start-up company with the resources to create a (much-needed) team and formal program to manage raw materials.
However, as Cady went on to emphasize, managing raw material suppliers and protecting supply continuity must be a strategic priority to any company from the highest echelons of leadership.
“When we look at the annual filings from any company, they often discuss risk,” Cady noted. “But they rarely highlight the fact that the company and its product(s) are depending on the next shipment of critical materials from maybe a dozen or more suppliers to make the next batch of product.” As he continued, the risks that can come from a company not keeping a pulse on their suppliers’ own supply continuity should be something we hear more about from CTOs, given the critical risk this can pose to the industry.
Of course, preparing a supply chain fit for pivotal studies (e.g., identity testing critical raw materials) and carrying out qualification verification studies to ensure your suppliers’ consistency as we approach the BLA is easier said than done. Even Cady himself acknowledged that the best solution to mitigate supply risks — namely the establishment of a cross functional raw material and supplier management team — will require great persistence. But establishing such a management structure and building and leveraging supplier relationships at the right level are critical strategies to better mitigate supply risks.
First, this means shifting the relationship between purchasing agents and customer service reps to that of our (biotech) senior leadership and the senior leadership within the supplier company. It’s been a common challenge particularly in the CGT space for our young companies to garner our desired suppliers’ attention — especially in what has been a seller’s market. As such, it can be a boon for biotechs to have executive level touchpoints within their organization and within a supplier, along with a dedicated, cross-functional team focused on supplier management. In fact, devoting resources to a cross-functional team enables a company to implement a clear-cut communications pathway and escalation pathway to ensure we are “speaking with one voice” and finding a balance between “the sky is falling” and “surprise!” in communicating risks.
My inner literary nerd also loved that successfully building stronger supplier relationships and supply accountability hinges upon our ability to tell the stories of our products and the materials upon which they (and our patients) depend. Cady’s closing argument contained so much gold, I didn’t dare paraphrase.
“Suppliers don’t necessarily know where their raw materials are going unless you tell them,” he concluded. “It sounds simple enough, but sharing who you as a biotech or CDMO are, and how that supplier’s materials and services are enabling you develop a specific drug and treat a specific disease is rarely done. But, in my experience, understanding where my goods and services as a supplier are being utilized is a critical launch point for improving supply management. Mitigating risk is not carried out through a supply contract — though this is an important piece of the equation. It’s through careful relationship management. So, my message to you is this: If you’re leaning on a sole-source or single-source supplier, how do you make sure they know who you are?”