FOR BETTER OR FOR WORSE . . .

---

By Helen Paparis, B.Sc., MBA

The outsourced GMP manufacturing contract often represents a large chunk of the first financing for a small biotech. Cost control and a successful balancing of fiscal and science decisions to produce clinical lots of a biologic drug product can make or break a small company. The amounts of money juggled are large, and decisions for changes in manufacturing steps can result in significant unforeseen costs. There are several key success factors to managing the relationship with the contract manufacturing organization (CMO). These factors include getting off to a good start, learning how to walk the science/budget tightrope, and being ready to solve problems by having a good working relationship.

Once the agreement with the CMO has been signed, people sometimes think that the tough part is over. The challenge is to actually make it happen. At BioAxone Therapeutic Inc., a small biotech startup located in Montreal, Que., a recombinant protein therapeutic was successfully made at a U.S.-based contract manufacturer, delivered on time and within the budget framework. The project was not without some painful times, despite the benefit of the author’s “insider” point of view, having previously worked for a contract manufacturer. This article describes the experience of seeing the balls being juggled from the sponsor viewpoint. Success of a manufacturing project is defined differently according to the stakeholders. The venture capital (VC) investors are interested in a product of reasonable cost that passes regulatory scrutiny. The sponsor is intimately involved in the yield and purity aspects of manufacturing. Timely delivery of the product to meet an IND filing deadline or a clinical trial start date is important to all, especially if the clinical team is newly established. Success will be evaluated by the various stakeholders according to these parameters, so it’s a good idea to prioritize them up front, as doing so will help in making decisions later.

Starting the Relationship with the CMO
Normally, both the sponsor and the CMO each set up a multidisciplinary project team and identify project leaders on both sides. A face-to-face project startup meeting with both teams is crucial, and must include representation from project management, business development, senior management, manufacturing, process development and QC/QA. If the two project teams don’t spend at least one day face-to-face at the start of the relationship, it’s a sure-fire road to a rocky relationship.

Furthermore, it goes a long way if the sponsor presents information about its company, the biologic under development, the proposed indication, filing timelines and financial highlights of the business environment. For small biotechs, the VCs can weigh heavily in dictating timelines because these are linked to disbursement of funds. From the CMO point of view, if they can better understand the sponsor’s environment, then it helps them to be flexible and propose solutions that are more likely to suit the sponsor’s financial or timing constraints.

Contract manufacturing businesses are structured to have a small core project team that is involved in daily life with the sponsor, and therefore knows and understands both the sponsor as well as the biopharmaceutical product that is under development. However, the extended project team — such as the operator on the fermentation shop floor or the QC technician who is analysing samples from the manufactured lot — lives in a coded world where the sponsor has a code name, the product has a code name, and client confidentiality is protected as tightly as national security. The buy-in and commitment from members of an extended project team who at least know the importance of the therapeutic they are all working toward is immeasurable to their dedication.

After the initial kickoff meeting with the core project team, some CMOs follow on by conducting an internal project startup meeting with the extended project team. Insist on this. From the CMO point of view, a one-day investment for what may be a large extended team — including even clean room support teams — to partake in such an internal project startup gets the buy-in and commitment required, and can have measurable effects, such as reduced number of deviations, improved compliance in completing batch records on the shop floor, or faster turnaround time in delivering the records from operations to QA.

When you consider that the major modes of communication between CMO and sponsor are teleconference and e-mail, having the project team members meet face to face helps to make future communication more personal. Face-to-face meetings should also be held at other critical points in the project. In our case, the transfer from the process development group to the manufacturing group also meant a physical transfer to another site. Because the transfer coincided with pre-IND activities, we skipped a face-to-face meeting, and lived to regret it, because we did not get to meet the key players in the manufacturing facility until much later.

How to Make Tech Transfer Easier
Having your own SOPs (standard operating procedures) goes a long way in transferring the process to the CMO. This is especially true for analytical procedures that have been developed in-house for measurement of activity and quality of your therapeutic, or that are specific to your product. It is worth the investment of time to delay, and put processing methods on paper prior to embarking on tech transfer with a CMO. Time invested up front in this way will be saved many times over in reviewing potentially mediocre batch records later.

At the start of the tech-transfer process, it is an excellent exercise to walk through the manufacturing process as a team. The process being transferred from the sponsor to the CMO is often a bench-scale process. The walk-through allows the CMO project team to ask potentially crucial questions as well as identify unit operations that may have to be modified to meet large-scale or GMP requirements. A similar exercise for the analytical bill of testing is equally important.

Weekly and Daily Interaction
Don’t expect to hand off your process to the contract manufacturer and walk away. In our experience, the project leader and project team needed to be involved in every (sometimes painful) step of the way, and it’s best for senior management to recognize the colossal amount of time and effort that needs to be invested from the experts on the sponsor side. From the regulatory point of view, the sponsor is ultimately responsible; hence, you might as well take it head-on.

Your level of involvement and responsibility will be dictated by the experience and maturity of your CMO. Seasoned CMOs with a fair amount of experience will be able to advise you and help you a great deal, but such CMOs are often not within the financial grasp of a small biotech. If, like we were, you are dealing with a smaller CMO, or one with a short manufacturing history, then there is a bigger onus on the sponsor in maintaining the right balance between what needs to be done earlier versus later in development, after the product has proven itself to be safe in man. Also, BioAxone saved money by outsourcing specific assays to smaller, specialized third parties. For example, the National Research Council of Canada’s Biotechnology Research Institute in Montreal, Que. came to our rescue several times.

Regular team meetings are important to keep everyone informed on the progress of the project. Most CMOs have a weekly teleconference with their clients. In a large setting with both project teams present, the meeting should not get bogged down in details; smaller off-line meetings can be held for resolving specific issues. A separate, weekly scheduled meeting between the two project leaders is also necessary, in our experience. This is an ideal forum to exchange information about changes in either team’s environment, to look at the overall timelines, and to share feedback one-to-one. Typically, the project leaders from both CMO and sponsor are in daily communication for the duration of the manufacturing relationship.

After the project progresses through development to manufacturing, the kind of problems that crop up will change. Plan to have a person in the plant during your manufacturing runs at the CMO, especially for the first runs. At BioAxone, we view always having a person in the plant as a key success factor. This approach will ensure that even small deviations are dealt with swiftly and effectively. If disaster strikes, you will avoid having to wait for the formal communication from the CMO, and will get a head start on the decision-making process. Even when things go well, having a sponsor presence in the plant is good and current practice.

When Things Go Wrong
Things do — and will — go wrong. For example, processing issues may force a return to the bench. There can be equipment failures in manufacturing which lead to a spoiled batch — or maybe it is not clear whether the batch will be spoiled, and a quick decision is needed because of time/money implications. Ensuring the involvement of senior management for serious business-risk decisions will help the small biotech stay focused and reduce risk. Throughout our recent manufacturing program with our CMO, we had to make some tough decisions. Involving senior management and keeping our investors informed was the best way to share the risk in choosing the path forward so that there were no surprises later.

Be prepared prior to discussion with your service provider by brainstorming internally. During the manufacturing phase especially, we had to initiate and guide some of the most important problem-solving efforts. Our CMO was sometimes inflexible in its approach to both manufacturing and problem solving, so the BioAxone project team quickly learned to prepare internally, to have strong arguments ready. For example, in one batch early on, a temperature spike in the fermentation caused concern. We decided to abort because of the risk of a heat-shock response that could have changed the protein profile, leading to problems that would only have been detected several days later. We had reasoned the issues (science and financial) internally, helping us quickly decide to restart, thus losing only one day rather than, potentially, an entire week.

Reality of Invoices
Becoming familiar with the contract manufacturing agreement is important. The work contract itself with its legal jargon may not be light reading, but the most important thing is to be aware of hidden costs. Depending on the experience level of the contract manufacturer, the CMO is not necessarily going to know how to flag all costs, which can land as a big surprise to the small biotech sponsor. It is an experienced CMO that is able to adequately estimate and plan man-hours, and hence adequately forecast costs to its client. For those of us who do not have the luxury or money to work with the top-tier CMOs, financial management of the relationship takes on a more hands-on approach.

Examples of “surprising” costs include charges for raw material testing, which, if not explicitly discussed, can be a significant multiple of the cost of the raw materials themselves. Also, there may be man-hour overruns, as compared to the estimate for process-development work, which, if not flagged, may simply appear on an invoice at month’s end. In order for any invoice to be sent to the sponsor, someone at the CMO approves it internally. Hence, it becomes a question of raising that knowledge to a transparent level between the two parties, ideally between the project leaders of each team.

Expectations of how finances will be dealt with should be set out early in your relationship with your CMO. In French, there is an expression “les bons comptes font les bons amis,” which means, “good accounting makes for good friends.” Sponsor companies of any size, especially small ones with outside investors, need to be able to forecast costs as well as cash flow. Monthly business meetings between CMO and sponsor on financial management are useful for managing expectations on both sides. Don’t wait for problems to arise to arrange such meetings. At BioAxone, although we had monthly business meetings with our CMO, and made clear our financial expectations, we still received some surprise invoices. But our history of dialogue allowed more effective negotiation when this happened. A strong project manager at the CMO who is able to flag out-of-scope or out-of-estimate activities on a daily or weekly basis is the secret to an excellent financial relationship with your CMO. Creativity among project team members in resolving process and other issues is certainly valued, but the balance of ideas and cost is one that must be handled by project management on both sides.

As in any relationship, the one with our contract manufacturer had its ups and downs. Once the contract was signed, both CMO and BioAxone were in it together, for better or for worse. And at the end of the day, a successful GMP lot was manufactured. This lot has now passed regulatory approval and will be used for BioAxone’s first clinical trial in acute spinal cord injury.

BioAxone would certainly work with the same CMO again; there is a lot to be said for the value of the learning curve. The to-do list described above would clearly be the basis for management of any future work with our CMO, current or future.

Helen Paparis is director of Contract Research at BioAxone Therapeutic Inc. (Montreal, QC). She has 18 years’ experience in the biotechnology industry, in contract research, contract manufacturing, and project management. Paparis organizes and manages BioAxone’s outsourced activities. BioAxone is specialized in the development and commercialization of pharmaceuticals that promote neuroprotection and neuroregeneration in CNS and ophthalmology indications.