Monopoly — C&G Therapy Manufacturing Edition: Balancing Risk & Reward In Your Development Strategy
By Anna Rose Welch, Editorial & Community Director, Advancing RNA
It’s been a wild year for biotech investment — and the cell and gene space has been a willing and frequent recipient of much-coveted capital. ARM triumphantly proclaimed in its annual report that the advanced therapies sector garnered $19.9 billion in 2020, with cell and gene therapy financing increasing by 160 percent and 73 percent, respectively. In other words, the advanced therapies industry has been popping lots of champagne bottles or consuming celebratory cakes (or both).
As we all know well, the ATMP industry comes with its own scientific, manufacturing, and, in turn, financial intricacies. The science is downright cool — this we know. But when it comes to taking that science and turning it into a well-understood, well-engineered, reliable, and adaptable process, we’ve got miles to go (and millions to spend) before we sleep.
My burning questions around planning for and allocating funding for the manufacturing process — whether in-house and/or outsourced — led me to Freddie Dear and Alex Hamilton, partners at the VC fund Syncona. Given Syncona’s work founding and funding multiple cell and gene therapy companies, Dear and Hamilton were in the perfect position to discuss how they establish cost structures for these off-the-beaten-path manufacturing paradigms — and where the greatest financial management complexities arise.
Manufacturing Says, “Show Me The Money” And Investors Are Saying…
Before we jumped into the challenges and best practices of funding the complex C&G manufacturing processes, I wanted to hear Dear’s and Hamilton’s perspectives on the investment trends in the C&G space and the impact this could have on the manufacturing paradigm.
There are a few signs in the market — some flashier than others — that a company’s manufacturing capabilities and/or the manufacturability of a potential candidate are increasingly valuable and garnering investor buy-in. Obviously, one of the most notable is the seemingly constant roll-out of new facility announcements. Given the growing pains in the outsourcing realm and the smaller footprint for some of these facilities, investors are increasingly open to funding such endeavors. But we also can’t ignore the fact that valuations are trending equal across companies at all levels of clinical development.
“Preclinical companies are able to raise capital at valuations similar to that of a clinical company,” Hamilton observed. “This trend not only means that more companies are striving to build a financial framework for the long-term early, but they’re also more likely to direct some of these funds towards building manufacturing capabilities earlier as a result.”
Dear agreed with Hamilton, adding that manufacturing success is a real differentiator for C&G companies right now, not to mention it can be an inflection point strategically and funding-wise. Syncona, for example, commonly structures its investments around the de-risking of manufacturing. Just as companies may seize the opportunity to receive additional funding following positive clinical data, establishing a proof-of-concept manufacturing process or achieving a specific manufacturing milestone can trigger additional funding.
Evaluating The Financial Risks Of ATMP Manufacturing
When investing in a promising candidate and establishing a new company, the manufacturing strategy and its associated cost structure is, naturally, one of Dear’s and Hamilton’s first considerations. Two of the most important factors that will impact the amount of funding to allocate (initially) for manufacturing include the complexity of the treatment and the size of the market the product would serve. For an early-stage donor-derived allogenic cell therapy, for example, you can start by determining a treatment’s dose range and the number of donors this range will require.
It’s also well-known going in that both cell and gene therapies will be held to an increasingly stringent quality trajectory as they progress through the clinic. As Dear clarified, “We can plan at least five to seven years in advance for the costs associated with the tightening of manufacturing requirements through clinical development.” This includes having conversations with CDMOs and suppliers to get a realistic picture of outsourcing costs and how these will shift and impact funding needs and COGs over time.
However, for any early-stage candidate, Hamilton was honest that it’s impossible — at least at this nascent stage in the market with few to no commercial success stories — to precisely predict the manufacturing cost structure outright.
“We can predict the dose range and how much process development effort is required to decrease that range over time, while also being realistic about the risks inherent in establishing that process,” Hamilton said. “The goal is to arrive at an estimate that contains an appropriate margin for added flexibility.”
I don’t have to tell you there are a variety of uncertainties that plague the advanced therapy development paradigm and, in turn, its budget. Both cell and gene therapy players are grappling with the intense juggling act of evaluating, managing, and acting upon a constant influx of analytical and clinical information — often with immature or ill-equipped tools. What will differ between a cell therapy and gene therapy company, however, is how and when this information influences a company’s process development — and how that affects scale-up and capacity investments.
In Dear’s eyes, the greatest period of risk for cell therapy development is during preclinical and Phase 1/2 of clinical development, during which a company will receive the most actionable information on the structure-as-function relationship and the therapy’s efficacy profile. “For a cell therapy — and especially for an autologous cell therapy — the biggest challenge is building a process that you have confidence is going to hit the release criteria 90 percent of the time given the variability in the input material,” Dear explained. “You’re constantly tweaking the process to achieve the best product you can prior to entering the clinic. As you start to see the initial clinical data, you may need to revisit that process as you learn more about how the efficacy profile of your product is related to the tweaks you make in process development.” But once a company reaches its pivotal trials, regulators anticipate that this is the process that will bring the product safely and consistently to the market — and that the company has it locked-down.
If we shift to look at gene therapy development and its inherent risks, Hamilton argued that the timeline for process development and investing in a commercial-scale infrastructure can be quite different. “While you may be constantly trying to improve the process of a cell therapy product — particularly an autologous product — while you’re in the clinic, you want to have your process for an AAV gene therapy almost finished by the time you’re in the clinic,” he said.
As he went on to explain, this goal was reinforced by FDA guidance dangling the carrot of a quicker market approval timeline for companies achieving a more thorough understanding of CMC prior to entering the clinic. This guidance opened the door for companies to gain market approval after demonstrating batch-to-batch comparability in non-clinical studies and showing efficacy in a single pivotal trial (good-bye Phase 1/2). Whether this is feasible will, of course, depend on a number of factors, including the burden associated with demonstrating comparability prior to clinical development, the pivotal trial endpoint(s) and its associated risks, and the duration of the data. Hamilton acknowledged this guidance may not be applicable across all AAV gene therapy development programs. But the prospect of shaving years off of the market authorization timeline is certainly an appealing proposition.
Timing Is Everything: Keep Your Eyes On These Factors
However, the opportunity to accelerate through the clinic brings with it even greater financial and manufacturing complexity. As Dear and Hamilton emphasized throughout our conversation, determining when to best deploy funds throughout the evolving C&G manufacturing paradigm is a difficult art to master.
“The reality is that your estimate of how much capacity and the operational support you’ll need to manage that capacity will evolve as you progress,” Hamilton acknowledged. “So, the challenge is deploying that capital at the right time, rather than just putting it all up front to get to the end in one go.” As he went on to explain, there’s a difficult tension between a company’s desire to control its manufacturing destiny right off the bat and the fact that it will take time to learn the nuances of the process and the capacity it will ultimately require. “By investing in capabilities and facilities to service your anticipated commercial market too early, you risk settling on a platform that requires significant financial upkeep you can’t support with the cadence of the data you’re generating,” Hamilton said.
As the AAV example cited above exemplifies, the evolving regulatory paradigm, our increasing knowledge of the science and clinical efficacy of these treatments makes capacity planning particularly tricky. This is why it behooves companies to ensure they have a sufficient amount of capital on hand to support the necessary infrastructure advancements. For example, a cell therapy may start with 10 to 20 patients in its Phase 1 trial, which is supported in house by one cleanroom and 20 operators. Should the data from these initial trials look promising, the company will pivot quickly to Phase 2 enrolling somewhere in the ballpark of 50 patients. That number will climb to 100-plus patients by the time the treatment enters its pivotal trial. Each of these expansions triggers the need for additional cleanrooms and staff to manage therapy turnaround — and this is only during clinical development. Solid pivotal trial data will push the company toward approving the treatment and launching commercially as soon as possible. Servicing the commercial market will require a vastly different infrastructure which will also need to be approved by the necessary regulators.
“In cell therapy development, the bar can shift very quickly from ‘investigative cell therapy’ to ‘commercial product,’” Dear said. “Putting the GMP-grade infrastructure — including the appropriate number of people — in place to support that transition is a complicated and time-consuming process to align, even when you have the capital.”
We also can’t forget that shifts in dosage, target patient population size, and supply of critical materials (i.e., viral vectors, serum-free media, transfection reagents, etc.) can throw a wrench in the best-laid plans and threaten or downright destroy a product’s commercial viability. A shift in patient population size could lead a company to find that the manufacturing facility (or facilities) are ill-equipped to benefit both the patients’ needs and the company’s economies of scale. Realizing that the dose will be twice as large as originally anticipated will jack up an already high cost of goods and blur the lines of commercial viability. For cell or gene therapies relying upon third-party manufacturers for viral vector manufacturing and supply, it may make sense to spend the additional money on manufacturing two batches of viral vector, instead of one, to proactively mitigate delays on the CDMO’s side — and the resulting cash burn as development languishes.
“Because of the critical nature of the timelines, you’ll often find that you’re spending on back-up plans ahead of time in case your original plans don’t go as intended,” Hamilton offered. “Depending on the situation, those upfront costs will be worth it to save yourself from a troublesome downside scenario.”
To best define manufacturing strategies and back-up plans A-E (and onwards), both Dear and Hamilton emphasized how important it is to bring a Chief Technology Officer (CTO) and/or a head of manufacturing on board at a company as early as possible. And though embracing communication is a given, it’s a best practice that (always) warrants repeating: any organization — but especially a young advanced therapy company — must be built around a regular, thorough, and honest flow of data and information from process development all the way up to the CTO. This will ensure that the data being produced is supporting and regularly informing the overall manufacturing strategy and its associated costs.
In fact, such communication will be exceptionally important in the years ahead as process development folks unlock the highly anticipated gains in the yield and purity of advanced therapies. While Dear and Hamilton anticipate overall C&G therapy development costs to continue increasing in the next few years, higher, more rapidly achievable yields boasting greater purity will likely counterbalance these increases.
“What costs $10 million today may rise to $15 million in the next few years,” Hamilton surmised. “But you might be getting twice as much product for that cost. So, on a unit basis, the development of a cell or gene therapy will ultimately become more efficient.”