Cell and Gene Therapy Manufacturing: To Build or Not To Build

In this complex and growing market, CDMOs can help clients smooth commercial cell and gene therapy manufacturing demand

It’s well known in the cell and gene therapy field that demand outstrips supply in the cell and gene therapy manufacturing space. This has led a number of cell and gene therapy developers to build manufacturing facilities for clinical, and hopefully commercial manufacturing of their cell and gene therapy (CGT) pipeline products.

Recent findings from Industry Standard Research (ISR), which focuses on pharmaceutical trends, showed that the percentage of cell and gene therapy companies who outsource CGT manufacturing is expected to drop from 44% to 22% over the next five years especially as their products move closer to commercialization.

While it is understandable for cell and gene therapy developers to want to retain control over their manufacturing destiny, there are downsides to this approach which should be considered.

In the interests of full disclosure, I work for an industry-leading contract development and manufacturing organization (CDMO) that CGT companies depend upon to manufacture their cell and gene therapies for preclinical, clinical, and commercial uses. I’m proud of the work we do and believe that CGT products and CDMOs in general will continue to flourish. Even so, I don’t believe I would have a different opinion if I were an independent analyst.

Why Developers Keep Cell and Gene Therapy Manufacturing In-House

First off, let’s examine several reasons why so many CGT developers say they are eager to bring their manufacturing in-house.

• Time. Companies want to advance their pipeline therapies as rapidly as possible, particularly at clinical (and hopefully commercial scale), and see in-house manufacturing as an avenue to realize that vision
• Confidentiality. Numerous therapeutic developers in the CGT space follow “the process is the product” mantra having spent significant time developing novel CGT products and believe certain product attributes represent proprietary/trade-secret know-how.
• Experience. Each CGT product is generally unique meaning there is a learning curve to onboard new groups performing the manufacturing process and analytics. Some companies feel they know their process as well as analytics and are therefore the group most capable of manufacturing the product.

But here’s the thing. Some companies have built cell and gene therapy manufacturing facilities so they can support clinical, and hopefully commercial, manufacturing, but even modest facilities require significant capital investments into the tens of millions of dollars. Once the facility is built companies must find people to staff and run the facility, no easy feat in this market where talent is tight and turnover can be high. Operational requirements (staff, facilities, etc.) vary depending on facility size but it’s not uncommon to see monthly operational burn rates in the seven to eight figure range or higher.

One primary reason companies decide to build their own facilities is to retain control of their manufacturing timeline. Another reason revolves around saving money by insourcing. When evaluating cost savings, companies should include facility build, qualification costs, finding, hiring and managing talent as well as idle capacity costs. CDMOs function by operating manufacturing sites at high utilization; this is important for both facility and employee costs. If facility utilization is not considered, much of a GMP manufacturing facility and the attached manufacturing teams may sit idle.

Idle manufacturing teams bring additional costs for retraining if teams only intermittently perform cell and gene therapy manufacturing processes. The pace of early clinical manufacturing, especially for Phase I, moves quite slow and companies should coordinate with the clinical operations teams to understand the pace of manufacturing expected as this is important when planning facility size.

There is another important consideration when thinking about building an internal facility: What is the build timeline? In the past this might have seemed like a rather silly element to add to the list because the speed of construction was generally commensurate with how quickly companies were willing to spend money. Since COVID disrupted supply chains though, this is not the case. Key pieces of equipment whether it’s electrical, control boards, or generators for example have lead times exceeding one year. Even the best planned builds may take one to two years longer. Additionally with inflation, there has been significant construction cost increases on a per square foot basis.

Once a facility is built and staffed, operational expenditures are owed every time payroll is due. If the cell and gene therapy manufacturing facility is built and managed by a pre-revenue, pre-commercial stage developer this can rapidly eat up a company’s balance sheet.

There are other challenges such as deciding what size facility to build once a company has commercialized a therapy. Many CGT therapies in development are intended as curative therapies, considered one-and-done, which comes with a different demand curve than maintenance therapies. If a facility is built to serve peak demand, a company may end up with excess capacity once backlogged cases have been cleared. In contrast, if a facility is built to serve maintenance demand — the company may miss out on revenue since they are treating just a segment of the addressable population.

How a CDMO Partner can Help Streamline Cell and Gene Therapy Manufacturing

In these situations, it would be helpful for companies to partner with CDMOs to help them smooth their commercial cell and gene therapy manufacturing demand. A company might think about building a modest facility once they reach commercial and rely on CDMO manufacturing for overflow and geographical reach outside their home base.

I’ve been vocal about this recently. CGT developers are likely to spend less outsourcing their GMP manufacturing to commercial than the capital expenditure required to build their own manufacturing facility. The past year has seen numerous manufacturing facilities change hands via sale and/or partnership. While we can only speculate on the reasons why facilities are changing hands, one possibility is because of the revenue drain on a company’s balance sheet.

In today’s market, startups are more likely to turn to Contract Development and Manufacturing Organization for manufacturing support. As noted in this article by CRB Group , startups often lack both the capacity and experience in clinical and commercial cell and gene therapy manufacturing. They tend to be capital-challenged and lack complete understanding of GMP regulatory requirements and experience establishing a robust quality system. In fact, a 2021 survey of 500 industry leaders by Horizons Life Sciences found nearly three quarters (≈75%) of start-ups plan to partner with CDMOs.

Large pharma is different. They are more likely to leverage internal manufacturing capabilities or a hybrid of their own facilities and outsourced production because they have the capacity and workforce to bring drug products to market and have more capital. Another difference is generally large pharma companies have other commercialized products which produce revenue.

And manufacturing is only one part of a CGT therapy’s lifecycle. Discovery, safety assessment, regulatory support, and testing are also required. Companies often outsource to a CRO for much of these ancillary services. We all know how critical manufacturing is in the CGT space for the final drug product. Partnering with a company early that can provide assistance in process development and has experience developing processes with commercialization in mind (along with having brought other therapies through the regulatory pathway) can offer a significant guiding hand to develop a robust and reproducible process with the proper critical process parameter (CPPs) and critical quality attributes (CQAs). Having this same company involved with your safety testing and release testing provides for a unique synergy for CGT products creating significant opportunities for time and cost savings.

As I stated at the beginning of this post, there is a continued CGT CDMO manufacturing capacity shortage, resulting in sometimes significant wait-times, and this is one reason companies decide to build versus outsource. However, building a new facility or renovating an existing one also impacts the road to commercialization. CRB notes that for a new facility build, it can take up to two years to design, construct, and commission qualification. “Ninety-two percent of the industry experts we surveyed indicated they had experienced a shortage of consulting, design, and construction service providers, with almost one in five stating this shortage was extreme,” notes Brita Salzmann, Process Engineer for the CRB Group in her article. “Given this timeline, the earlier a company can plan its production strategy, the better, which also allows for building in strategic flexibility.”

The good news is CDMOs recognize the need for GMP manufacturing space and are expanding accordingly to meet demand and deliver curative therapies to patients.