Given the transformative nature of regenerative medicines, which can yield greatly improved patient responses, meet unmet need, and now exist as viable products on the market, cell and gene therapeutics developers over the past several years have been drawing deal attention, not only through collaborative partnerships, but also as acquisition targets (see Datamonitor Healthcare’s Gene Therapy Deal-Making Trends, 2012–17 for more details). In 2019 to date, attention-grabbing headlines such as Roche’s announcement of an acquisition of Spark Therapeutics for $4.8bn (still apparently held up by regulators), Biogen’s $877m play for Nightstar Therapeutics, and Vertex’s pair of deals for Exonics (up to $1bn) and Semma Therapeutics ($950m) exemplify the demand to enter or expand in this sector.
But 2019 deal-making has also been notable for another critical piece in the cell and gene therapy modality: manufacturing. Therapeutic cells and genes are uniquely produced products requiring special scale, and technical and logistical considerations. A popular saying in the regenerative medicine industry is that “process is the product”, because inherent in the final medicine are the critical manufacturing steps that take place to make that medicine. In 2019, there have been at least six major acquisitions involving cell and gene therapy manufacturing companies.
Pace of deal-making highlights gene therapy manufacturers as prime deal targets in 2019
Source: Medtrack, September 2019; Strategic Transactions, September 2019; company press releases
In the largest of these transactions, Danaher paid $21.4bn for GE Life Sciences’ biopharma business, which brings with it a cell therapy and analysis portfolio including an end-to-end (from development through commercialization) bioprocessing and manufacturing platform. Thermo Fisher now owns one of the largest US contract development and manufacturing organizations (CDMOs) in the gene therapy market after buying Brammer Bio for $1.7bn. Brammer conducts clinical- and commercial-stage current good manufacturing practice (cGMP) manufacturing of viral vectors used to deliver in vivo and ex vivo gene therapies, specializing in adeno-associated viral, adenoviral, lentiviral, retroviral, and herpes vectors. In addition to consolidation among manufacturers, private equity buyouts have also played a role, with the purpose of these transactions presumably to further enhance value for shareholders. The majority of plasmid DNA supplier Aldevron was purchased by EQT VIII Fund, while Vibalogics, which performs cell-based virus production for gene therapies, was acquired by Ampersand Capital Partners .
Panelists at both the Cell and Gene Therapy BioProcessing & Commercialization conference in Boston, Massachusetts, held on 10–12 September 2019, and on Informa Pharma Intelligence’s webinar Manufacturing Challenges Facing Cell and Gene Therapy, held on 19 September 2019, discussed factors driving such acquisitions. According to Wouter Van ’t Hof, the cord blood bank director at the Cleveland Cord Blood Center, these deals can bring in additional capacity and enable further iterations of existing capabilities. They also signal that acquirers are looking to diversify their portfolio offerings. Bob Preti, president and CEO of Hitachi Chemical Advanced Therapeutics Solutions, agreed, saying these acquisitions add important services, allowing customers access to a harmonized network that is more efficient than working with separate providers or a loosely affiliated network. Preti believes another key advantage to building through M&A is geographic expansion, giving therapeutics developers access to multiple regions in the world. There was consensus among the panelists that the pace of acquisition activity for manufacturing companies will continue in the future. “I expect to see this consolidation trend really increasing. The biggest players will be snapping up other parts to make more complete offerings,” says Preti.
Companies that have drawn big acquisition dollars, such as Brammer Bio, Paragon Bioservices, and apceth, are quite attractive because they play key roles in the development and manufacturing processes of gene therapies. Many therapeutics developers choose to outsource the manufacturing piece as opposed to introducing and broadening that capability in-house. For many companies, says Steve Oh, director of stem cell bioprocessing and institute professor at A*Star, partnering is a viable option for those short on cash who cannot invest in internal manufacturing. When scouting and evaluating an outsourcing partner, there are several important characteristics that therapeutics developers should take into consideration, such as understanding the volume of products to be produced, the complexity of those products, and accessibility to high-end equipment, including large-scale bioreactors that enable scale-up for vector manufacturing. From the developer’s side, having a good understanding of the process and critical quality attributes of the product is critical to establishing a robust manufacturing process. Partnering with a contract manufacturing organization (CMO) or a CDMO comes with multiple advantages, according to the panelists at the conference and on the webinar.
Advantages of partnering with a cell and gene therapy CDMO/CMO
| Therapy development
|| Potential to reduce development risk
|| Secure a scalable supply of product so that developers can transition from enablement to sustainability
| Access to capital/infrastructure
|| CDMO/CMO has capital, infrastructure, logistics, information systems, and an already built/presumably high-quality facility; access to this enables developers to avoid making a long-term investment in a facility
| Reduction in cost of goods
|| Potential to reduce cost of goods, increasing the chances for producing a viable product
| Speed to market
|| CDMO/CMO partners have the capacity to increase speed of product to market; partners can offer additional value on commercial manufacturing/high volume
| Geographic considerations
|| Ability to put manufacturing footprint in parts of the world that would otherwise not be accessible
| Expertise/trained personnel
|| CDMOs/CMOs already employ trained personnel to handle manufacturing for highly specialized cell and gene therapies
Source: conference panels at Cell and Gene Therapy BioProcessing & Commercialization conference, and Informa Pharma Intelligence’s Manufacturing Challenges Facing Cell and Gene Therapy webinar
Overall, to take the best path forward, proper alliance management should be in place – the manufacturer and developer would benefit most from a true relationship, where each partner is working toward a unified goal, with strong communication in place, including identification and discussion of bottlenecks that arise. Both Van ’t Hof and Oh agree that entering discussions with a CMO or CDMO partner as early as possible is an advantage; it is also important to begin that relationship with the ultimate use of the end product in mind, and to work backward to understand the goals needed to produce that end product. Having a target product profile, says Van ’t Hof, is a major factor for success in this regard, especially having a good grasp of the mechanism of action, potency, and stability: “Manufacturing capability or scale is no replacement for need to understand the fundamentals of the product.” Developers should approach CMOs already having a well-understood development process, a clear understanding of protocol, and for gene vectors, provide the CMO or CDMO with the source of the virus or plasmid. Another critical factor is face-to-face time, with developers having a presence at the actual manufacturing site to, for example, be able to physically see the clean room and observe. Geographic location between the partners is also an important consideration.
Outsourcing, however, might not be the best approach for all companies. Some of the advantages to outsourcing – including access to quality, scale, and automated systems – may also be reasons why a company would want to retain manufacturing internally. Chris Gemmiti, Sentien Biotechnologies’ vice president of operations, points out that automation in manufacturing is very unique to each developer, so this may be more appropriate to keep in-house. According to Lior Raviv, Pluristem’s vice president of development, a change in environment, such as manufacturing or process development, can alter the end product, which is another reason that a developer may not wish to outsource. In addition, because there is such a high demand from developers for manufacturing in cell and gene therapy, and a finite number of CDMOs and CMOs that specialize in this area, backlogs and long wait times are inevitable.
Developers do not necessarily have to choose one option over the over. Some could take a hybrid approach, and this might be appropriate in situations of curative therapies, describes Preti. When a product first goes on the market, a company needs to ensure that the pace of manufacturing can keep up with demand, because there will initially be a backlog. Based on the estimated patient population, a developer may want to outsource with a CDMO to meet, for example, half of those patients, because it is a known volume of patients. For the remaining patients, the developer may choose to build out its own manufacturing to handle the capacity because it will be highly variable, given that the product is a curative therapy, and eventually the number of patients theoretically will decrease over time as patients are cured. In this strategy, a developer can avoid overproducing while meeting the demand of the market and reaching patients.
To partner, or build out manufacturing, or do a combination of both, remains highly individualized to each company and the status of a project. The wave of deal-making around cell and gene therapy manufacturing players indicates that companies are looking for services that are broadened in terms of both capabilities and geographic reach. It is clear that understanding manufacturing challenges, introducing innovative technologies, and planning for future demand are all key to ensuring success in the cell and gene therapy industry.
 Medtrack, September 2019; Strategic Transactions, September 2019.