A One-Stop-Shop For Biologics Production In Europe
By Louis Garguilo, Chief Editor, Outsourced Pharma
A history of bio-pharma outsourcing is writ large upon the chronicles of Cobra Biologics.
It is the story of three European manufacturing facilities—a former AstraZeneca plant; one built by a Swedish pharmacy in the early sixties; and a biotech’s IC-funded dream—converging over decades and serving as a barometer of industry trends. The story touches topics of past and present, including the:
- vicissitudes of big pharma
- emergence of biotechs and biologics
- cycles of venture capital and economies
- growing centricity of outsourcing service providers
Facilities In Play
We start with the AstraZeneca facility, in Södertälje, Sweden, 30 kilometers southwest of Stockholm, birthplace of Astra AB. “It was and is today a modern, well equipped facility with two cGMP suites fantastically laid out, and scientists with vast experience producing mammalian and microbial products,” says Peter Coleman, CEO of Cobra Biologics, our bellwether CDMO.
“Södertälje was AZ’s first serious foray into biologics,” says Coleman. “They built it in the early 1990s, and thought it would deliver fantastic products, but that never happened. Not to be critical of big companies, but biotechnology was new, and is different, more entrepreneurial and free-wheeling.”
With a lack of internal success, AZ turned to a multi-billion dollar purchase of MedImmune (2007) as “a replacement strategy for developing biologics. Södertälje became surplus to their requirements. They were effectively abstracting themselves up the pipeline by buying a business with more advanced products than those in-house,” says Coleman, outlining a strategy much repeated by pharma.
Enter the service provider, stage right. Recipharm, today a leading CDMO with manufacturing facilities across Europe, scooped up Södertälje in 2009. According to Coleman, “It was an opportunistic purchase. Like many others, they recognized the need to get into biologics, and that it was the future.” However, 18 months later, the plant was again in trouble, this time under utilized. “Great facility, great people, but with no track record or traction,” says Coleman. Add to that a steep recession that the industry is still talking about today.
Recipharm considered options, and what they decided introduces our protagonist center stage. “Recipharm bought Cobra because it was well established and had a commercial arm,” says Coleman, “and they got it for a steal.” Coleman, then finance director, remembers this period well. “We were in a serious recession in 2008-2009, and to be honest Cobra was on its last legs. Funding had dried up completely. I was just trying to keep the business going on a week-to-week basis. So Recipharm picked us up for a small fee and renamed us Recipharm Cobra Biologics.”
Spun In, Spun Back Out
The expectation was that Cobra would make an immediate impact in terms of winning orders. “That did not transpire,” recalls Coleman, “customers and capital had dried up. We were burning cash. It was going to take longer.”
Thus, in 2011, it was decision time again, and not only the Södertälje facility, but all of Cobra. Recipharm considered two paths for the promising but struggling asset.
“The email was clear,” says Coleman, who had become the unit’s CEO. “You know this business; we either spin you out, or we close you down. We think you are the ideal person to deliver both.” He then adds, “I took the job on that basis.”
According to Coleman, it was Chief Executive Thomas Eldered who led Recipharm into biologics. “He continued to believe in the business potential. And that,” Coleman says with a note of respect, “has been validated ever since.”
Today, Cobra Bio serves global customers—including Actavis, Israeli customers such as Kahr Medical, and J&J’s Crucell—as a privately owned CDMO offering an array of biology-based development and manufacturing services for antibodies, recombinant proteins, viruses, phage, DNA, whole cell vaccines and therapeutics as well as biologics and small molecule API lyophilization and fill-finish. Eldered remains the majority owner.
“I find it funny when people are risk-averse to taking positions. I thrive in an environment like biotechnology, founded on risk but great promise, very active, with lots of contracts, lots of different customers.”
Once back on its own, Cobra moved quickly. “The first thing we did after separating from Recipharm was acquire the Matfors facility,” he says referring to a plant originally established by Sundsvall Pharmacy in Matfors, Sweden, in 1963. Through the years, the facility changed ownership several times, and was a microbial production and fill-finish operation run by Unitech Pharma, when Cobra came calling.
“The history of this facility encapsulates the biotech industry, all signs and elements. You’ve got Matfors starting out as a pharmacy, involving itself into a biotech, in a region with no biotech, and now it is a part of a growing CDMO.
Back To The Beginning
Before getting reeled in and then set free again by Recipharm, Cobra had moved through the uneven underbrush of the biologics contract services—and venture capital—industries. It traces back to a gene therapy company called Therexsys, the first UK company focused on non-viral gene therapy technologies for the treatment of haemopoietic diseases and cancer.
“The initial emphasis was to acquire the R&D and products in early development to get into gene therapy,” says Coleman. I was doing the due diligence, and we soon recognized the biology contract services business had the great potential. I think Lonza was interested at the time as well. Finally, in 2002 we stuck on the idea of doing an IPO. That’s when I got the proper job as finance director,” Coleman says with a laugh.
"The barometer I have always referred to is how lively the market is in fund raising. For our clients and Cobra’s history, success has remarkably tracked VC and the performance of IPOs,” says Coleman.
“All three sites are so typical of the biotech industry,” he continues. “Each is unique in what it offers. My job is to bind those different product lines and working cultures under one brand. We are trying to achieve consistent service, flexing towards customers’ needs. We do this by having one commercial department representative of all three sites, and including both sales and project management.” Coleman confirms for me this service and project management integration, and capabilities expansion, is customer requested. “Yes, always,” he says. “We also represent the trend of the one-stop-shop in biologics services.”
Back To The Future
Cobra’s most recent activity is a partnership with QuiaPEG Pharmaceuticals, a biotech spun out of the University of Uppsala (Sweden). I spoke with co-founder and CEO Marcus Bosson about the opportunity, and in keeping with our theme, asked about the trends his company foretells.
He says QuiaPEG is focused on raising quality and reducing costs in the production of biologics, biosimilars and particularly biobetters, based on a PEGylation platform and technologies. “We are a start-up, but our science came out of 30-plus years of university research. PEGylation itself has been around since 1973, but we can confidently claim we have a strong and substantial IP position. The added value to clients isn’t only the lower cost of production, but also extended patent life for new molecules and lifecycle management for older products.”
Interesting to our narrative, here we have a biotech early in its existence identifying a CDMO partnership as key to its initial success.
“Our agreement with Cobra is significant for us,” Bosson says. “We were ready to find and engage customers, but we knew we were too small to do this ourselves. Why not team up strategically with a contract manufacturer with a good track record? We think we can make a significant contribution to Cobra. It is a clear win-win situation.”
I asked Bosson if his company was located in a bio-cluster, reportedly so important to startups nowadays.
“Yes, including Uppsala, where we originate, and Stockholm, centered on the Karolinska Institute, where they award the Nobel Prize. Our office is now located there,” he says. The local landscape, suggests Bosson, mirrors that of bio-clusters around the world.
And so does recruitment.
“We have a local pool of people from other biotechs, and a lot, sorry to say, of former AstraZeneca and Pharmacia employees. It is kind of the industry recycling itself, to the benefit of smaller companies,” he says.
Coleman also commented on the QuiaPEG alliance: “I read an article that said the emphasis is not how big your capacity is anymore, but in novel, specialist approaches to problems. Being able to offer clients flexibility, reducing batch size, house technologies, increasing titers, these are elements that enhance the customer’s product. Clearly the PEGylation piece can provide that. Over the next few years we will be increasingly looking at these types of arrangements to use and license outside technology for customers.”
What else does Coleman see ahead?
“There has been an increase in demand, and an interesting dynamic is the change in emphasis on what we have been selling. We are steady on the mammalian side, and this has reflected the market, which is 65% mammalian, 35% microbial. But this year there has been a shift towards microbial, particularly DNA-based products, and I guess you pull them together under the gene therapy banner. So I predict mammalian-related production services will predominate, particularly for biosimilars, but I see a significant increase in gene therapy and in the DNA virus area.”
“I have aspirations to do an IPO at some point,” Coleman concludes. “If that comes in the next few years, we’ll see. But it is a nice goal to aim for, getting back to where we were going when we started out.”