The Biotech And The Behemoths

By Louis Garguilo, Chief Editor, Outsourced Pharma

Biotech Genisphere LLC started with a list of around 35 candidate CDMOs to help them with the manufacturing of their nanomaterial. As it turned out, the two partners they selected are well-established multinational CDMOs.

Can this biotech have any leverage in these relationships?

Tom Bliss, recent CEO of Genisphere, and James Kadushin, (retired) VP Operations / COO, say yes.

The Best Choice Was Big

The fundamental “gating issue” for Genisphere in its CDMO search was technical capabilities surrounding the ability to manufacture a product built from nucleic acid (DNA). After initial discussions, the company’s candidate list was whittled down to about a dozen where both sides agreed the CDMOs had the requisite development and manufacturing capabilities. That field was further reduced to a final handful, from which two established multinational CDMOs, one based in the U.S., and the other in Europe, were selected.

Genisphere was: a small company relying on increased funding; unproven in the drug development arena; pursuing novel “3DNA” nanotechnology in modest in vivo studies – thus also needing relatively little material (actually grams might make up an entire campaign).

So why would these established, larger CDMOs want to get involved?

Bliss says there’s a twofold answer. He explains that “3DNA is an exotic instrument, and a lot of the smaller or midsize CDMOs dropped out because they didn’t really understand it and weren’t willing to make an investment. The two we partnered with were just the opposite. They're keen to be on the forefront of novel modalities. I think their perspective is a gram or two for Genisphere initially, could turn into a quite a few grams for others coming along in the field. This is very unique material with uncommon performance characteristics, and it could put them in the front-row seat for this category of targeted therapeutics.”

He says these CDMOs draw parallels with this new technology, the genetic therapies emerging today, and those biologic therapies that emerged 15 or 20 years ago. They want to “be around as a new modality emerges, hoping that like those who developed biologics capabilities, they will end up creating tremendous value for themselves and their shareholders.”

Sounds nice … but CDMOs like to get paid in the here and now.

“In the meantime,” responds Bliss with a laugh, “They are getting paid, and making a decent margin from Genisphere. And in fact we are working together with other customers that come to us in this field.”

He hesitates a moment then adds: “Of course our business plan – not of exclusivity but of working so the entire industry can advance the technology – makes it paramount that Genisphere trusts the CDMOs it sends work to. We need to ensure they “lock down our process development, and that they understand, acknowledge, and respect our background IP.”

Kadushin, VP/COO at Genisphere at the time of CDMO selection, adds: “We executed master service agreements that memorialized the protection of our IP in a solid contractual form. Obviously our IP is our lifeblood. So even though we had really good relationships with these CDMOs, we wanted to be certain that over time our IP position was fully protected. We feel these established CDMOs covered that nicely for us under MSAs.”

Since Genisphere is in the early development stage, like with many biotechs the reproducibility, scale up/process advancements of the material is “a baseline dictating our long-term relationship with our partners, both operationally as well as contractually.”

Nonetheless, both Bliss and Kadushin are impressed with the flexibility of their selected CDMOs, their planning for the future, and for producing GMP materials out to potential commercial launches.

“But to be clear,” says Bliss, “the relationship right now is based upon contractual obligations on both sides around the development and scale up processes.”

Innovation Is Diffuse; Commercialization Not So Much

This narrative serves as a counter-confirmation of the sort we’ve been looking for throughout 2018; that big (and getting bigger) CDMOs will work effectively with smaller, innovative biotechs.

Because biotechs have indeed told us of instances – and increasing concerns – of being shut out of development or manufacturing services/capacity, because the bigger CDMOs focus on established biopharma customers. In fact given a choice, smaller biotechs say for the most part, they are more comfortable working with a CDMO that is more their size.

The problem is the smaller CDMOs often do not have the risk-taking profile, nor financial/human resources for the new technologies biotechs approach them with.

Bliss puts this in perspective: “Interestingly enough, precisely because of the leading-edge nature of 3DNA and our platform, we ended up working with larger multinationals. They had the grit and the guts to try making these very novel nanostructures, as well as the backbone to support their development, and to either set aside or create the infrastructure to support that willingness to be a part of this.”  

Which brings us to what Bliss describes as a “constant dynamic.”

“Innovation is as diffuse as ever, but when innovation has to now be commercialized, the pendulum swings back and forth. You go through periods of consolidation with fewer players on both sides. Then there’s the need for more innovation, services and capacity, and you see the creation of smaller biopharma and service providers to support that in another cycle.”  

He continues: “When you have modality changes such as we're witnessing in genetic medicine right now, that will eventually lead to the creation of more firms, many of which will then get gobbled up, on both sides of the equation. Again, we only have to look back to the biologics revolution to see how that played out. And when we look at companies in the cell and gene therapy space, they are in that cycle of converting research-standard processes to GLP and GMP. I'm thinking particularly of some of the ex vivo processes, CAR and CAR-T.”

Both Bliss and Kadushin believe the revolution Genisphere is participating in today, involving their 3DNA and applied nanotechnology, will eventually produce more service-provider options, with some new entrants emerging as leaders in the space.

“When you look at it,” concludes, Bliss, “3DNA is a synthetic process. Our lead program to take into GLP and then an IND in human patients is a relatively simple synthesis. That's something the larger CDMOs we ultimately selected are versed in. They got comfortable with the notion that they're working with DNA – A's, C’s, T's and G's, and realized they could take this on. I’m sure others on both the biopharma and CDMO side will follow.”

For now, though, it’s the biotech and the behemoths. And they seem to be working well together.