CDMO Management for Sponsors — Part 2: Handling SOPs, Multiple Partnerships, and M&A Disruptions

Life Science Connect Editorial Staff

At our second OP-Virtual, Outsourced Pharma Chief Editor Louis Garguilo invited individuals with professional experience at both CDMOs and biotechs to share advice and some best practices gleaned from working both sides of outsourcing partnerships.

The forum, moderated by Patty Seymour, featured contributors Lisa Wyman, VP of Technical Operations and Quality at Acceleron Pharma; Ken Baker, CMC Lead at Sage Therapeutics; Charlie Montgomery, Senior Director of CMC at Skyhawk Therapeutics; Bernhard Paul, President and Principal Consultant at Carinth Consulting; and Steve Collier, Executive Director of Process and Analytical Development at Sage Therapeutics.¹

The first article in this two-part series discusses identifying a CDMO partner and project startup best practices. Here, forum participants explore tenets of sound CDMO management and discuss how to avoid and/or overcome common challenges within those partnerships.

Effective CDMO management by a pharmaceutical company typically demonstrates three key attributes: clear communication, an understanding of the contracted work’s technical aspects (e.g., manufacturing and analytical methods), and proficiency in the partnership’s business and budgeting elements. These qualities also facilitate more adept correction of issues that arise around SOPs, multi-partner relationships, and M&A activity.

According to Baker, day-to-day discussions between technical teams and regular brainstorming/exchange-of-information meetings are commonly understood to be vital to a partnership — ensuring the sponsor and vendor understand each other’s long- and short-term priorities — but problem-solving and mediation are equally critical communication skills. Whether the issue is differing timeline expectations between the CDMO and the sponsor or identifying and correcting an impurity issue at the end of a production run, level-headed discussion is the best course toward understanding whether the risks associated with the problem and its potential solutions are acceptable, as well as brainstorming ways to mitigate some of those risks.

Technical understanding, meanwhile, empowers a sponsor to ensure the work being completed by its partner(s) is being carried out efficiently.  For example, a CDMO may be weeks into design of experiments (DoE) work and, analyzing the data, realize the DoE was not properly set up. Perhaps the CDMO was not looking at the correct variables, or a wide enough range of variables. Now DoE work must start anew. In-house technical knowledge allows sponsors to vet the work proposed by its partner(s) and to avoid repeating experiments, wasting time and money.  Similarly, comprehension of the proposed analytical methods lets a sponsor ensure it is validating the correct techniques.  

Shrewd management of the business and financial aspects of CDMO oversight produces obvious benefits, from favorable contract/master service agreement (MSA) terms to a budget that accounts for short- and long-term considerations. CMC tends to be the second-largest budget within a development project behind clinical work. Tracking those budgets, rationalizing and dissecting the spend, and communicating that information to leadership is vital.

Additionally, Collier states, CDMO behavior can be influenced by quarterly numbers, particularly year-end numbers. For example, a CDMO may be compelled to ship material before the end of its fiscal year so it can realize the revenue. Sponsors that recognize and understand this dynamic can leverage that information to navigate a mutually agreeable approach to invoicing with their partners.

Establish Internal SOPs

While MSAs or the supply and quality agreements typically define the rules of engagement between a sponsor and its partners, they rarely translate well at the micro level (i.e., how SMEs or FTEs carry out day-to-day operations). Thus, Wyman advises, it is prudent to establish standards for vendor/supplier management or oversight, but do not make those standards so prescriptive that the organization is forced to deviate as it manages multiple relationships.

An SOP or a similar guidance document gives sponsors, as they onboard new employees, a training guide on how cross-functional and tech transfer teams interact. Moreover, health authorities expect sponsors to have clearly defined roles and responsibilities related to vendor oversight, extending beyond quality agreements.

Managing Multiple Partners

It is unusual for a pharmaceutical sponsor not to spread responsibilities around. All-in-one services tout the convenience of proceeding from development through commercial production, but simple risk management demands sponsors have a backup plan. That strategy might not be the most cost efficient, but it can be particularly helpful as the project scales up (e.g., splitting batches between different CDMOs). Montgomery points out that running several activities in parallel, utilizing multiple vendors, is a common — almost necessary — strategy to meet the extremely tight timelines for DS/DP development and production.

And, as Seymour notes, overall supply chain management almost demands built-in redundancy to guard against high-risk activities and unforeseen circumstances (e.g., geopolitical strife impacting shipping, equipment breakdowns). A thorough strategy analysis and a robust business continuity plan (which commonly includes additional or backup vendors) are vital to preserving both clinical supply and commercial supply. Consider that few companies had pandemics in their business continuity plan in 2019, but nary a company exists today without one.

One key to effectively using these multiple vendors, states Collier, is limiting each partner’s involvement to a discreet work package. For example, an impurity synthesis typically is straightforward. A spike and purge requires sending the vendor analytical methods, embedding those methods with the vendor for future use. In this context, a specialized provider can probably accomplish analytical method development faster and more efficiently than a more multi-faceted provider.

Overcoming M&A Disruptions

CDMOs being acquired or acquiring other organizations to expand their services is a common occurrence that can have negative impacts on ongoing projects for both organizations. For some new owners, this is a carefully planned process, and the transition is near-seamless. In fact, M&A activity can work to sponsors’ advantage by opening up additional capabilities within a CDMO’s network.

However, Baker points out, some CDMOs’ work quality declines sharply after they are acquired. A new owner can lead to significant staff turnover — especially in program management, where continuity is critical. How much knowledge is walking out the door? Often, sponsors are forced to move on to a new CDMO partner following the loss of a key project manager in these situations.

Additionally, M&A activity has cost the industry many high-quality small CDMOs; they are acquired by a larger organization and drift away from the niche they excelled in, transitioning instead to a more all-encompassing service offering. In short, the acquiring company is not fully realizing the value of its acquisition, to the detriment of its clients.

Wyman, who has been an employee at merged/acquired companies, suggests effective CDMO management during M&A begins with speedy alignment between the organizations on three or four top priorities. Then, personnel, expectations, and metrics by which to measure whether those expectations are being met should be formulated and assigned to monitor the state of those priorities. So, set clear expectations up front as the deal closes and schedule frequent conversations aligning on what proficient operation looks like.

Final Thoughts

Ultimately, successful CDMO management is an exercise in relationship- and network-building, Wyman concludes. Think of each CDMO as a resource in your professional network: they have significant access to world-class science, technology, chemistry, and people. Think about how your organization can utilize that network, whether to recruit talent, fill capability gaps, or supplement in-house expertise. Well-established understanding of, and trust in, a CDMO partner allows sponsors to — as Montgomery succinctly phrases it — exploit what the CDMO is good at, get out of the way, and let them deliver.