How A Biotech Navigates the CDMO Frenzy For GLP-1 Services

By Louis Garguilo, Chief Editor, Outsourced Pharma

Doug Bakan is enjoying all the attention CDMOs give him nowadays. As we described earlier, they are beating a path to his door.

That door is entryway to his biotech, Kailera Therapeutics. The young company has four GLP-1-related programs we also described previously.

Bakan, Chief Technology Officer, is charged with leading the outsourcing of these programs, and he’d prefer to work with U.S.-based external partners whenever possible.

How is he selecting his external partners? Which CDMOs are most trustworthy? Can he discern what they say is what they they're going to do?

Which CDMO Should We Select?

“We have a rigorous way to select CDMOs,” he says. Here’s how that rigor is applied.

• We identify the whole universe of companies we think could be a viable partner, but then selectively send out RFPs only to those we judge as most promising. That paring down is based on information provided in capabilities presentations from candidate CDMOs, previous experience by our team members, and even recommendations from colleagues in the industry.
• We review the proposal responses for each firm’s approach to performing the work requested, the compatibility of the proposal’s projected delivery schedule with our timeline needs, and the cost of the project. We then select the top three to five CDMOs with the best chance for success, and schedule site visits.
• Those visits include:
  • meeting the people who will actually be working with us on a daily basis to discuss our program and future plans
  • touring their warehouse, manufacturing, and analytical laboratory facilities
  • understanding their quality systems and regulatory inspection history
  • learning how they manage their workflow
  • probing the CDMO’s philosophy on a successful client/provider relationship
• We then complete a grading sheet. On one side of that document, we have parameters like technical capabilities, quality systems, regulatory history, cost, location, the feel that we have with the people we’ve met…all the key differentiation factors. Next to that list, we then assign a percentage weight to each evaluation parameter based on what we think is most important in each case.
• Next, we grade each CDMO on each of those parameters on a scale of 1-10, multiply their score by the parameter weighting factor, and sum the weighted scores. This results in a numerical value providing us with a reasonably quantitative lens through which we can look to differentiate CDMO candidates.
• But then we do a final, more subjective gut check:
  • Do we feel we could have a productive business partnership with the CDMO?
  • Did we get along with their key personnel?
  • Did the team at the CDMO seem excited about working with us?
• Finally, we use all of this to make our final selection. The Tech Ops team members vote for their favorite candidate. The CDMO with the most votes wins. It’s amazing how often we all end up with the same final choice.

“You don't get it right all the time even with a thorough process like ours,” Bakan says, “but this rigor helps ensure when we select a CDMO, we can have a high confidence level it's going to be a positive long-term relationship. That’s what we are looking for.”

Workers And Capacity Challenges

There’s a concern running through the biopharma industry – perhaps exaggerated, perhaps not – regarding worker turnover rates at (U.S.-based) CDMOs.

“As part of our assessments, we do look at turnover and consistency of the workforce at the CDMO. In fact, we're very big on this factor,” explains Bakan.

“We've found, though, there has not been a significant amount of turnover in most of the companies we're considering, and even less turnover in the ones we actually select and work with.”

He’s especially careful to watch out for high turnover at the program management level.

“That's always a red flag to us. There's nothing more important than having a strong advocate within the CDMO partner to ensure your voice is heard clearly inside your external partners.”

One of the GLP-1 clinical programs at Kailera is for a small-molecule drug, and Bakan sees the difference in CDMO availability for that modality.

For peptide-related work, “it's still considered more specialized manufacturing,” he says.

It’s on the drug-substance peptide side where sponsors may be more likely to consider making cost-sharing investments as needed to meet demand.

“When you look at the potential size of GLP-1 markets, you're not talking hundreds of thousands of doses, but tens or hundreds of millions of doses annually. That requires a lot of drug substance.  But then you also need the corresponding amount of drug-product manufacturing infrastructure to complete the manufacturing cycle,” he says.

That’s why, Bakan says, “The Lillys and Novo Nordisks of the world are investing billions of dollars into new plants.

Furthermore, he’s keeping an eye on CDMO acquisitions. The prime example has been Catalent facilities getting picked up by Novo Holdings (for Novo Nordisk).

“I'm a bit gun-shy about any CDMO firewalls potentially being violated, and I definitely don't want to be delayed when they say, ‘Sorry, but another customer needs a couple of campaigns so we have to push you out a few months.’”

That’s Why You Make Deals

The above challenges can be mitigated by co-investment opportunities.

Bakan offers three potentialities based on years of experience and creative problem solving. “There's a short menu – with variations – of how to do it."

• If you have sufficient funds, you might approach the CDMO to build or expand a facility, but the capacity is dedicated to you. Maybe you put in 80% of the money and the CDMO puts in the remaining 20%. If they want to put another client in there, fine, but they must clear it through you first. It’s essentially your space.
• The next step down is more a 50/50 financial share. In exchange, you get priority for scheduling. You may also negotiate a discount over normal pricing until you’ve gotten back an agreed percentage of your investment.
• More minimally, for example, you discuss a new equipment train for drug-substance or -product manufacturing. You might enter into some cost-sharing, but without the priority benefits of the more aggressive approaches above. In this case, at least you know that new capacity gets built.

Any of these can be win-win, depending on needs and finances.

“CDMOs today want to be a part of the GLP-1 explosion. I would bet that you’d be hard pressed to find one that wouldn't take your money,” Bakan concludes with a smile.