How A Virtual Biotech Lands A Large CDMO

By Louis Garguilo, Chief Editor, Outsourced Pharma

I hope you’ll agree we’ve been an honest broker when it comes to recording the frustrations emerging (and mid-sized) biopharma have when trying to land capacity at established CDMOs.

Unfortunately, a significant number of these companies are being effectively throttled. They encounter limited CDMO interest; even when there is capacity, it’s with prohibitively long start-times, and high pricing.

But there’s some good news of late: The tide could be turning.

I’ll attempt to demonstrate how CDMOs are beginning to step up by looking into two recently announced deals between emerging drug developers and a large CDMO.

The first we’ll cover involves a small-molecule developer in-licensing clinical assets. That will follow with a cell therapy start-up. Both have announced relationships with one of the globe’s largest CDMOs – of which we’ve heard a fair bit of criticism for turning away small fish to land  bigger ones.

Actually, Steve Carchedi, CEO, Allarity Therapeutics, used that metaphor to describe how his biotech has been successful in its outsourcing.

Small, Not Small-Market

Allarity is a public company (listed in Stockholm) developing small-molecule drugs for “personalized treatment of cancer.”

“Personalized” in that Allarity is guided by a proprietary diagnostic “drug response predictor technology” (the DRP platform), and has a clinical portfolio of six drug candidates, one of which nears an NDA in the U.S. (Dovitinib is a pan-tyrosine kinase inhibitor targeting fibroblast growth factor receptor (FGFR), vascular endothelial growth factor receptor (VEGFR) and other receptor tyrosine kinases (RTKs).) 

Allarity’s recently announced supply agreement with Lonza for dovitinib, on the surface, seems a mismatch between a small company and very big (and busy) CDMO.

How did Allarity, formed in 2012 as Oncology Venture, and currently with 20 employees, get that CDMOs attention?

Carchedi says drug developers, to the degree possible, should start by “playing where the market is big enough.”

“Larger CDMOs understand if they begin with a small fish in a big pond, pretty soon they'll be participating in that bigger pond,” he says. “The first thing is establish you’re playing in a big enough market if you want to work with large CDMOs.”

Next, ensure the CDMO understands the scope and depth of the market (or markets) you are pursuing, and your approach. Any and every opportunity to communicate with the CDMO should bring out your best efforts in this regard.

Do I Know You?

That Allarity was already ensconced in the clinic and heading to an NDA puts it ahead of most  emerging biopharma organizations.

“Yes, we are at the precipice of an NDA filing,” says Carchedi, “but it’s important to also note there were established relationships with the organization over the years.”

Dovitinib was in-licensed from Novartis, who worked with Lonza to develop clinical supply before mothballing the project.

Another prior connection: Some Allarity employees had relationships with the CDMO. Carchedi himself had previously worked with Lonza via positions he once held at BMS, Lilly, J&J, and other companies.

However, what’s key is not the past relationships themselves, says Carchedi, but working them consistently.

“We have six products in our portfolio, three under accelerated development. We're constantly evaluating manufacturing capability, depending upon the product, quality, timing, and of course price. It’s not unusual for us to be engaged with various CDMOs on an ongoing basis.

“And to be clear, we did consider other suppliers for the commercial supply of dovitinib. We went through a rigorous process.

“So it’s one thing for Lonza to pick us. But it is another for us to pick Lonza, because we have particular needs they needed to address.”

Done That Before

I’ve recently written editorials pursuing the fact today CEOs are involved in all aspects of selecting CDMOs. I ask Carchedi whether he’s more involved than he might have been years ago, and whether he “picked up the phone” to make his case with contacts at Lonza.

“Well,” he replies with a half-laugh, “I wish it were that easy.”

“But certainly, ten years ago I would have told you that manufacturing component was mostly handled by somebody other than the CEO. Fast forward – today you have to be actively involved. If there’s one thing that COVID taught us, it’s the complexity of the supply chain.”

Carchedi says even before COVID, this was the operational direction, given the sheer importance outsourcing has taken on.  

“I'm still not an expert – and joke to my colleagues I know just enough to cause them trouble. Historically, like others, I’ve made mistakes along the way. But I do understand drug substance manufacturing, API requirements for our products, and what we need from CDMOs.”

In fact, at a predecessor company (Mallinckrodt), Carchedi ran the supply chain as independent business units.

“I know what it's like to manage this. If you want to be a successful CEO, this is a must-have skill set.”

Prove The Platform

How many “platform pitches” from perspective biopharma customers do you think a CDMO like Lonza has heard?

If you answered, “Too many,” you’re right.

Drug sponsors believe their “platforms” are the secret sauce for what’s going to be a blossoming pipeline of work, and the market-winning differentiator leading to sustained volumes for the CDMO.

The CDMO has heard it all before. Unfortunately, they’ve encountered enough failures to remain skeptical.  

Therefore, if you are a “platform company” to any extent, stay realistic and stick to the science.

Carchedi says while he believes his DRP platform (mentioned above) can expand, for the time being he’s sticking to clinically proving it’s effective for small-molecule drug development.

“I explained to the CDMO we want to walk before we can run. We are developing a world-class, companion diagnostic platform, but most important to them is it's been clinically validated. I think there's often claims of platforms that aren’t.”

Takeaways  

To summarize this first look at small company/large CDMO relationships:

1. CDMOs are less interested in the size of the potential customer than in the size of the market. If you don’t have the market size for a big CDMO, it might be best to look elsewhere when starting your outsourcing journey.
2. Have an outsourcing experienced CEO.
3. Dig up connections to the CDMO you want to engage.
   1. For virtual start-ups, these relationships may reside with your consultants – a good reason to wisely pick them, as well as your first employees.
4. Don’t “platform proselytize” – seek to clinically prove your thesis, and keep it real.