To Enhance Biotech Investments, Involve CDMOs Early In CMC Decisions

By Nathalie Huther, Ph.D., MBA; Carlos N Velez, Ph.D., MBA

In Part One, we discussed CMC in a drug development environment that is increasingly complex, both in terms of the modalities and targets being pursued, and patient subpopulations being targeted. We also introduced the critical link between CMC in drug development (and its contribution to overall project risk) and the perspective of the prospective investor and/or licensee.

Here we conclude with a series of suggestions for how CDMOs can lend their expertise earlier in discovery and development to improve the probability of securing a successful investment or license for their clients.

Critical CMC Areas for Diligence

As prospective investors and/or licensees review opportunities, their diligence increasingly includes detailed assessment of CMC-related issues. Critical areas directly related to CMC in this context may include:

Technical Feasibility - A robust CMC strategy (and corresponding risk-mitigation strategies) is critical, particularly for novel modalities like cell therapies and other complex biologics. Unclear or uncertain manufacturing plans (especially for clinical batches) can quickly turn into red flags for prospective investors.

Regulatory Feasibility - Non-GMP studies which cannot be performed under cGMP studies, or the use of excipients which are not GRAS, are a few examples of areas where sophisticated investors may serve as proxies for regulators to anticipate problems with the agencies, and making “No Go” investment decisions accordingly.

Manufacturing at Scale - Manufacturing feasibility is a key determinant of risk. Investors would need to assess whether production can scale efficiently from laboratory to clinical and commercial scales. Products with complex manufacturing requirements may struggle with supply-chain scalability and/or face higher market-entry costs. Sophisticated investors will spot these issues early in diligence. Conversely, companies who can walk prospective investors through the CDMO facility manufacturing clinical batches are more likely to secure substantial investment and/or a license.

Corporate executives seeking large licensing transactions or investment (especially large Series A rounds and beyond) must be aware that sophisticated investors will examine CMC-related issues closely during due diligence. Thus, a robust CMC strategy must include a thorough assessment of technical, manufacturing, and regulatory issues in anticipation of questions from investors. As leaders prepare for fundraising or licensing diligence, key considerations may include:

Compliance with Current Good Manufacturing Practices (cGMP): Early-stage studies typically use non-GMP materials or processes, but transitioning to cGMP standards is essential. A lack of foresight in this transition can lead to significant setbacks during later stages of development.

Selection of Excipients and Materials: Incorporating Generally Recognized as Safe (GRAS) excipients and materials with established regulatory pathways can streamline diligence and mitigate future regulatory risks.

Alignment with Regulatory Guidelines: Regulatory agencies, such as the FDA, EMA, or PMDA, have specific requirements for Chemistry, Manufacturing, and Control (CMC) documentation and processes. Ensuring that the development program aligns with these guidelines from the outset can prevent costly rework or submission rejections.

Global Regulatory Strategy: For programs targeting multiple geographies, a harmonized regulatory strategy is critical. Divergences in regional requirements, such as stability testing or raw material sourcing standards, can complicate approvals and require additional resources.

Proactive Engagement with Regulators: Early and frequent communication with regulatory agencies can help identify potential issues before they become critical. Seeking advice (and documenting these communications) through pre-IND meetings, Scientific Advice Procedures, or other regulatory consultations can provide clarity on expectations and reduce uncertainty.

Engaging CMC Experts Early: Engaging experienced consultants with large pharma backgrounds to guide innovators in addressing complex CMC issues is usually money well spent. These consultants can help shape and refinance development plans, engage with CDMOs, and provide the necessary gravitas when engaging in discussions with prospective licensees or investees.

What Can A CDMO Do?

Phase II is not the time to discover and fix CMC-related problems. Even before candidate selection CDMOs can help ensure as many CMC considerations and risks as possible are included as part of the candidate selection process. Often factors which impact scalability, regulatory compliance, commercial feasibility as well as ensuring the active ingredients(s) can be easily formulated and adequately delivered, can be evaluated during or soon after candidate selection.

This increases the chance of removing CMC issues from the critical path for late stage development – and identified as a problem by prospective licensees or investors. Even relationships based on a consultative basis (especially to smaller companies) prior to entering into longer-term agreements can provide real value.

Similarly, there may be opportunities for prospective investees to get their CDMOs involved during investor diligence. If investors have doubts about CMC-related data or plans, the experts within CDMOs can be invited into the process to provide their expert opinion (as well as potential pitfalls) during investor/investee diligence meetings. This may be especially important (and valuable) with higher-risk modalities and/or less-experienced management teams.

CDMOs can provide a level of comfort to investors by conveying that the candidate is in a safe pair of hands during development, especially when it comes to manufacturing feasibility, risk management, geopolitical/supply chain risks, and regulatory issues. CDMOs can also provide other details (technology transfer, project management, supply chain contingencies) to increase the chances of a successful investment or licensing event. 

It’s in everyone’s best interest to develop drug candidates as quickly as possible. Perhaps under investor pressure, sponsors will want to change ongoing projects to achieve faster demonstrable results. While it can be challenging for CDMOs to change in the middle of a project, CDMOs that are flexible, and can deliver at or below promised timelines and costs and considering a higher probability of being successful, will accept such challenges, and gain competitive advantages over other CDMOs.

Conclusions And Recommendations

Drug development is an increasingly difficult and risky activity. Both Licensors and Investors are increasingly aware that beyond efficacy and safety, unaddressed or unanticipated CMC issues can quickly turn a drug candidate into one that is unlicenseable and/or undevelopable.

The idea that more time and cash can solve these problems, especially in a difficult financing environment, is not an option for many investors and their investees. Thus, it is increasingly important for drug developers to work proactively with their CMC service providers to move programs forward quickly, on budget, but also with an eye on increasing probability of successfully moving from one step to the next.

Innovators should integrate CMC considerations early in development by engaging experts as early as candidate selection and forming preclinical partnerships. Seamless collaboration among complementary CROs, CDMOs, and biopharma companies, with transparent data sharing, will ensure smooth transitions from discovery to commercialization. Leveraging CDMO expertise early when developing advanced modalities and innovative partnerships will also enhance scalability and compliance. Prioritizing long-term manufacturing feasibility, addressing investor concerns with clear CMC roadmaps, and engaging experienced consultants will strengthen development efforts.

Ultimately, companies with forward-thinking management teams – and often forward-thinking investors – will engage with CMC experts early and throughout drug development, hopefully resulting in greater probability of success, and more innovative drugs and therapies reliably delivered to patients.

About The Authors

Nathalie Huther, Ph.D., MBA, is a commercial leader in the CDMO space with over 15 years experience successfully building/deploying territorial strategies to support revenue growth for companies offering discovery, CMC, nonclinical/clinical and commercial solutions supporting Biotech/Pharma innovators in Europe, the Middle East and Asia Pacific. In 2020 and 2021, she was named one of the UK Northern Powerhouse Export champions for successfully building and deploying export strategies for a UK SME leading to market penetration in new/unexplored territories. She is also a strategic board advisor and a mentor for early career scientists and women in biotech. She holds BSc and MSc degrees in Chemistry from the University of Strasbourg, a PhD in Organic Chemistry from the University of York and an MBA with Entrepreneurship Specialism from Warwick Business School.

Carlos N Velez, Ph.D., MBA, is a pharmaceutical and biotechnology strategic advisor, with 25 years experience in consulting, venture capital, corporate strategy, and entrepreneurship. Carlos specializes in helping pharmaceutical and biotechnology companies develop their in- and out-licensing strategies, with additional expertise and experience in portfolio assessment and prioritization, drug candidate valuation, valuation, and related services. He also develops and presents customized training programs (both live and virtual) for companies seeking to improve their in- and out-licensing processes. He holds a Ph.D. in Pharmacy from the University of North Carolina at Chapel Hill, and an MBA from the Rochester Institute of Technology.