Life Science Rabbit Hole #11: “Making It”

Cell and Gene therapies (CGTs) potentially offer cures for a range of previously incurable diseases and are moving from third- or fourth-line indications and indications limited to rare diseases, to second- or first-line therapies and more prevalent diseases.

Today’s article, Life Science Rabbit Hole #11: “Making It”, explores how the supply side of the CGT industry might evolve as these products become better understood, as increased scale is required to support wider use, and as the broader healthcare ecosystem responds to the pricing challenge.

Let’s begin with some context

I think we all recognize that cell and gene therapy production involves specialized materials and processes such as synthetic genetic material, custom-made nucleic acids, or tailor-made lipid nanoparticles. ?Analytical methods to characterize materials and potency assays to evaluate the end product are still maturing, as are procedures, equipment, and variables to control freeze/thaw, amplification, purification, etc. ?

There is a belief that allogenic therapies (i.e., that use cells from someone other than the patient) will offer long-term advantages over autologous therapies (i.e., that use cells from the patient), where they can be developed, with research programs seeking to identify viable allogenic therapies to displace therapies based on autologous cells.

I think we can confidently say that the CGT space is technologically immature and evolving extremely rapidly.

Cell and gene technology might be immature, but FDA’s expectations are not:

Manufacturers should understand the sources of variation, detect the presence and degree of variation, understand the impact of variation on the process and ultimately on product attributes, and control the variation in a manner commensurate with the risk it represents to the process (1)

The basic Quality by Design (QbD) framework incorporating Critical Quality Attributes, Critical Material Attributes, and Critical Process Parameters must be applied to what is a still-maturing set of technologies used to create and manufacture CGTs.

Today’s delivery model for CGT is complex.?

It commonly involves patients traveling to Authorized Treatment Centers that assess the patient and collect cells by surgical or other means.? The cells are transported via frozen or cold chain to a manufacturing facility where they are isolated, amplified, purified, and so forth to create the therapy, which is then transported back to the Authorized Treatment Center (again, under controlled and monitored conditions), where the patient is treated, for example via infusion, and monitored according to the label.? It is a complex, time-consuming and costly process, and not optimal from a cell viability perspective.

The final consideration is the price of these therapies.?

Consider that CAR-T therapy pricing is $500,000-$1,000,000 (2), Gene therapies average $1,500,000 (3), and other types of cell and gene therapies are being priced in the $500,000+ range.? CGT players generally seem to be pricing to value and have worked hard generating data to demonstrate compelling health economic outcomes.? While favorable health economic outcomes can be demonstrated across the healthcare ecosystem, specific specialties, departments, providers and payors are challenged by the current pricing strategies.? When we consider the robust industry-wide CGT pipeline, especially of new therapies and indications, the pricing challenge will become more acute, mitigated somewhat by the emergence of new entrants in existing disease states.

So back to the question: How the supply side of the CGT industry might evolve in the context of the factors we just described

Those factors were:

• Immature, but rapidly maturing, capabilities for process design, validation, and control
• FDA expectations
• Strong industry pipeline of new therapies with broader indications
• A costly supply chain that also presents technical risks related to cell viability
• Unprecedented pricing

As we consider potential industry supply evolution, there are several ways it might develop:

1. Large-scale outsourced production based in high-price, early adopter markets such as the US and Europe
2. Large-scale outsourced production based in low-cost regions such as India
3. Small-scale, localized, near-to-patient production

What might drive cell & gene therapy supply to large-scale outsourced production based in high-price, early adopter markets such as the US and Europe?

Building up internal capabilities is costly and time-consuming. Viral vectors, for instance, are expensive to make and handle. Outsourcing to a dedicated CDMO with CGT expertise such as @ThermoFisher, @Catalent or @Lonza can be a solution. Ensuring products meet the highest regulatory standards while maintaining efficient production timelines can save CGT companies millions of dollars in the long term, giving opportunity to reallocate cost savings towards additional clinical trials.

However, outsourcing brings problems of its own. For example, transferring technology from a small lab to a larger organization can be arduous and require troubleshooting for glitches that arise in the process. Established CDMOs may prioritize more lucrative work with larger biotech and pharmaceutical firms, leaving smaller companies affected in a constrained manufacturing landscape with multi-year waitlists.

This scenario could dominate in situations where there are cost or speed advantages from sharing manufacturing infrastructure (equipment trains, temperature-controlled storage, analytical equipment, facility management/infrastructure, and so on) coupled with ability to access the specialty workforce required to operate these processes reliably and compliantly.

While unlikely to be the lowest-cost model, it can be compelling due to reduced capital investment, production cost efficiency, and time-to-market advantages over the ‘build your own’ approach that was used by most early CGT entrants.?

CGT therapies that might find this model attractive may include

• Existing therapy approved for an earlier line or broader indication that will require production volumes that exceed the capacity of the in-house facility
• Second or third entrants that can take advantage of installed capacity, thereby reducing capital requirements and accelerating time-to-market
• Therapies needing surge capacity or supply chain redundancy
• CGT companies repurposing their in-house capacity for next generation products or new programs

What might drive cell & gene therapy supply to large-scale production based in low-cost regions such as India?

There is a growing talent pool of highly skilled biotech and related industry professionals in countries such as India, building on mature expertise in small- and large molecule generics and branded products.? This is now extending into Cell and Gene Therapies: India’s first natively developed CAR-T therapy was introduced in April 2024 (4). ?

There are also proven cost advantages in construction of these facilities in low-cost regions.

This evolution of CGT supply is supported by government investment in higher education and in initiatives to promote biopharma research, development, and manufacturing capabilities.? While low-cost countries still need to increase their skilled production workforce, we see it coming.? A lower-cost production workforce, coupled with lower-cost facilities can offer lower product cost and equivalent quality compared to outsourced production in high-cost regions.

CGT therapies that might find this model attractive may include

• Therapies where efficacy is not likely to be negatively impacted by a longer, cross-regional supply chain
• CGT companies using lower price points to drive adoption
• CGT companies intending to launch therapies in these regions, either now or later

What might drive cell & gene therapy supply to small-scale, localized, near-to-patient production?

Advances in manufacturing technologies, such as modular units and mobile labs could enable small-scale production closer to treatment sites.?

This is the wild card, a potential game-changer.?

The Life Science Rabbit Hole doesn’t have the expertise to predict the future feasibility of small-scale, localized CGT supply, but we have a perspective to share.

CGTs often require treatment customization for each patient. In many cases, the patients are very sick, and traveling back and forth to Authorized Treatment Centers several times during the course of treatment (including post-infusion monitoring for adverse events) is an emotional and financial burden on the patient and their family members.

And, as described earlier, the current delivery model for CGT is complex and costly.

Localized production could reduce the complexity and cost of delivering CGT therapies by eliminating long distance supply chains and reducing the turnaround time between collection of patient samples and reinfusion.? Local production could reduce the risk of contamination and degradation of sensitive biological materials, an important factor influencing the efficacy of these treatments. Savings on shipping, storage, and handling can lower overall production cost.?

There is investment in these technologies today.? Cellares ’ Cell Shuttle, a mini-factory that houses all the technologies needed to make a CAR-T drug dose, claims it can reduce process failure rates by 75%, require less labor, and reduce production costs. (5)? 百时美施贵宝 is an investor in Cellares.? Astraveus , which closed its seed round only in 2023 (one investor was 强生公司 Development Corp.), touts its automated, microfluidic Cell and Gene Therapy manufacturing platform. (6)

BioCytics Inc , an integrated CDMO, CRO, BioBank and CLIA-certified laboratory, is developing a cell therapy platform focused on oncology, and plans “to scale this platform across the country, bringing it to every major metropolitan area and making it accessible for all patients.? Community-based cancer clinics will play a significant role…as these treatments would primarily be outpatient.” (7)?

BioCytics believes there is an FDA-acceptable solution to decentralized cell therapy production: “Multiple sites can...conduct point-of-care manufacturing of cell therapies, but there must be an integrated quality control program and 100% accountability at all times, in which the process at each site is qualified and validated by the primary IND holder.” (7)

The Life Science Rabbit Hole doesn’t feel comfortable predicting the evolution of this production model but will certainly continue to monitor its development.? Perhaps one or more readers has expertise or perspective to share in the comments section.? Please do!

In Conclusion

Demand for external manufacturing is increasing, and has exceeded the capacity of contract manufacturers. Since 2017, at least half a dozen companies have launched with the goal of addressing the bottlenecks that hinder the progress of cell and gene therapy innovation. Some focus on vector production, while others provide more comprehensive services.? We anticipate that CDMO supply will increase for CGTs, just like it did for traditional small and large molecules.

Lower-cost supply models provide companies with an opportunity to rethink cell and gene therapy pricing, which are some of the costliest medicines on the market. ?Payor pushback to CGT pricing will probably increase, especially as second, third, and fourth entrants for a particular indication try to carve out a sustainable position in the market.

A therapy priced today at $800,000 may have a cost of goods sold (COGS) of $500-600,000 when produced by the CGT company in-house in a dedicated facility.? That same therapy could be produced at $400-500,000 by an CDMO in a high-cost region, and $50-150,000 by a CDMO in a low-cost region.? COGS of a therapy produced using a small-scale, near-to-patient production platform is, frankly, impossible for us to estimate at this time.

The capital investment & time required for a CGT company to build dedicated in-house capacity, plus the unit cost advantage of outsourced supply leads us to anticipate a substantial shift to outsourced supply models, particularly when volume needs to scale.

I hope you enjoyed this edition of Life Science Rabbit Hole.? We also want to acknowledge the contribution of Ivan Montoya, MPH, CLSSBB , who co-authored this edition.

As always, your comments and suggestions are welcome.

Footnotes:

1 Process Validation: General Principles and Practices

2 CAR T-Cell Therapy: How to Manage Costs and Get Financial Assistance (webmd.com)

3 ?Multimillion-dollar gene therapies offer hope to patients, but huge cost concerns (axios.com)

4 India Celebrates First Homegrown CAR T-Cell Therapy (aabb.org)

5 Fully Integrated, Scalable, cGMP Cell Therapy Manufacturing Platform (cellares.com)

6 Astraveus - Enable a Healthier Tomorrow

7 ACCC, "Expanding Cellular Therapies in a Community Setting: An Interview with Dr. John Powderly, II"