Outsource or In-house? Options for the production of development API’s
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Outsource or In-house? Options for the production of development API’s and Drug Products. Peter Lutwyche, Ph.D. Director, Pharmaceutical Development Scope Comparison of relative merits of contract manufacturing vs in-house manufacturing for development products presented as a case history of QLT Decisions Made Business Pressures Lessons Learned Future Plans QLT Founded in 1981 Became the world leader in Photodynamic Therapy (PDT) 1995: Photofrin – Lung Cancer, Barretts Esophagus 1996 headcount ~50; revenue $14MM 2000: Visudyne – Age-Related Macular Degeneration 2000 headcount ~200; revenue $49MM 2004: Acquisition of Kinetek (ILKs), Atrix (Eligard) 2005 headcount >500; revenue $242MM 2006: Divestment, Re-focus on Ocular and Derm 2006 headcount ~230; revenue $175MM Business Models for Manufacturing of Development Products 1st Phase: “Virtual Company” Outsource drug development, GMP clinical manufacturing, Analytical 2nd Phase: “Scientific Control” Continue to outsource GMP Manufacturing Bring Formulation, Process Dev. Analytical, Stability, QC In house “Partner” with CMO’s with regard to problem solving, issues etc 3rd Phase: “Fully Integrated” All drug development activities performed in-house 4th Phase: “As required” Competitive bidding between in-house and CMO’s combined with strategic analysis 1st Phase: “Virtual Company” Statement: Outsource everything! Advantages: Low internal overhead Access to experience and specialized facilities as required Disadvantages: Contractors know more about your product than you do Can get stuck in a non-ideal relationship (tech-transfer barrier) Normal development issues can be very expensive to solve Your (only!) product is always competing for resources Reduce IP opportunities 2nd Phase: “Scientific Control” Statement: It’s Our Product! Advantages: Ownership, IP, empowerment Increased flexibility with tech. transfer Possibility of cost savings through efficiencies, detailed knowledge Still leaves manufacturing overhead with CMO, where it is shared Disadvantages: Significantly increased internal overhead (management and technical) Although increased flexibility, scheduling still can be poor Product is still competing for attention 3rd Phase: “Fully Integrated” Statement: We do it all! Advantages: Total Ownership Increased flexibility (not total…) Disadvantages High Internal Overhead (management, technical, compliance) Capital investment Need vast internal experience QLT’s experience In 2005, built a state-of-the-art aseptic (isolator-based) Pilot Manufacturing Facility Rationale: - Integrate a portion of Visudyne supply chain - Prepare for Phase III supplies of aseptic products - Prepare for in-license products PMF Construction, commissioning and validation took 2yr Cost $10+MM Labour 20 FTE/year Not as straightforward as hoped Inexperience led to delays, batch failures Many, many discussions on the appropriate quality standards Development staff distracted [Compare to well-established CMO] BUT – project completed, facility opened Concurrently…. In 2005, Macugen launched for AMD In 2006, Lucentis launched for AMD Led to Visudyne sales decline QLT pipeline faltered:Phase II and Phase III trials failed Hence: Cost-cutting and down-sizing Inevitably… A new question was asked: What is critical to QLT’s sustained business model? An aseptic manufacturing facility with a $2MM annual overhead, when no aseptic products are in pipeline? NO! Lessons learned (the hard way) Biotech is a risky business, therefore… Define business model: Developing new drugs! Stick to activities critical to sustainability of business model (building pipeline) Remain cognisant of market forces Build on certainty, or change business model – CMO? If necessary, wait…there are contract resources available, use them All of the infrastructure in the world will not save a Biotech with no pipeline 4th Phase: “As required” Question: What makes sense? Small molecule API’s…. Early stage, small (kg) quantities, clear guidance on clinical supply (ICH Q7A), low GMP overhead (material control,lock on door, batch record) In-house advantage: lab chemists perform early GMP batches – no tech transfer of complex multi-stage processes and analytical controls, the experts stay involved – move quickly 4th Phase: “As required” Small molecule API’s…. Contract out post clinical PoC or when solvent/reaction volumes get too large, or when internal resources saturated But ALWAYS perform competitive bid with CMOs, factoring in internal indirect costs; there will be occasions when CMOs will win over in-house even pre PoC. At QLT now – 1 API being manufactured in-house for PhI/II 2 API’s contracted to CMO 4th Phase: “As required” Topicals and Orals… Controlled not classified rooms, minimal monitoring, simple equipment Formulation scientists make the initial batches Early stage – small batch sizes – move quickly Currently using PMF for both topicals and orals in PhI/II, and utilizing the isolator technology to provide inert compounding atmosphere for sensitive compounds 4th Phase: “As required” Aseptic Products… High fixed overhead (micro, QC, cleaning, etc) Expensive, specialized rooms and equipment High compliance bar Likely only makes sense to do in-house if multiple products involved AND the organization can run more efficiently than a specialized contractor Still, work out the numbers… QLT has a sterile product in clinical development, and will be undertaking this exercise shortly 4th Phase: “As required” When to implement? After all, QLT already has choice…. As early as startup if the products fit. Don’t need a huge investment for early stage small molecules, topicals and orals. Extend philosophy to commercial too…. Summary Current QLT Outsource policy for development APIs and Drug Products is… View each case individually Be aware of all resources required and available Be rigorous and objective in analysis Acknowledgements Ideas arose from discussions with QLT employees: Alun Rees Darren Gray Deepank Utkhede
