European CMO Challenges Highlighted at CPhI - PharmSource · account for nearly 40% of the $19...

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Business Conditions

European CMO Challenges Highlighted at CPhIThe 2017 edition of CPhI Worldwide was larger than ever; more than 35,000 at-tendees worked their way across 11 exhibit halls, most with multiple floors, some-times having to walk nearly 30 minutes to get from one place to another. Company display stands, as usual, tended toward the enormous, and a number of CMO executives indicated that at least 60% of their annual marketing budgets are spent on their CPhI presences.

Despite the logistical challenges, CPhI remains the single best opportunity to meet with multiple CMO executives and sourcing executives from major global bio/pharma companies, in order to gauge the health and concerns of the industry.

Our focus this year was on the European drug product CMOs, which together account for nearly 40% of the $19 billion drug product CMO industry, but few of which have any presence in the North American market. Three themes popped out at us as we made our way through the show:

• Faced with an increasingly difficult prescription drug market, many European drug product CMOs are emphasizing offerings for the OTC, nutraceutical and functional foods markets. The Rx market challenges are the result of efforts by European governments, which are the main drug purchasers, to move from branded generics to commodity generics in order to control costs. The increased use of tendering to buy commodity drugs has reduced drug prices and limited market access for many sponsors. As a result, unit volumes and price received for Rx drugs are declining at many European CMOs. Direct-to-consumer markets appear more attractive because of their overall growth and independence from government spending. The consumer focus also means CMOs are investing in delivery technologies (e.g., softgels, blow-fill-seal) and packaging formats (e.g., stick packs) geared to the consumer market.

• In another response to their difficult home market, European CMOs are increasing their presence in North America. A number of European drug product CMOs have made acquisitions in North America in recent years, includ-ing Fareva (Luxembourg), Famar (Athens, Greece), Unither (Amiens, France) and Recipharm (Jordbro, Sweden), mostly older facilities shed by large bio/pharma companies. More European companies would like to make acquisi-tions in the US, but the opportunities are limited at the moment, especially for the prices they are willing to pay. Even if they don’t have local manufacturing facilities, European CMOs are putting sales representatives in the US, although probably too few to generate significant activity in a market where cold-call-ing is a principal business development tactic. Furthermore, we encountered a number of European CMOs that have invested substantial sums in facility expansion (including new builds), but are strangely reluctant to build the busi-ness development infrastructure required to fill the new facilities.

1 Business Conditions1 European CMO Challenges Highlighted

at CPhI2 Side Effects: Impacts of Key Events on CMOs and CROs3 Commercial Dose Manufacturing and Packaging4 Clinical Dose Manufacturing and Packaging5 API — Large Molecule5 Large Molecule API Sector Becomes

Increasingly Crowded as Peregrine Changes Focus

6 Catalent Closes Cook Deal, Reorganizes to Advance Biologics Work

7 API — Large Molecule in Brief8 Cell, Gene and Virus-based Therapies 8 CAR-T Approvals Boost CDMO Interest

in Advanced Therapies13 Cell, Gene and Virus-based Therapies in Brief13 API — Small Molecule 14 Analytical Services15 Phase II-IV Clinical Research15 Drug Discovery15 Captive Capacity15 Shortages, Reduced Revenue Could

Result from Hurricane Maria Damage16 Captive Capacity in Brief18 Commodity Suppliers18 Regulatory Developments18 FDA Issues New User Fee Guidance,

Updates Investigations Operations Manual

19 US-EU Mutual Inspection Recognition Kicks Off with Eight EU Members

19 Regulatory Developments in Brief19 Outsourcing Events

Volume 22, Number 11, November 2017

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• European CMOs are nervous about Avara (Norwalk, Conn., USA). Executives from European CMOs expressed concerns about the competitive implications of Avara, which has grown rapidly by pursu-ing the European model of acquiring redundant facilities from global bio/pharma companies at low cost and targeting lower-value products. The concerns stem from Avara’s aggressive approach to the business (six facilities acquired in just two years), along with a perception that Avara may have more favorable access to new business thanks to the relationships of CEO Tim Tyson, a respected former bio/pharma executive. In an already challenging market environment, an aggressive new competitor with advantaged access to new business is a serious threat.

AAPS underscores broad capability competitionThe AAPS Annual Meeting was held just two weeks after the conclusion of CPhI. Exhibitors, which included mostly CDMOs, analytical labs, drug delivery specialists and excipient companies, were gener-ally upbeat about the market and continue to experience year-over-year growth.

The growing significance of a broad service offering was a theme at the show. An executive from BioDuro (San Diego, Calif., USA) noted that company’s success in linking its China-based discovery services business with its US-based early-phase CMC offering.

Eurofins Scientific Group (Brussels, Belgium) began promoting its early API, pharmaceutics and CTM manufacturing capabilities, built from recent acquisitions of Alphora (Mississauga, Ontario, Canada), Avantor (Center Valley, Pa., USA) and Amatsigroup (Fontenilles, France).

Avista Pharma Solutions (Durham, N.C., USA), which offers a full CMC development service portfolio, used the event to announce the expansion of its API development and manufacturing capabilities at its facility in Longmont, Colo., USA (see related item, Page 13)

Side Effects: Impacts of Key Events on CMOs and CROs

Side Effects identifies CMOs and CROs that might be impacted by key events affecting their clients, includ-ing company acquisitions, product acquisitions and licenses, product approvals, late clinical product terminations and FDA rejections.

Contractor BioPharma Company Event Product Relationship

POTENTIALLY POSITIVE

Catalent AstraZeneca FDA approval Calquence Solid dose manufacturing

Alcami Heron Therapeutics FDA approval Cinvanti Parenteral manufacturing

Proteus Digital Otsuka FDA approval Abilify Mycite Device manufacturing

Rentschler Biopharma Ultragenyx FDA approval Mepsevii Large molecule API manufacturing

Rentschler Biopharma Ultragenyx FDA approval Mepsevii Parenteral manufacturing

Esteve Johnson & Johnson EMA approval Symtuza Small molecule API manufacturing

Evonik Johnson & Johnson EMA approval Symtuza Small molecule API manufacturing

Flamma Johnson & Johnson EMA approval Symtuza Small molecule API manufacturing

Catalent Xencor Positive Phase II data XmAb5871 Large molecule API manufacturing

LFB Group TG Therapeutics Positive Phase III data TG-1101 Large molecule API manufacturing

Halo Pharmaceuticals Egalet Corp Positive Phase III data Egalet-002 Solid dose manufacturing

Source: PharmSource Lead Sheet





Commercial Dose Manufacturing and Packaging

Albany Molecular Research Inc. (AMRI – Albany, N.Y., USA) has added an aseptic pre-filled syringe filling line at its Albuquerque, N.M., USA facility. The line has capacity for about 50 million syringes per year, and can handle biologics, controlled substances and complex compounds.

Capsugel (Morristown, N.J., USA) has expanded capabilities for producing liquid-filled hard capsules (LFHC) and highly potent and cytotoxic compounds at its Edinburgh, Scotland manufacturing facility. The expansion, originally announced in 2015 (August 2015 B/POR), boosted capacity at the site by 250 million LFHC dosage forms per year. It includes a third cleanroom, new isolators for high containment pre-dispensing and compounding, high- and low-shear compounding and holding tanks, an additional high-speed encapsulation machine, a capsule banding unit and a 5,000-square-foot warehouse.

The expansion also increased its clinical development and manufacturing capabilities at the Edinburgh site, adding API-in-capsule micro-dosing services that combine Capsugel’s Xcelodose micro-dosing system with powder-in-capsule/powder-in-bottle technology. A new dedicated suite at the facility, designed to handle highly potent API, houses the new equipment.

Grand River Aseptic Manufacturing (Grand Rapids, Mich., USA) is now majority-owned by private equity firm Arlington Capital Partners (Chevy Chase, Md., USA). Terms of the acquisition were not dis-closed. Arlington Capital will help to fund facility expansions and additional parenteral drug development and manufacturing capacity.

Metrics Contract Services (Greenville, N.C., USA), the CDMO arm of Mayne Pharma (Salisbury South, South Australia, Australia), has completed an $80 million, 126,000-square-foot solid oral dosage form manufacturing facility in Greenville. The new plant includes commercial-scale, solvent-based fluid bed processing and film coating capabilities. Production at the facility, which quadruples Metrics’ US manu-facturing capacity, is slated to begin in January.

Novartis (Basel, Switzerland) has entered a Memorandum of Understanding under which it will make a tender offer of $41/ordinary share and $82/American Depositary Share for radiopharmaceutical company Advanced Accelerator Applications (AAA – Saint-Genis-Pouilly, France) in a transaction valued at about $3.9 billion. Novartis expects the acquisition to boost its oncology capabilities. AAA is develop-ing products like Lutathera, a radio ligand therapy to treat neuroendocrine tumors approved in Europe in September 2017 and is under review in the US, with approval expected in 2018. AAA reported sales of €109 million ($128.04 million) in 2016.

PCI Pharma Services (Philadelphia, Pa., USA) has added Xcelodose 600S fully automated micro-dosing powder-in-capsule technology for manufacture of highly potent molecules at its Tredegar, UK facility. The addition allows filling amounts as low as 100 µg at a speed of 600 capsules/hour, and containment to OEL limits down to 0.1 µg/m3. In 2010, PCI had invested in Xcelodose 120S technology, a semi-automated system capable of providing early stage clinical supplies.

Pfizer CentreOne (New York, N.Y., USA) has begun offering highly potent solid oral dosage form contract manufacturing services in Nagoya, Japan at a site owned by parent company Pfizer. The facility offers containment at OEB levels 1-5 and OEL down to 0.01 µg/m3. The Nagoya site will also provide inspec-tion, packaging and testing services for highly potent solid oral drugs or sterile injectables made by Pfizer CentreOne outside of the country and imported into Japan.

Recipharm (Jordbro, Sweden) will close two of its Swedish plants: a solid dose manufacturing facility in Stockholm and a sachet and stick pack filling site in Höganäs. The Höganäs site, which employs 45, is slated to shutter by the end of 2018, to be followed by the Stockholm site, which employs about 180, by the end of 2019. The cuts were reported along with the CDMO’s financials for the January-September 2017 period, which showed net sales of SEK 1,200 million ($143.2 million) and EBITDA of SEK 103





million ($12.3 million). During a call to discuss the financial report, Recipharm officials said the company is talking with clients about transferring work to other Recipharm facilities.

Thermo Fisher Scientific (Waltham, Mass., USA) has won a five-year contract to make commercial supplies of Evoke Pharma’s (Solano Beach, Calif., USA) nasal metoclopramide formulation, Gimoti, thanks largely to its acquisition of Patheon (Durham, N.C., USA), completed in September (September 2017 B/POR). Evoke plans to finalize its NDA submission for Gimoti, indicated for acute and recurring diabetic gastroparesis, in the first quarter of 2018. Evoke had worked previously with Patheon.

Tulex Pharmaceuticals (Cranbury, N.J., USA), a specialty pharmaceutical company that also provides CMO services for clinical and commercial supplies, has completed a new cGMP solid oral and liquid dosage form manufacturing plant in Cranbury. The facility has capability for solvent processing and Wurster coating.

Vetter Pharma International (Ravensburg, Baden-Wuerttemberg, Germany) is expanding the second-ary packaging operation at its Ravensburg site, adding 32,000 square feet to the existing facility. The ex-pansion will occur over several years on the second floor of the existing secondary packaging facility and will include new fully automated packaging lines, plus space for manual and semi-automated packaging processes. It will also house a flexible syringe blister line that includes safety device assembly and equip-ment for packaging. Serialization and aggregation services will be expanded for both current require-ments and any future regulatory requirements that may develop.

Clinical Dose Manufacturing and Packaging

Advanced BioScience Laboratories (ABL – Rockville, Md., USA) earlier this year added a fully auto-mated vial filling system to the aseptic fill/finish operations at its Rockville biomanufacturing facility. The new line—contained in a restricted access barrier system—can accommodate lot sizes of 100-5,000 vials. It also uses a disposable product contact path to limit cross-contamination. ABL also has an isola-tor-based fill/finish line at its Stasbourg, France site capable of handling lots up to 10,000 vials.

Almac (Craigavon, UK) passed an inspection by the UK Medicines and Healthcare products Regulatory Agency at its new Charnwood facility in Loughborough, UK, thus gaining licenses to produce clinical and commercial supplies of non-potent and potent solid oral drug products. Almac acquired the site in November 2015 and recently completed improvements to the buildings, as well as installation and vali-dation of new processing and analytical technology. It’s intended to complement existing development and GMP manufacturing services provided at Almac’s Craigavon site.

Clinigen (Burton-on-Trent, Staffordshire, UK) acquired International Medical Management Corp. (IMMC – Tokyo, Japan), a supplier of unlicensed medicines, a move aimed at strengthening Clinigen’s presence in the Japanese pharmaceutical market. IMMC operates in several pharma sectors, including niche vaccine, oncology and in vitro fertilization. Financial terms of the deal were not disclosed.

Eurofins Amatsigroup (Fontenilles, France) is adding a new building at its Saint Gely du Fesc, France site, which specializes in packaging and logistics for human and veterinary drugs, that will double clinical supply capacity from the site. The new 1,200-square-meter building will house seven packaging suites, including two secondary packaging rooms controlled to temperatures of 2–8°C that will be directly con-nected to the temperature-controlled storage area, thus allowing products to remain at the appropriate temperature throughout all labeling and packaging activities. The new facility will also add 2,500 square meters of GMP storage capacity at 15–25°C and 220 square meters at 2–8°C. The new facility is expected to be fully operational by the end of 2017.

Marken (Durham, N.C., USA) has introduced an online tool—dubbed Marken Viseo—for use with direct-to-patient and direct-from-patient clinical delivery services. The app allows clinical trial patients to track





home deliveries of investigational drugs and pickup of biological specimens on their phone, other mobile device or home computer.

Nitto Avecia Pharma Services (Irvine, Calif., USA) has completed initial manufacturing synthesis runs at the 1.6 Mol scale at its new oligonucleotide API production facility in Milford, Mass., USA. This capacity boosts Avecia’s total synthesis capabilities to more than 3 Mol.

PAREXEL International (Waltham, Mass., USA) has launched a service to provide near real-time tem-perature and location monitoring of clinical drug supplies shipped from central distribution centers to clinical trial sites. The Active Tracking service is intended for investigational drugs that require a tem-perature-controlled supply chain to ensure product integrity, particularly biologics and vaccines. It will detect incidents such as shipment delays or diversions and temperature deviations, which are automati-cally sent to clinical trial sites, along with current location and temperature data.

Quotient Sciences (Ruddington, Nottingham, UK), formerly known as Quotient Clinical, has acquired CDMO Pharmaterials (Reading, UK). The purchase brings additional formulation and manufacturing capabilities to Quotient’s offerings; Pharmaterials specializes in development of preclinical and clinical small molecule drug products for oral and inhaled delivery at its 48,000-square-foot facility, which houses 13 GMP manufacturing suites. This marks Quotient’s third acquisition in 2017. Terms of the deal were not disclosed. Earlier in the year, the company also acquired QS Pharma (Boothwyn, Pa., USA) for $75 million and Seaview Research (Miami, Fla., USA) for an undisclosed amount (February 2017 B/POR). It renamed itself Quotient Sciences in November to better reflect the extended range of services provided via the acquisitions.

Velesco Pharmaceutical Services (Plymouth, Mich., USA) has won a subcontract for clinical production of a potential treatment for beta-thalessemia; the prime contractor is Leidos Biomedical Research, the op-erations and technical support contractor for the Frederick National Laboratory for Cancer Research. The $350,000 agreement, funded by the National Institutes of Health’s National Center for Advancing Trans-lational Sciences through its Therapeutics for Rare and Neglected Diseases program, includes analytical method development, manufacture of clinical supplies and stability testing of the investigational drug.

API — Large Molecule

Large Molecule API Sector Becomes Increasingly Crowded as Peregrine Changes FocusCompetition within the 2,000-5,000 L biomanufacturing segment is set to intensify as Peregrine Phar-maceuticals (Tustin, Calif., USA) announced its transition to a dedicated CDMO from an excess capacity player.

The company announced the move during the company’s quarterly conference call. Subsequently, Mark Bamforth, currently Brammer Bio (Lexington, Mass., USA) CEO and president, was appointed to the company’s board of directors. This followed appointment of Roger Lias, an experienced executive, as the new head of its CDMO division, Avid Bioservices (Tustin).

In reality, Peregrine is making virtue out of necessity as it readjusts after failure of its lead product bavituximab, which led to a 20% reduction in staff and the inevitable hit to the share price. The company has forecast flat revenues for fiscal 2018, with CMO revenues estimated to be around $50-$55 million, despite a bumper first quarter.

Avid Bioservices joins a roster of other CDMOs serving the clinical/early commercial biological segment. These include Abzena (Cambridge, UK), Ajinomoto Althea (San Diego, Calif., USA), Emergent BioSolu-tions (Gaithersburg, Md., USA), Fujifilm Diosynth Biotechnologies (Morrisville, N.C., USA), KBI Bio-

WHAT ITMEANS > > >





pharma (Durham, N.C., USA), Rentschler Biopharma (Laupheim, Baden-Wuerttemberg, Germany) and Therapure Biomanufacturing (Mississauga, Ontario, Canada), as well as Cook Pharmica (Blooming-ton, Ind., USA), now part of Catalent (Somerset, N.J., USA).

Global biopharma companies, with their portfolios of (potentially) large volume drugs and biosimilars, remain targets for such industry giants as Lonza (Basel, Switzerland), Samsung BioLogics (Incheon, South Korea) and Boehringer Ingelheim (Ingelheim am Rhein, Germany). However, the proliferation of emerging biopharmaceutical companies with little manufacturing capability is likely to ensure reason-able returns, at least while the funding lasts.

Catalent Closes Cook Deal, Reorganizes to Advance Biologics WorkCatalent Pharma Solutions (Somerset, N.J., USA) plans to reorganize its operations into two new dedi-cated business units: Biologics & Specialty Drug Delivery and Oral Drug Delivery. The biologics unit, led by Barry Littlejohns as president, will encompass eight Catalent facilities that have biologics develop-ment, manufacturing, analytical and sterile fill-finish capacity, along with the CDMO’s respiratory and ophthalmic businesses. The company’s biopharmaceutical business is growing faster than its traditional small molecule, oral dosage form business (October 2017 B/POR).

The reorganization comes as Catalent has added to its existing biologics development, manufactur-ing and analytical services by completing its acquisition of Cook Pharmica (Bloomington, Ind., USA) for $950 million (September 2017 B/POR). That deal comes with privately held Cook’s 875,000-square-foot Bloomington facility, which has capacity for clinical and commercial cell culture manufacturing, formula-tion, finished dose manufacturing and packaging. The site also fills an important hole, providing Catalent with new injectables manufacturing in North America. Tedd Green, former president of Cook, will serve as senior vice president of the newly created Catalent Bloomington.

Highlighting the importance of the biologics niche, Catalent also recently announced that it will develop and manufacture a candidate solid tumor treatment for Grid Therapeutics (Durham, N.C., USA). Catalent will use its GPEx® cell line technology to develop cell lines and manufacture antibodies as part of de-velopment of a cGMP bulk drug production process. All work will occur at Catalent’s Madison, Wis., USA biomanufacturing site.

Catalent’s new Oral Drug Delivery business unit, led by Jonathan Arnold as president, will include the company’s delivery technologies and development solutions, including formulation and analytical devel-opment, bioavailability enhancement (e.g., micronization, hot melt extrusion and spray drying technol-ogy), controlled release, Zydis orally disintegrating tablet technology and commercial supply across nine manufacturing sites.

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API — Large Molecule in Brief

Celonic (Basel, Switzerland) has acquired a biomanufacturing facility in Heidelberg, Germany from Glycotope (Berlin, Germany). The plant will boost Celonic’s capacity for late-stage clinical and commer-cial supply of large molecule API. The CDMO will pair its CHOvolutionTM platform with Glycotope’s GEX® human cell line platform at the site; it also plans to expand the facility, adding two additional clean rooms and two 2,000 L single-use bioreactors to the existing five manufacturing suites. Financial details of the acquisition were not disclosed.

Fujifilm Diosynth Biotechnologies (Morrisville, N.C., USA) is investing heavily in monoclonal antibody production capacity using its Saturn mAb platform, which includes process development through clinical and commercial manufacture. The CDMO has completed a monoclonal antibody production facility at its College Station, Texas, USA site, an investment of ¥2.2 billion ($19.4 million), including installation of three single-use, 2,000 L mammalian cell culture tanks for a total of six tanks at the site. The Texas site has room to scale up to a maximum of 12 cell culture tanks, if needed. The company also recently opened a ¥1 billion ($8.8 million) expansion at its Redcar, UK facility, which nearly doubled the existing 930-square-meter space for production process development and added fully automated bioreactors and chromatography systems. Operations are slated to begin in early 2018.

iBio CDMO (Bryan, Texas, USA) will manufacture recombinant lectin protein Galanthus nivalis agglutin (GNA) for use with Aethlon Medical’s (San Diego, Calif., USA) Hemopurifier blood purification device, a single-use cartridge intended to capture highly glycosylated viruses, such as influenza and hemorrhagic fevers like Ebola. The GNA will be used to boost the blood purifier’s performance by improving binding capacity with blood pathogens to enhance their removal; it is intended to replace extracted mixtures that have proven less effective. Aethlon recently received an FDA Expedited Access Pathway designation for the Hemopurifier device.

LakePharma (Belmont, Calif., USA) will develop and manufacture clinical supplies of CDX bi-specific antibodies for biotech company Hemogenyx Pharmaceuticals (London, UK). The antibodies are intended to replace traditional methods—such as chemotherapy and radiation—of conditioning patients for bone marrow transplant.

Lonza (Basel, Switzerland) has broken ground on the mammalian cell-culture facility it is building in Visp, Switzerland under a joint venture with Sanofi (Antony, France) and has begun integration of recently purchased Capsugel (Morristown, N.J., USA) into its operations, the company reported in its third-quarter 2017 financial results. Lonza announced the Ibex SolutionsTM biologics facility, to be used for monoclonal antibody production, earlier this year (March 2017 B/POR); the $285 million site is expected to be fully operational by 2020.

Lonza also reported on progress in integrating the operations of Capsugel, the acquisition of which it closed in July. Lonza had forecast that the $5.5 billion purchase would be accretive to its core earnings per share in the first half year post-closing (July 2017 B/POR); in its third-quarter results, the CDMO reported that Capsugel had performed in line with expectations and posted particularly strong results in the consumer health and nutrition sector. Combined finances will be reported in full-year 2017 results. Lonza reported that it expects to see EBITDA over CHF 1 billion ($1 billion) for full-year 2017, crediting strong performances in the third quarter by its Pharma & Biotech and Specialty Ingredients units.

Samsung BioLogics (Incheon, South Korea) will provide clinical manufacturing services to small biotech start-ups in partnership with MilliporeSigma (Billerica, Mass., USA), which will provide process devel-opment and technical training support under a new memorandum of understanding (MOU) between the two companies. Also as part of the MOU, MilliporeSigma will provide its Mobius single-use systems to Samsung Biologics. The MOU is an extension of a similar 2014 agreement between the two companies.





WuXi AppTec (Shanghai, China) will manufacture preclinical and clinical supplies of stem cell, cell and gene-modified candidate products for IQVIA (Durham, N.C., USA), formerly Quintiles IMS. Work will be done at WuXi’s Philadelphia, Pa., USA site.

Cell, Gene and Virus-based Therapies

CAR-T Approvals Boost CDMO Interest in Advanced TherapiesGrowth continues in the cell and gene therapy sector, despite ongoing technology and cost challenges, with recent approvals galvanizing the biotech companies and CDMOs involved in developing and produc-ing these drug products, dubbed “living drugs.” Approval of the first two commercial CAR-T cell thera-pies—Novartis’ (Basel, Switzerland) Kymriah (tesagenlecleucel) and Kite Pharma’s (Foster City, Calif., USA) Yescarta (axicabtagene ciloleucel), indicated for B-cell precursor acute lymphoblastic leukemia and non-Hodgkin lymphoma, respectively—has highlighted the potential for this sector. In August 2017, Gilead Sciences (Foster City, Calif., USA) acquired Kite for $11.9 billion.

However, technological challenges still abound, with requirement for customized production platforms driving up both development time and costs. And a limited supply of CMOs with the necessary capability and expertise could both hinder growth in this niche, while at the same time offering an enormous op-portunity for CMOs able to invest in the necessary capacity and employee skill sets.

In its data report for the second quarter of 2017, the Alliance for Regenerative Medicine (ARM), reported global financings $2.45 billion for the sector in that quarter, up 88% from the second quarter of 2016. Financings for cell therapy during the quarter were $1.33 billion, up 70% from 2016. Gene and gene-modified cell therapy financings rose 56% over 2016 figures, to $1.18 billion. Tissue engineering financ-ings rose 64% from 2016, reaching $90.7 million for the second quarter of 2017. Mergers/acquisitions and follow-ons have made up the bulk of 2017 financings to date, with venture capital, corporate part-nerships and initial public offerings contributing markedly less.

For the first half of the year, ARM reported total $4.25 billion. Cell therapy financings for the half-year were $2.71 billion; the gene therapy sector raised $2.04 billion.

Pipeline growth seen

Though some later-stage clinical work is ongoing and some approvals have even been seen, much of the activity in the cell and gene therapy industry remains in relatively early—Phase I and II—clinical trial stages.

ARM’s second quarter 2017 report estimated that 586 clinical trials of cell therapy products are currently underway, including 174 at Phase I, 365 at Phase II and 47 at Phase III. In the gene and gene-modified cell therapy sub-niche, 504 clinical trials are underway, 184 of those at Phase I, 286 at Phase II and 34 at Phase III. For comparison, at the end of 2015, ARM estimated that 631 clinical trials of cell therapies were underway.

Key areas of interest continue to be oncology (50% of trials), cardiovascular disorders (10%) and central nervous system diseases (6%), with such areas as immunology, ophthalmology, infectious disease and hematology rounding out the leading areas of new product development.

And progress in cell therapy pipelines has led to a minor boom in contract manufacturing agreements. For instance, Fujifilm Corp. (Tokyo, Japan) earlier this month entered a contract development and manu-facturing agreement with regenerative medicine venture company Cyfuse Biomedical (Tokyo); with this deal, Fujifilm will gain access to Cyfuse Biomedical’s 3-D technology for fabricating live cells into any shape and the 3-D cell printer Regenova®. The agreement also included a ¥390 million ($3.5 million) investment by Fujifilm in Cyfuse Biomedical. And in October, Nikon CeLL Innovation (Tokyo, Japan)





entered an agreement to manufacture clinical supplies of the cell therapy MultiStem, a candidate treat-ment for ischemic stroke, for Athersys (Cleveland, Ohio, USA).

In addition, multiple CMOs have entered manufacturing agreements with cell and gene therapy develop-ers. Some of the companies that announced manufacturing agreements in 2017 are included in the table below.

Select Cell Therapy Contract Manufacturing Deals

Contractor Client Product Services Provided

Oxford Biomedical Novartis CTL-019 Commercial lentiviral vector production

Shibuya Corp. Promethera Biosciences N/ADevelopment of clinical-

and commercial-scale manufacturing platform

Lentigen TxCell CAR-Treg Clinical lentiviral vector supply

Lonza Netherlands (formerly PharmaCell) Lion Biotechnologies Unnamed autologous cell

therapiesClinical and commercial

manufacture

Cellular Dynamics International Harvard Stem Cell Institute N/A Induced pluripotent stem cell production

Brammer Bio Abeona Therapeutics N/AClinical manufacture of candidate treatment for

Sanfilippo Syndrome

Source: Previous B/POR coverage

Construction, acquisitions show CMO interest

Aside from such large players as Lonza (Basel, Switzerland) and WuXi AppTec (Shanghai, China), which have significant positions and experience, most cell therapy CMOs are small, early-stage companies. This could mean a lack of qualified late-stage clinical and commercial supply. Some companies already have suggested, for instance, that viral vector demand could soon outstrip available supply. It is certainly the case that many Phase 1 studies are run out of academic establishments.

However, growing interest in cell and gene therapies has also led to a burst of facility additions and expansions in the last year among CMOs already active in these sectors or seeking to enter them. For instance, PCT Cell Therapy Services (Allendale, N.J., USA) last month announced that it will add 49,700 square feet to a building at its Allendale manufacturing site, which will house additional Grade B/ISO 7 controlled environment rooms, manufacturing development, quality control and microbiology labs and warehousing space (October 2017 B/POR).

Leading cell and gene therapy CMOs Lonza and WuXi added additional capacity last year, as well. Lonza in October 2016 announced plans to add 150,000 square feet of viral gene and cell therapy production capacity to its Houston, Texas, USA site (October 2016 B/POR). And in the same month, WuXi opened a 150,000-square-foot biomanufacturing facility in Philadelphia, Pa., USA that will make cell therapy products that use viral vectors (October 2016 B/POR).

ACF Bioservices (Exton, Pa., USA) in September completed a 3,400-square-foot gene and cell therapy product testing facility in Exton (September 2017 B/POR).

Some overseas construction is occurring, as well. For instance, CARsgen Therapeutics (Shanghai, China) opened a new, 33,000-square-foot cell therapy manufacturing facility in China with capabilities to make clinical supplies of vectors and CAR-T cells (June 2017 B/POR).

Facility or company acquisition is another way that CMOs can gain entry into the cell and gene therapy game. For instance, KBI Biopharma’s acquisition of the lease on a 10,200-square-foot Houston, Texas, USA manufacturing site—along with lease of an unnamed “major piece of equipment”—from Opexa





Therapeutics (The Woodlands, Texas, USA) has allowed it to begin offering contract manufacturing for cell therapies (February 2017 B/POR).

Hitachi Chemical Co. Ltd. (Tokyo, Japan) acquired PCT (Allendale, N.J., USA), a contract manufacturer of cell therapy products, from Caladrius BioSciences (May 2017 B/POR).

Vigene Biosciences (Rockville, Md., USA) acquired Omnia Biologics (Rockville) for an undisclosed sum. The purchase includes Omnia’s 7,000-square-foot cGMP facility, which houses three manufacturing suites and a process development laboratory for viral vector production (March 2017 B/POR).

One of the more interesting features of the current landscape is the increasing involvement of national governments as key infrastructure providers. In the UK, for instance, the Cell and Gene Therapy Catapult (London, UK) is slated for completion by the end of 2017. Designed to support early stage com-panies, the facility is EU-compliant and is licensed for clinical and commercial production.

Not to be outdone, Yposkesi (Evry, France), a joint venture between AFN-Telethon and the French government, has already received more than €121 million ($141.9 million) in funding with a remit to develop cell and gene therapy products. Although it is currently limited to clinical scale gene therapy manufacturing, commercial scale manufacturing for both gene and cell therapies is expected to commence by 2021.

PharmSource has identified 48 companies currently providing contract cell and/or gene therapy manu-facturing services (see table on Page 11). Notably, some players fall under the same parent company. For instance, BioReliance (Rockville, Md., USA) and SAFC (St. Louis, Mo., USA) are both owned by Merck Mil-lipore. And, as noted above, Lonza Netherlands was formerly PharmaCell; Lonza acquired that company earlier in 2017 (June 2017 B/POR).

Technology, supply challenges remain

Despite the spate of new construction and M&A activity, entry into or expansion of services in the cell and gene therapy sector remains rather fraught. Many of the challenges that have dogged the cell and gene therapy sectors for the last few years remain (April 2016 B/POR). For instance, there is no estab-lished manufacturing platform that can be used to cover an array of cell therapy products. The need to, therefore, customize production processes—from growing and harvesting to sorting and processing the cells—makes it more time-consuming and costly to scale manufacturing as a new product is developed. Additionally, limited cell life affects the size of batches that can be made, meaning that for shorter-lived cells, companies cannot produce large batches.

And on the gene therapy side, pipelines have grown to the point where demand for viral vectors may outstrip available supply. Capacity may be one part of the challenge, but some companies have suggested that the quality of vectors is a more critical limiting factor.

Even distribution of cell and gene therapies is somewhat specialized, requiring cold chain logistics services that may need to be customized to individual products. For autologous products, for instance, cells taken from the patient must be transported at cryogenic or chilled temperatures to the product manufacturer for processing into the treatment. The finished drug, likewise, must be transported at cryogenic temperatures, requiring specialized packaging, as well as temperature-controlled storage and transport.

Due to the specialized transport and storage required, these logistical services may be outsourced. For instance, Cryoport (Irvine, Calif., USA) was recently tapped to provide logistics services for both Novartis’ Kymriah and Kite Pharmaceutical’s Yescarta. The company had previously provided clinical-scale logistics services for the Kite product.





Providers of Cell, Gene, Virus and Cell Therapy Manufacturing Services

Provider Country Gene Therapy and Virus Products Tissue and Cell Therapy

3P Biopharmaceuticals Spain ●

Advanced BioScience Laboratories, Inc. (ABL) USA ●

apceth Biopharma GmbH Germany ●

Areta International Italy ●

Austrianova Singapore Pte. Ltd. Singapore ●

BioNTech Innovative Manufacturing Services (Idar-Oberstein, Germany),

formerly Eufets AGGermany ●

Biovian Finland ●

BioReliance (Merck Group) UK ●

Brammer Bio USA ● ●

CellforCure France ●

Cellin Technologies LLC Estonia ●

Cellular Therapeutics Ltd. UK ●

Cevec Pharmaceuticals GmbH Germany ●

Cobra Biologics UK ●

Cognate Bioservices USA ●

Esperite (formerly The Cell Factory) Netherlands ●

Eurogentec S.A. Belgium ●

Fraunhofer Group Germany ● ●

Fujifilm Diosynth Biotechnologies USA ●

Genibet Biopharmaceuticals Portugal ●

Halix Netherlands ●

Hitachi Chemical Co., Ltd. USA ● ●

Holostem Terapie Avanzate Italy ●

IDT Biologika GmbH Germany ●

Japan Tissue Engineering Japan ●

KBI Biopharma USA ●

Lonza Group Switzerland ● ●

Lonza Netherlands (Lonza; formerly PharmaCell) Netherlands ●

MaSThercell Belgium ●

Medinet Japan ●

Meridian Life Sciences Inc USA ●

Nikon Corporation Japan ● ●

Novasep Belgium ●

Oxford Genetics Ltd. UK ●

Paragon Bioservices, Inc USA ●

Roslin Cells (formerly Roslin Cell Therapies) UK ●

SAFC (Merck Group) USA ●

Sanquin Blood Supply Foundation (Stichting Sanquin Bloedvoorziening) Netherlands ●

Takara Bio Japan ●

VGXI USA ●





Provider Country Gene Therapy and Virus Products Tissue and Cell Therapy

Vibalogics Germany ●

Vigene Biosciences, Inc. USA ●

WuXi AppTec USA ● ●

Government Agencies and University Departments

Cell and Gene Therapy Catapult UK ●

Cell Therapies Australia ●

NCI Biopharmaceutical Development Program USA ●

University of North Carolina Vector Core USA ●

Waisman BioManufacturing USA ●

Source: PharmSource Strategic Advantage database

FDA Updates Regenerative Medicine Policies as Industry Interest SwellsAlong with the pharma industry, regulators also seem to recognize both the promise and the chal-lenges posed by cell and gene therapy products. The US FDA earlier this month released an updated policy on handling regenerative medicine approvals. The agency’s original policy on these products was issued in 2005, but developments over the last 10-plus years have outstripped the agency’s ability to apply the old policy to the many burgeoning new cell and gene therapy products currently in the pipeline.In a statement about the new policy, FDA Commissioner Scott Gotlieb called cell-based therapies “one of the most promising fields of science,” while also noting that the cell and gene therapy arena “has presented unique challenges to researchers, healthcare providers and the FDA.”The policy framework is outlined in four guidance documents. Two of those—Regulatory Consid-erations for Human Cell, Tissues, and Cellular and Tissue-Based Products: Minimal Manipula-tion and Homologous Use and Same Surgical Procedure Exception under 21 CFR 1271.15(b): Questions and Answers Regarding the Scope of the Exception—are final guidances clarifying the agency’s interpretation of risk-based criteria that manufacturers should use when determining whether a product is subject to the FDA’s premarket review. The first guidance clarifies clarifies the FDA’s current view of “minimal manipulation” and “homolo-gous use,” important concepts for the testing and commercialization of autologous cell therapy products and help to establish when a product is subject to premarket approval requirements. The second clarifies when cell- and tissue-based products are exempt from regulations covering human cell and tissue products, as defined in 21 CFR 1271.3(d) when they are removed from and implant-ed into the same individual in the same surgical procedure and in their original form, in other words for use in autologous cell therapy products. Both include information on how the agency plans to apply a risk-based approach to oversight and enforcement of these products.The framework also includes two draft guidances, on which the agency will accept public comments for 90 days from their Nov. 16, 2017 issuance. The first draft guide—entitled Evaluation of Devices Used with Regenerative Medicine Advanced Therapies—builds on regenerative medicine provi-sions in the 21st Century Cures Act and explains how the FDA plans to streamline application of the regulatory requirements for devices used to recover, isolate and deliver cell therapies, includ-ing combination products. It specifies that devices intended for use with a specific therapy may be considered a combination product.The second draft guidance—Expedited Programs for Regenerative Medicine Therapies for Serious Conditions—describes expedited programs available to developers of cell therapy products that target serious conditions, including priority review and accelerated approval, which several candidate cell and gene therapy products have received over the last year.


https://www.fda.gov/downloads/BiologicsBloodVaccines/GuidanceComplianceRegulatoryInformation/Guidances/CellularandGeneTherapy/UCM585403.pdf



https://www.fda.gov/downloads/BiologicsBloodVaccines/GuidanceComplianceRegulatoryInformation/Guidances/Tissue/UCM419926.pdf

https://www.fda.gov/downloads/BiologicsBloodVaccines/GuidanceComplianceRegulatoryInformation/Guidances/Tissue/UCM419926.pdf








Cell, Gene and Virus-based Therapies in Brief

BioNTech Innovative Manufacturing Services (Idar-Oberstein, Germany) is the new name for cell and gene therapy CDMO Eufets AG (Idar-Oberstein, Germany), the manufacturing subsidiary of BioNTech AG (Mainz, Germany).

Novartis (Basel, Switzerland) will use gene editing technology developed by Homology Medicines, Inc. (Bedford, Mass., USA) in the development of new treatments for ophthalmic and hemoglobinopathy disease. Novartis made an upfront payment to Homology, as well as an equity investment under the agreement that gives it access to the editing technology. The company will also help to fund further development of Homology’s technology platform, while Homology may receive milestone payments and royalties on any commercialized products from Novartis.

Vibalogics (Cuxhaven, Germany), which specializes in manufacture of viruses and live bacterial products, has partnered with SIRION Biotech (Munich, Germany), a virus vector technology expert, to provide ade-no-associated virus services from vector engineering and development to GMP manufacture. The service will become available in the beginning of 2018; SIRION will provide AAV development, while Vibalogics supplies production capabilities for clients ready to enter clinical trials.

API — Small Molecule

Alcami (Wilmington, N.C., USA) will provide clinical supplies of darinaparsin API for trials of a Solasia Pharma (Tokyo, Japan) candidate treatment for hematologic and solid cancers. Production will begin in the fourth quarter of 2017 at Alcami’s highly potent API manufacturing site in Germantown, Wis., USA. Solasia acquired rights to darinaparsin from ZIOPHARM Oncology (Boston, Mass., USA) for potential treatment of peripheral T-cell lymphoma; the product is currently in Phase II trials in Asia.

Alcami also opened an office in Tokyo, Japan last month, part of its effort to expand its drug development and manufacturing presence in Japan. It currently houses global sales and business development staff, with quality, regulatory and project management teams to be added later.

Avista Pharma Solutions (Durham, N.C., USA) has completed an expansion of its Longmont, Colo., USA API manufacturing site, in which the three existing manufacturing suites were upgraded and a fourth added. New equipment included four walk-in hoods, three 50-gallon gas-lined reactors, three Hastelloy agitated filter dryers and several small-scale reactors and mixing vessels. The site can manufacture mate-rials rated up to SafeBridge occupational exposure bands of 3A and 3B. Avista also added two large-scale development suites, effectively doubling the site’s non-GMP capacity.

BioStem Technologies (Pompano Beach, Fla., USA) subsidiary Qualified Pharma Ingredients, Inc. (QPI – Oakland Park, Fla., USA) has begun expanding its Oakland Park API manufacturing facility to 4,500 square feet. The expansion, slated for completion by the first quarter of 2018, will include a Drug En-forcement Administration (DEA) Schedule III-V cage, allowing QPI to make DEA-regulated products, as well as additional product storage and pack out stations.

Cambrex (East Rutherford, N.J., USA) has completed an expansion at its Charles City, Iowa, USA manufac-turing site, adding 1,000- and 4,000-gallon glass-lined reactors in the 7,500-square-foot plant opened last year (July 2016 B/POR). The additions bring cGMP reactor capacity in that plant to 23,000 gallons and the total capacity at the Charles City site to 107,000 gallons. An additional expansion at the site—a $24 million, 4,500-square-foot highly potent API plant—is slated to open in 2019 (August 2017 B/POR).

Evonik (Essen, Germany) has renewed a long-term API and drug intermediate supply agreement with Eli Lilly (Indianapolis, Ind., USA); the deal covers both human and veterinary drugs. Much of the supply will





come from Evonik’s Tippecanoe Laboratories (Lafayette, Ind., USA), which Evonik acquired from Lilly in 2010. Evonik has been supplying API for Lilly, along with about 20 other clients, from the site since that time.

Evonik has also launched a sterile, ultra-low metal content bioresorbable polymer for use in formulat-ing sterile controlled-release parenteral products. The RESOMER® ZERO, a sterile controlled release poly(lactic-co-glycolic) excipient, offers a tin content of 1ppm or less and is intended for formulations with APIs that are sensitive to elemental impurities. The polymer aims to minimize degradation during melt processing, thus improving process control, and requires no further sterilization before use in aseptic manufacturing.

Novasep (Pompey, France) will add cryogenic API production capabilities to its Chasse-sur Rhône, France facility. The €4 million ($4.67 million) expansion will include installation of a new cGMP cryo-genic production line capable of temperatures down to –80°C, along with a four-cubic-meter Hastelloy reactor, filter drier and clean room. As part of the project, Novsep will also add a new stream to its cGMP pilot plant, including a 400L Hastelloy reactor, filter drier and clean room to boost small-scale manufac-turing capabilities for clinical supplies and low-volume API production. The new facilities will also allow Novasep to handle highly reactive compounds. The expanded capacity is slated to become operational in early 2018.

Servier CDMO (Neuilly Sur Seine, France) has added continuous chromatography with simulated moving bed and super critical fluid chromatography with solvent recycling at its Bolbec, Normandy, France manufacturing site. The company expects the $7.5 million improvements to boost productivity by 50%, allowing purification of 50 kg/day and chiral separation of 10 kg/day for clinical and commercial API supplies.

Sterling Pharma Solutions (Cramlington, Northumberland, UK) is expanding milling, micronization and solid dosage form capabilities at its Dudley, Northumberland manufacturing site. The £6 million ($7.97 million) expansion will include four new milling areas housing mechanical milling, spiral jet milling and small-scale trial mills. Sterling will also boost its laboratory capabilities to include polymorph screen-ing, salt selection, particle engineering and crystallization scale-up capacity. The facility will offer ISO 8 cleanrooms and the capacity to handle OEB 4 classified molecules. It is expected to be operational by mid-2018.

Analytical Services

Albany Molecular Research Inc. (AMRI – Albany, N.Y., USA) unit SSCI has added in vitro bioequivalence testing services for new generic drugs to the analytical services it provides. The new services include comparative dissolution and solid-state chemistry testing.

Almac (Craigavon, UK) will purchase analytical services provider BioClin Research Laboratories (Athlone, Co. Westmeath, Ireland) for an undisclosed amount. The acquisition includes BioClin’s 14,000-square-foot Athlone facility, where it provides cGMP bio/pharmaceutical analysis services, along with microbiology testing and bioanalyses. Almac will add BioClin’s capabilities to its own analytical facilities; the CDMO recently expanded the analytical facilities at its Craigavon site.

CiToxLab (Evreux Cedex, France) has acquired CRO Xenometrics (Stillwell, Kan., USA), which provides safety, pharmacology and pharmactokinetics testing services, for an undisclosed sum. CiToxLab acquired another CRO, AccelLab (Boisbriand, Quebec, Canada) for an undisclosed amount in late 2016 (December 2016 B/POR). More recently, the company gained a new laboratory facility in Laval, Montreal, Canada (October 2017 B/POR).

Concept Life Sciences (Manchester, UK) has acquired preclinical CRO Aquila BioMedical (Edinburgh, UK), which provides immune-oncology, immunology and multiplex histology testing.





Eurofins Scientific Group (Brussels, Belgium) will build a new 5,800-square-meter laboratory offering bioanalytical testing services in Livingston, Scotland. The £4 million ($5.2 million) facility, which will employ more than 100, will provide pharmaceutical chemistry, microbiology and water microbiology testing. Construction of the new facility follows Eurofins’ 2016 acquisition from Exova Group (Manches-ter, UK) of 10 facilities in the UK and Ireland, two of which provide pharmaceutical quality control test services (May 2016 B/POR).

Smithers Avanza (Gaithersburg, Md., USA) has doubled the size of its bioanalytical services laboratory in Wareham, Mass., USA to 15,000 square feet, as well as expanding large-molecule analysis capabilities. The expansion also included addition of new instrumentation to support toxicology and vaccine testing, along with 28 new employees.

Sterigenics (Oak Brook, Ill., USA) parent Sotera Health (Broadview Heights, Ohio, USA), formerly known as Sterigenics International, has added extractables and leachables testing services via its acquisition of CRO Toxikon Europe (Leuven, Belgium), the European division of Toxicon (Bedford, Mass., USA). The purchase includes Toxicon’s facility in Leuven and approximately 100 employees; Toxicon Europe will operate under the umbrella of existing Sotera company Nelson Laboratories (Salt Lake City, Utah, USA). Under terms of the deal, Nelson Laboratories will also outsource in vivo biocompatibility services to Toxikon USA. Financial terms of the agreement were not disclosed.

Under the rebranding to Sotera Health, the three operating companies—Sterigenics, Nelson Laboratories and Nordion (Ottawa, Ontario, Canada)—will continue to operate under their current names.

WuXi AppTec (Shanghai, China) has acquired CRO ResearchPoint Global (RPG – Austin, Texas, USA), which provides such services as clinical monitoring, data management and biostatistics. RPG will be in-tegrated into WuXi’s existing clinical development and analytical services and operate as a wholly owned subsidiary of WuXi. The acquisition, financial terms of which were not disclosed, will add to WuXi’s US clinical research capacity.

Phase II-IV Clinical Research

IQVIA (Durham, N.C., USA) is the new name for CRO Quintiles IMS, effective Nov. 15, 2017. IQVIA will continue to provide clinical trial services via its CORETM platform, including data security and privacy protection, along with trial development and analytical services.

Drug Discovery

RxCelerate (Cambridge, UK), a provider of medicinal chemistry, antibody discovery and preclinical safety and efficacy testing services, has opened a new office in Cambridge, Mass., USA. The CRO already has some US clients. RxCelerate also has hired Linda Hamilton as executive vice president, US operations.

Captive Capacity

Shortages, Reduced Revenue Could Result from Hurricane Maria DamageAlthough many drug manufacturers with facilities in Puerto Rico have reported that their plants have resumed partial to full operations, this is not true for all facilities and companies warn that full effects from October’s Hurricane Maria have yet to be seen. Reports in such news outlets as Reuters and The New York Times, as well as statements by pharma companies to their investors, indicate that these effects could include shortages of some drug products.





Long-term power outages and facility damage from the storm are the primary issues facing manufactur-ing facilities in Puerto Rico. Lack of communication and unreliable transportation systems also play a role in hindering drug shipments from the island to the US and other countries. Unreliable power can also mean unreliable refrigeration, placing some temperature-sensitive supplies currently stored at sites in Puerto Rico in jeopardy before they can be distributed.

For instance, Johnson & Johnson (J&J – New Brunswick, N.J., USA) has reported that all six of its Janssen manufacturing sites on Puerto Rico are running again after Hurricane Maria decimated the island in October, having taken minimal damage. However, the company cautioned that intermittent shortages of some drugs could occur. A J&J spokesperson declined to list specific drugs that could be affected, but noted that most products made in Puerto Rico were also manufactured at facilities located elsewhere.

Damage to contract manufacturing facilities on the island could also affect drug availability. For instance, Patheon (Durham, N.C., USA) produces Gralise for Depomed (Newark, Calif., USA) at a Puerto Rico facility, although a Depomed statement indicated the company believes it has adequate inventory of that product in place.

Baxter International (Deerfield, Ill., USA), which has three plants in Puerto Rico, was affected by the widespread power outages and storm damage; none of its facilities on the island are yet in full produc-tion. The company has gained US FDA permission to temporarily import some products from facilities elsewhere in the world – including Canada, Mexico and Ireland – to meet US demand.

An FDA spokesperson said that the US agency is in regular communication with affected companies and will work with them to make arrangements to reduce the number of drug shortages. After a visit to the island by FDA Commissioner Scott Gotlieb, the agency has compiled a list of drugs, such as Mylan’s (Can-onsburg, Pa., USA) methotrexate to treat childhood leukemia and some HIV treatments, that could face shortages due to the problems in Puerto Rico.

That will not help with loss of revenue for affected facilities, however. Some manufacturers already are forecasting reduced revenue. For example, Baxter, in its earnings report for the third quarter of 2017, forecast a hit of about $70 million in the fourth quarter of 2017.

Some CMOs are also bumping up production to help deal with shortages, as well. Nephron Pharmaceu-ticals (Orlando, Fla., USA) is offering 24/7 production of products currently in short supply, including sterile small-volume parenteral solutions, such as sodium chloride 0.9% injection bags.

Captive Capacity in Brief

Akorn (Lake Forest, Ill., USA) released vials for filling despite US FDA investigators noting particles on a conveyor belt that stages washed vials before they are moved into the filling room, and the vice president of domestic sterile products quality assurance being informed of the issue, the agency said in a Form 483 issued to the company after a May 2017 inspection of Akorn’s Decatur, Ill., injectables manufacturing facility. The particles, similar in color to the conveyor belt, varied in size and accumulated at both ends of the staging belt, the agency wrote. Affected products included AK-Fluor (fluorescein, labetalol HCl, methylene blue and levofloxacin. Fresenius Kabi (Bad Homburg, Germany), which participates in the CMO industry through its Product Partnering unit, entered an agreement in May 2017 to acquire Akorn for approximately $4.3 billion, or $34/share (May 2017 B/POR).

Eli Lilly (Indianapolis, Ind., USA) will invest $72 million to replace an insulin vial filling line at its India-napolis insulin production facility. The project is part of an overall $850 million investment in US facilities announced earlier this year (April 2017 B/POR).

Europharma DK (Esbjerg, Denmark) has had its GMP manufacturing certificate suspended by the Danish Medicines Agency for the second time in a year. In a report to EudraGMDP, the Danish Medicines





Agency reported that a Sept. 21, 2017 inspection showed that the company was not adequately following a corrective and preventive action plan established in 2016 and confirmed during a March 2017 inspec-tion. Specifically, Europharma was not addressing complaints and deviations sufficiently and lacked controls to prevent falsification of such critical QC data as temperature excursions during shipping. The pharma company had previously had its GMP certificate suspended in January 2017 in the wake of problems found during a December 2016 inspection by the Danish regulatory body (January 2017 B/POR). In September, Europharma announced that the agency had lifted that suspension after a March 8 inspection ascertained that the critical findings from the earlier inspection had been corrected.

Pfizer (New York, N.Y., USA) expects to complete part of planned expansions at its Kalamazoo, Mich., USA API manufacturing site by the end of 2017. The drug giant told local news outlets, such as the Kalamazoo News, recently that the $40.8 million, 98,000-square-foot warehouse at the site was nearly complete. A $105.6 million, 10,000-square-foot sterile manufacturing operation is slated for completion in 2019, with first commercial batches produced in the same year.

Pfizer also pointed at ongoing GMP compliance problems at facilities acquired with its purchase of Hospira as the reason for lagging revenues for its Essential Health unit, the division into which it placed the Hospira business, in the third quarter of 2017. Revenues for that unit were $5.05 billion, down 12% from the same quarter in 2016.

Regeneron (Tarrytown, N.Y., USA) will expand its 400,000-square-foot Limerick, Ireland biologics manu-facturing site, adding several manufacturing suites to increase drug substance production capacity. The $100 million expansion is expected to add 300 jobs at the site. Regeneron has received support for the project from IDA Ireland.

Roche (Basel, Switzerland) plans to move packaging operations for large volume, small molecule products from its Kaiseraugst, Switzerland site to facilities in Segrate, Italy and Leganes, Spain, both of which were recently sold to CMOs. Delpharm (Boulagne-Billancourt, France) acquired the Segrate site, which produces solid and liquid dosage forms, including highly potent products and cancer treatments, earlier this year (September 2017 B/POR). That deal included a supply agreement with Roche. And Recipharm (Jordbro, Sweden), has recently entered an agreement to buy the Leganes site that includes a similar supply deal; that acquisition is slated for completion in December. Financial details were not disclosed.

Roche also recently announced that subsidiary Genentech (South San Francisco, Calif., USA) will elimi-nate 130 employees at its Vacaville, Calif. site, which produces such products as Avastin (bevacizumab), Rituxan (rituximab) and Herceptin (trastuzumab). Elimination of packaging work at the Kaiseraugst site will eliminate about 235 jobs.

Seqirus (Holly Springs, N.C., USA), formed in 2015 by Australian vaccine developer bioCSL (Parkville, Victoria, Australia) and Novartis’ (Basel, Switzerland) influenza vaccines business, will build a new fill/finish facility at its Liverpool, UK manufacturing site, which produces adjuvanted flu vaccines. The £40 million ($52.5 million) facility, expected to add 88 employees to the Liverpool site, is intended to bring in-house fill/finish operations currently performed by a contract manufacturer in Italy.

Shire (Dublin, Ireland) has asked the US FDA for approval to manufacture its hereditary angioedema treatment Cinryze at one of the plants it acquired with its $32 billion acquisition of Baxalta in 2016, company officials said during a recent conference call to discuss Shire’s third quarter 2017 earnings. Shortages of the drug have occurred due to manufacturing problems at Dutch contractor Sanquin (Am-sterdam, Netherlands) have driven Shire to bring about 30% of Cinryze production in-house. Assuming FDA approval is granted, production would begin in the first quarter of 2018. A Shire spokesperson declined to disclose the target facility.

Shire has targeted three additional former Baxalta plants for closure or sale, company officials said





during a conference call to discuss Shire’s third quarter 2017 earnings. It already has agreements in place to sell a vaccine plant in Europe to Merck & Co. and a mammalian manufacturing site in Hayward, Calif., USA to Lonza.

Commodity Suppliers

GE Healthcare (Chicago, Ill., USA) is expanding its Uppsala, Sweden bioprocessing equipment manufac-turing site, which produces chromatography tools used in biopharmaceutical purification. GE Healthcare plans to spend $50-70 million per year through 2022 to add manufacturing capacity, for a total of up to $350 million.Re

Regulatory Developments

FDA Issues New User Fee Guidance, Updates Investigations Operations ManualFacilities that make both API and finished dosage forms need only pay the facility fee for the finished dosage, not both types of product, according to US FDA draft guidance issued earlier this month explain-ing the types of fees applicable to generic drug manufacturers, including CMOs, under the Generic Drug User Fee Amendments (GDUFA II).

The draft guidance —entitled Assessing User Fees Under the Generic Drug User Fee Amendments of 2017—also clarifies that facilities only referenced in pending submissions need not pay a facility fee, and that the facility fees charged to CMOs will be one-third that of non-CMO sites. The fee for a CMO finished dose production site is $70,362 for a US facility and $85,362 for a non-US site for fiscal year 2018, which began Oct. 1, 2017 (September 2017 B/POR). The draft guidance also provides details on the types of user fees under GDUFA II, as well as such administrative information as how companies can pay the fees, how refunds are handled and the appeals process when the FDA denies a request for a refund or fee reduction.

Investigations Operations Manual Update

A new update to one chapter of the US FDA Investigations Operations Manual, the primary guidelines used by FDA investigators when inspecting bio/pharmaceutical manufacturing operations, highlights precautions that investigators need to take during audits of sterile manufacturing facilities to address risks of microbial contamination.

Familiarity with the instructions included in the manual can help CMOs and other firms better prepare for and successfully complete FDA inspections.

Chapter 5 of the manual, entitled “Establishment Inspections,” lays out basic procedures that investiga-tors should follow. The update cautions that agency investigators should be particularly aware of the potential for microbiological contamination. The manual suggests that it is rarely necessary to enter sterile rooms; areas that provide visual monitoring should be sufficient for most inspections. If entry into a sterile room or area is required, the manual instructs investigators to “follow the sterile program required of the firm’s employees.”

The chapter also explains how investigators should list findings in any Form 483 issued during an inspec-tion, how they should meet with upper-level management during inspections and how to handle hostile or uncooperative managers or employees.


https://www.fda.gov/ucm/groups/fdagov-public/@fdagov-drugs-gen/documents/document/ucm582475.pdf

https://www.fda.gov/ucm/groups/fdagov-public/@fdagov-drugs-gen/documents/document/ucm582475.pdf




US-EU Mutual Inspection Recognition Kicks Off with Eight EU MembersThe US-EU mutual recognition agreement (MRA) for inspections of pharmaceutical manufacturing facili-ties went into force Nov. 1, marking the first time the US FDA has recognized another country’s inspec-tion capabilities. Under the MRA, the FDA and select EU regulators will rely on each other’s inspections to make regulatory determinations, thus avoiding duplication of inspectional efforts. For drug manufac-turers, including CMOs, this means that the inspectional findings of one national agency could lead to regulatory action not only by that individual agency, but also by regulators in other countries in which drugs made in their facilities are sold.

The initial operational phase affects the US and eight EU member states—Austria, Croatia, France, Italy, Malta, Spain, Sweden and the UK. The US FDA has agreed that the regulatory authorities of the other eight countries are all equally as capable as the US agency to adequately conduct GMP inspections. The FDA must assess the regulators of the remaining EU members by July 15, 2019; those that measure up will be added to the MRA.

The current MRA updates a 1998 agreement that allows agencies to recognize each other’s inspection outcomes. In June 2017, the European Commission confirmed the FDA’s capabilities, and in October 2017, the FDA confirmed the capabilities of the first eight EU member nations. Since May 2014, teams from the FDA, EU national regulatory authorities, the European Commission and the European Medicines Agency have been auditing and assessing the inspectional systems used by all involved agencies.

Regulatory Developments in Brief

The UK Dept. of Health has introduced an accelerated access pathway, which will kick off in April 2018, aimed at speeding certain products into clinical trials and eventual commercialization. The role of agreeing to patient access plans will transfer from the Dept. of Health to NHS England for products with breakthrough designation. The plan includes £86 million ($113.5 million) in funding to aid new drug de-velopers, including support for small- and medium-sized companies to build stronger evidence bases for their drug candidates. Former GlaxoSmithKline CEO Andrew Witty will chair the Accelerated Access Col-laborative, which will designate about five new candidate products each year for the pathway. The AAC will also include representatives from the National Institute of Health Research, Medicines & Healthcare products Regulatory Agency, NHS England, NHS Improvement, the Dept. of Health and patients, industry and clinicians.

Outsourcing Events

Antibody Engineering and TherapeuticsDecember 11-15, 2017, San Diego, Calif., USAlifesciences.knect365.com/antibody-engineering-therapeu-tics/

DCAT Week 2018March 19-22, 2018, New York, N.Y., USAwww.dcat.org/DCATWeek.htm

2018 PDA Annual MeetingMarch 19-22, 2018, Orlando, Fla., USAwww.pda.org

92nd DCAT Annual Dinner 2018March 22, 2018, New York, N.Y., USAwww.dcat.org/AnnualDinner.htm

AACR Annual MeetingApril 14-18, 2018, Chicago, Ill., USAwww.aacr.org

INTERPHEXApril 17-19, 2018, New York, N.Y., USAwww.interphex.com

ACRP 2018April 28-May 1, 2018, Washington, D.C., USAwww.acrpnet.org


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Editorial Advisory Board MembersPeter BigelowPresident, xCell Strategic ConsultingJohn Budzinski, PhD Phelix Pharma Outsourcing Consultants, Inc. Mak Jawadekar, PhDConsultant in Drug Development

Martin L. Jeiven, MSPresident, Jeiven Pharmaceutical Consulting, Inc. Howard L. Levine, PhDPresident, BioProcess Technology Consultants

Paul C. Stuart, MBAVice PresidentPfizer, Pharmaceutical SciencesDrug Product Supply


Editor-in-Chief: James C. MillerDirector of Market Intelligence: Saul Richmond, Ph.D.Managing Editor: Elizabeth (Lisa) Tilley HinkleIndustry Analysts: Renee Richmond, Nanthida (Judy) Nanthavong, Scotty Chung-Siu, Katie LeuthGraphics and Design: Julie Young

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