Martin added, “That undercuts the need and value of big brick-and-mortar facilities. In theory, you could use a building that's no bigger than a pilot plant to produce enough for clinical trials and into product launch. Especially with the blockbuster model breaking down in pharmaceuticals, I think biologicals are generally going to be made with smaller production runs. We're looking at a very different balance of trade-offs in cost and location, who owns the building and what's inside it.”

Gottlieb said, “One challenge (particularly in vaccines) when you've got a tremendous amount of capacity tied up in one facility is if there's a problem, then the disruption is huge. It happened in the flu business a couple years ago. If you're in a pandemic or biosecurity situation, there's a lot to be said for distributed manufacturing to deal with capacity in multiple locations.”

Outsourcing could have a big impact as well. “Some companies — such as Itero Biopharmaceuticals — can leverage the geography by doing R&D in the United States and then manufacturing elsewhere. I think the ability to make those kinds of decisions is going to provide a lot of small companies with new technologies and approaches.”

Automation is also part of the industry's maturity. Gottlieb said “If you include electronic data capture and QA/QC information, then you can improve your quality.” And Martin pointed out, “Consultants on our panel — Eric Langer and Howard Levine — will speak to the fact that some years ago everybody talked about physical capacity as the big constraint. Expert people and automation may provide the solution. If you can automate some parts of the process, then your engineers can focus on either doing things better or doing new things.”

Are more biotech companies outsourcing than 10–20 years ago? Gottlieb recommended Eric Langer's “excellent survey about this every year” (1). And Martin said he's focused very much on how individual companies view the mix. “A small company has to plan how much product to make and when (to get through clinical trials), and how to do that when venture capitalists keep them on a very short monetary leash. And there are companies that want to take their excess capacity and find somebody who will help them cover their overhead. The real issue is matching those folks up. I suspect plenty of companies have excess capacity but aren't doing a very good job of marketing it to those who might want to use it.”

Gottlieb reminded us, “A current mantra for VCs is capital efficiency, and at early stage companies there's not a lot of appetite for brick-and-mortar investment. When you look at the economics of building or buying, outsourcing becomes very attractive. What should come out of this panel is how to weigh those pluses and minuses for each option. Xcellerex also functions as a CMO, so if someone's interested in that kind of relationship they can do that and still own their process, then can make a choice later in development. That's sort of a hybrid option.”

Martin noted, “It's not necessarily just two parties involved. There are also the venture capitalists. For example, Itero Biopharmaceuticals is thinking about their manufacturing economics up front, as part of their business plan. It used to be a lot of companies got to phase 2 before they really thought about the economics of biomanufacturing. But it's become absolutely essential for any company wanting to get a biologic onto the market to think about all aspects of biomanufacturing — from what process to use to where to do it — much earlier than before.”

Also emerging in importance are biosecurity and supply chain security issues. “Those kinds of worries are obviously much more of an issue if you're talking about a world stage for biomanufacturing,” Martin said, “than if you're talking about a single country like the United States.” And it's a lot more complex that simply asking a vendor where something comes from. “Consider the potential disruption if there's a pandemic and China shuts down,” she cautioned. Sole-sourced ingredients are particularly problematic.

In ~30 years since the harnessing of genetic engineering for making human proteins, production methods for therapeutic proteins have evolved dramatically. The accelerating growth of marketed protein therapies and the need for new vaccines worldwide has spotlighted manufacturing as either a potential bottleneck or a powerful enabler of next-generation drugs. New biotechnologies such as transgenic animals and plants, single-use and flexible expression systems, designer antibodies and nonnative proteins, as well as new vaccine platforms (e.g., insect cell culture using recombinant baculovirus), may not only transform the development timelines and commercial economics of the biologicals and vaccine industries, but also enable development of previously impractical products.

Gottlieb predicted that “shifting from eggs to cell culture could transform the vaccine industry in dramatic ways.” Even dozens of fermentors are relatively small compared with an assembly line using millions of eggs. “Also in terms of speed: Part of the vaccine industry challenge is knowing how much to make and match capacity to demand. We saw that problem with H1N1. First everybody was scared, and companies were ramping up like crazy. We didn't quite have enough, then we had too much, now we've got excess supply. Being able to ramp up more quickly is key. On our ‘disruptive’ panel, Novavax will talk about their cell-based virus-like particle technology. They can scale quickly, and they also have a deal with Xcellerex. With disposable technologies and all these new strategies, products that maybe didn't economically make sense before can start doing so. So there may be other molecules out there that haven't seen the light of day but now become commercially attractive.”

Martin considered, “That's sort of the flip side of the notion of disruptive technology. Some think transformative might be a better term because disruptive implies destruction. But it can be creative destruction, and that can be a good thing. If new technologies become standard, then all the companies that have invested in the old egg-based vaccine production methods are threatened. But the transformation is that technology enables drugs that weren't possible before. For example, a cell-free production system like Sutro Biopharma's would be as disruptive as disposables: With no cells, downstream processing becomes potentially much more efficient because you don't have to remove as much junk.”

Of course, it can take time for new technologies to be accepted, much less take over, especially in a highly regulated industry. Martin said, “I think disposables are already there. Even three years ago it was barely on people's radar screens. By last year everybody was talking about single-use technology and looking for ways to use it.” Gottlieb said transgenic animal systems are finally starting to live up to their promise, too, after many years of talk and development. “Now there's one out there with an approved drug.”

Martin added, “And some of the plant systems are coming on stream. Biolex and their duckweed, that's no longer just an eyebrow-raising approach; they're making antibodies. The idea of transgenic plants and animals goes back to the very beginning of biotechnology. There were tobacco-based systems in the 1990s that didn't really go anywhere, but now those technologies have matured to the point where they're really making progress.”

Gottlieb agreed. “In fact, one of the panelists is from a Canadian company that's using safflower seeds: SemBioSys Genetics. One of their programs involves a promising cardiovascular drug that had issues with excessive manufacturing cost. They have a plant-based approach that may solve the economics. SemBioSys is getting expression only in the seed oil, not the whole plant. So you basically crush the seeds and get it out of the oil. You don't have to grind up the plants like you did for some of the earlier transgenics.”

Martin said, “That points to another kind of long-term pattern we've seen time and again in biologicals. Some things start out with immense promise — monoclonal antibodies are probably the best example. Everybody thought they were dead after some 15 years of development, and then they came roaring back and now represent an absolutely established technology platform.”

Gottlieb said that's “almost the encapsulated story of biotechnology: potentially transformative technologies and small companies with not much cash and short timelines trying to move it forward. A lot of people give up on it, but others keep working at it.”

“Hyperbolic promises,” Martin put in, “followed by massive disappointment.” And then the phoenix rises from the ashes.