Aug 2010: Biopharmaceuticals Australia (BPA) has recently announced a deal with DSM Biologics (DSMB) to establish a state-of-the-art facility in Brisbane, Australia. The deal will see DSMB and BPA jointly design and build their biologics plant of the future, with DSMB taking up a lease from BPA to operate the facility as a fully independent, stand-alone business. The new plant will complement DSMB’s existing CMO facility in Groningen, Netherlands.

Key issues with local CMO capabilities
After extensive consultation with local Aussie biotechs who were using CMOs, BPA formed a view that a new facility was needed to meet the existing and anticipated needs of the country and of the South East Asian region. The key issues identified by BPA regarding perceived deficiencies with local and regional CMO capabilities were:

Lack of depth in track record (on-time and on-budget project delivery compliant with international cGMPs) that would attract larger and well-funded biopharma developer companies; absence of GMP facilities in Australia offering mammalian cell culture for production of recombinant proteins and antibodies for clinical development through to market launch; inadequate critical mass of CMOs in terms of ability to service the full range of biopharma developers needs, including analytical method development, process development, cell line development, scale-up and manufacture; and need for CMO capability which is fully independent of proprietary product interests (i.e., no in-house biopharma development aspirations or commitments).

Overcoming bottlenecks
Having defined the ideal attributes for its desired CMO partner, BPA embarked upon a global CMO engagement mission in third quarter 2009. From that process DSMB emerged as the preferred commercial operator, with binding documents executed in December 2009. Key attributes sought by BPA in evaluation of partnering opportunities included:

Financial stability and depth: Having the financial stability and depth to see the new operation through the start-up years when plant throughput and revenues are low but costs high, are very important in being able to weather the ‘lumpy’ deal flows that characterize the biopharma industry. CMOs with established operations and reputation added confidence that the CMO has the wherewithal to expand into the new territory.

Commercial focus: BPA placed great importance on having a partner with a business strategy focused 100 percent upon CMO operations and client service. In developing its preferred business model, BPA had noted a category of CMO operators that had grown from academic or semi-governmental origins. Often these organizations were not self-sustaining, and had mixed objectives around training, industry development and in-house projects.

The CMO market is mature and highly competitive, with modest gross profit margins. In this environment, only focused businesses with good resourcing will survive in the long term. BPA also believed CMOs with their own biopharma products competing for resources and production slots with external customers did not represent ideal partners.Having global perspective with regional focus: Ideally the CMO partner would be able to de-risk the start-up phase by leveraging existing clients and their established track record to augment the deal flow to the new facility. As part of a natural growth strategy for the CMO, a total dependence upon locally generated demand is ameliorated. The Australian and South East Asian CMO clients would also reap the benefits of doing business in the same time-zone and with less demanding travel schedules.

Existing CMO plant and client base: The clients of CMOs are totally consumed by achieving minimum time to market. Hence these biopharma developers cannot tolerate having to repeat steps in the clinical development process. In the CMO context, this means that demonstration of ability to consistently deliver outcomes compliant with contracted terms is a top ranking selection criterion for the prospective client. A cheap price matters naught if work has to be repeated due to technical or regulatory inadequacies.

Differentiators: Differentiators that would make the BPA partner’s operation provide an attractive point of difference in comparison to other CMOs.

Conscious of the competitive global CMO environment, BPA looked favorably upon sources of added value associated with particular potential partners. DSMB provided this through its unique proprietary technical platforms which offer enhanced performance options for clients for which they are appropriate. These platforms include access to the human PER.C6 cell line, use of the XD high productivity cell culture process, and their expanded bed adsorption technology.

BPA and DSMB have formed a joint bioprocess engineering design team and are currently well underway with the design development. Early construction work on the building shell has commenced. Due to become functional in 2013, BPA believes the new facility will relieve a critical bottleneck in the Australian biopharma drug development pathway, and reduce the challenges to local and regional biologics developers by providing world-class CMO services in a more accessible and convenient location.

Having the financial stability and depth to see the new operation through the start-up years when plant throughput and revenues are low but costs high, are very important in being able to weather the ‘lumpy’ deal flows that characterize the biopharma industry. CMOs with established operations and reputation added confidence that the CMO has the wherewithal to expand into the new territory. BPA placed great importance on having a partner with a business strategy focused 100 percent upon CMO operations and client service. In developing its preferred business model, BPA had noted a category of CMO operators that had grown from academic or semi-governmental origins. Often these organizations were not self-sustaining, and had mixed objectives around training, industry development and in-house projects. Ideally the CMO partner would be able to de-risk the start-up phase by leveraging existing clients and their established track record to augment the deal flow to the new facility. As part of a natural growth strategy for the CMO, a total dependence upon locally generated demand is ameliorated. The Australian and South East Asian CMO clients would also reap the benefits of doing business in the same time-zone and with less demanding travel schedules. The clients of CMOs are totally consumed by achieving minimum time to market. Hence these biopharma developers cannot tolerate having to repeat steps in the clinical development process. In the CMO context, this means that demonstration of ability to consistently deliver outcomes compliant with contracted terms is a top ranking selection criterion for the prospective client. A cheap price matters naught if work has to be repeated due to technical or regulatory inadequacies. Differentiators that would make the BPA partner’s operation provide an attractive point of difference in comparison to other CMOs.