The rate of discovery of new biologic modalities and the pace of innovation for viral vectors, cell and gene therapies, and the need to focus on defined patient populations to address specific therapeutic demands are leading to more production of smaller batches of drugs. This increases the need for more efficient process platforms that facilitate multi-product production, faster batch turnaround, and manufacturing flexibility. It also requires specialized expertise and knowledge of new and evolving biotherapeutic manufacturing technologies to successfully execute these processes.

Small and emerging companies pursuing new therapeutic indications often struggle with the wide range of drug development financial demands while managing with limited resources. This results in an increased interest to acquire cost-effective manufacturing capacity that can quickly produce the new therapies for delivery to patients. Building a new biopharmaceutical manufacturing facility can take years, and for biotech companies working on drugs in the early phases of development, it is not always a valuable capital investment.

Conversely, there are risks associated with relying on a contract manufacturing organization (CMO) to bring your product to market. They may not have manufacturing capacity available or the required expertise or critical equipment needed to fit the unique needs of your molecule, and the resources they do have available are shared amongst other customers, hence production slots are limited. There are many viable options that offer fast deployment and a flexible, scalable manufacturing capability in a new or existing space that is under your control. It is essential as well as challenging to evaluate the cost, timeline, and other variables that affect your distinct situation and manufacturing needs.

Meeting the manufacturing needs of complex molecules

ArmaGen is a small biotech company with a pipeline of multiple molecules targeting neurological disorders and neurodegenerative diseases predominantly affecting children. Its pipeline of molecules shows promise as enzyme replacement therapeutics that use insulin receptors to cross the blood-brain barrier, which is fundamental to addressing the cognitive impairment brought on by these diseases. ArmaGen is developing several products in parallel at different preclinical and clinical phases, which requires flexibility to quickly transition between non-cGMP and cGMP production.

The molecules are immunoglobulin G (IgG)-enzyme fusion proteins that carry the same IgG motif, designed to cross the blood brain barrier, but each product possesses a different enzyme attached to the IgG that have been sequenced to address a specific neurological disorder or neurodegenerative disease. Due to the same IgG constituent in each product, they are amenable to production using a manufacturing process platform employing perfusion-enabled bioreactors. In-house expertise to understand, design, scale-up and operate the platform processes for these molecules is crucial.

Finally, due to the low number of patients being treated in each of several rare disease programs that ArmaGen is developing therapeutics for, ArmaGen’s individual batch productions are typically very small amounts of drug product for each program to meet preclinical, clinical and commercial demand. This makes execution of multiple low production runs using the same process platform and manufacturing flexibility to switch between the programs essential to ArmaGen’s mission for timely delivery of its product to the patients who need them.

Prior to making critical decisions about its manufacturing strategy, ArmaGen decided to complete an economic evaluation of different manufacturing options to ensure it was selecting the option that would best fit its drug development needs. ArmaGen considered not just the financial investment that would be needed for each option but also how the option it selected would enhance the timelines for development of the drugs in its pipeline. Failure to produce batches of drug meeting targeted product quality specifications and delays in meeting production timelines result in failure to deliver critical medicines to patients with significant rare disease burdens and unmet medical needs.

Build vs buy: today’s biopharma dilemma

Accelerated regulatory pathways for orphan diseases and increased competition to access CMOs’ biologic therapeutics manufacturing capacity have made the option of building your own facility a much stronger consideration for small biotechs than it has been in the past. Time from discovery to human clinical trials and to market for new drug entities is critical, as there is increasing competitive pressure to seek opportunities to advance drug development quicker.

There is a significant amount of capital investment needed as well as a long timeframe required to design and build new biomanufacturing facilities, and you assume considerable risk if you invest in a facility before adequate positive clinical trial results are available. Additionally, working through an engineering firm on stick-built facilities that requires coordination of multiple vendors can expose other potential risks, which may impact your supply chain.

If demand is overestimated, the result is a facility that is underutilized, which could mean wasted financial investment, work force reductions, or even closure. Conversely, if demand is underestimated, you may face a drug shortage when you do not have enough product to meet patient demands and the needs of the market.

For small biotechs, working with a CMO is a common approach, but the specific needs of ArmaGen’s molecules means the CMO selected must have perfusion and continuous harvest technologies available. Since fed-batch processes in large stainless-steel bioreactors have been the traditional approach for drug development and manufacturing, few CMOs have developed the expertise and production operations with continuous manufacturing technologies.

The absence of perfusion and continuous harvest technologies contiguous with downstream operations makes it challenging to produce ArmaGen’s molecules at required product quality and productivity. Therefore, ArmaGen could not contract its manufacturing to a CMO that was not best equipped with the tools needed for perfusion manufacturing execution. There is the option for clients to purchase equipment specific to their process for the CMO’s facility. However, beyond absorbing the investment, there is significant purchasing lead time needed to accommodate delivery, installation, commissioning, and qualification, which may not allow a production slot to be available to meet the timeline when the drug supply is needed.

One thing to be especially cognizant of in a CMO partnership is that your production run is a one-off contract among many other competing priorities. Additionally, CMO’s resources are frequently required to shift from one project to another according to the production slot scheduling. When this happens, the knowledge that is intrinsic to your molecule’s production process moves on with the re-assigned staff, requiring retraining of new staff to your project. This makes the interface between the client and CMO very challenging when working with complex modalities requiring specific technical knowledge and expertise.

Capacity constraints at many CMOs impact timely availability of production slots and their flexibility to accommodate changes on short notice. This demands prioritization of one client’s product over another, which for commercial batch production can lead to delay of revenue streams from commercialization.

As ArmaGen considered its late clinical and commercial manufacturing strategy, it took into account its experience with outsourcing early clinical manufacturing, including low production success rates and inferior product quality. They also dealt with the statuary CMO raw material handling (pass-through) costs as it was not directly interacting with the raw material suppliers and hence an incremental elevation in cost of each production batch.

These experiences led ArmaGen to evaluate the option of retrofitting an existing potential space using a modular design offered by Cytiva. The modular production facility design approach would help defer capital outlay by allowing for the time- and cost-efficient addition of equipment to expand capacity as it is needed.

The evaluation: FlexFactory platform vs a CMO

Since ArmaGen had worked and collaborated with Cytiva on biopharmaceutical process technologies and Cytiva had a good understanding of ArmaGen’s manufacturing process, ArmaGen explored implementing a FlexFactory single-use platform as a viable manufacturing option.

The FlexFactory is a bioprocess platform that predominantly uses single-use technology. It is comprised of distinct unit operations connected via single-use tubing sets and can be automation-integrated leveraging Cytiva's pre-designed, developed and verified platform approaches. FlexFactory can be installed into appropriate new or existing workspaces.

In ArmaGen’s experience, Cytiva also had a large collection of bioprocess equipment, control systems, and bioprocessing materials under one umbrella, including the capabilities for continuous processing and reconfigurable operations needed for ArmaGen’s molecules and production flexibility. It was critical that Cytiva support would be provided for equipment/facility qualification and technical guidance throughout the course of the project, freeing up critical resources within ArmaGen to work on other value-added activities.

For this manufacturing cost evaluation, ArmaGen compared the financial elements of producing their drugs themselves with a FlexFactory platform versus employing a traditional CMO. The financial model used for the evaluation considered the following cost drivers:

Comparison of investing in a CMO or a FlexFactory single-use platform for manufacturing of biopharmaceuticals

In both cases, the different costs were applied to ArmaGen’s current and projected drug supply demands based on its development pipeline and modeled over a period of 10 years to derive the total cumulative investment. In the FlexFactory scenario, as ArmaGen already had potential available space that required just light retrofitting, the initial CAPEX investment was considered limited and in the low single-digit million-dollar range only.

The remainder CAPEX investment was Cytiva's FlexFactory with a configuration that included one (1) 500-liter Xcellerex production bioreactor, seed train equipment, a three-column downstream process with two ion exchange chromatography steps in addition to the protein A capture, and filtration steps for harvest, virus removal as well as a ultra-/diafiltration for product formulation. For cell culture production media and feeds as well as buffer solutions, pre-made supplies were considered in order to reduce infrastructure investment and maintenance cost in particular, costs related to the WFI-generation, storage and loop system.

The upstream model was based on a fixed-volume at steady-state manufacturing process. Other costs linked to installation, commissioning and qualification were also included, and the overall investment was modeled with Cytiva's payment terms through financing support and installments. The distribution of CAPEX costs over the year allowed for manufacturing to begin with limited cashflow impact and the ability to invest over time as money was raised. As for OPEX, about $5 million per year, on average, were allocated to the various costs as listed above. The highest contributing factor toward OPEX was the labor cost at about 40 percent of total cost while consumables contributed to about 20 percent, which was driven mainly by low utilization of the resin given the small sizes of the clinical batches produced. A batch failure rate of 10 percent was applied.

Regarding the investment to manufacture at a CMO, several scenarios were created to account for the variability of pass-through and overage costs as well as potential batch failure, which would result in repeat batch production and delay in time to market based on slot availability at the CMO. Additional costs were modeled in the range of 10 to 15 percent and 20 to 50 percent for the pass-through and overages, respectively, while batch failure rate was modeled between 10 and 50 percent. The modeling factors used, as well as the costs of consumables and batch service, were based on ArmaGen’s experience with outsourced manufacturing, which had proven challenging given the specific requirements of their production process.

Based on the above assumptions and considerations, process economic calculations and financial modeling provided the following total cumulative manufacturing investment for the FlexFactory option versus a range of CMO scenarios:

Example of total cumulative manufacturing investment for a FlexFactory option versus a range of CMO scenarios

In-house manufacturing cost includes Capex + Opex

Total cost of internal manufacturing for ArmaGen using the FlexFactory ranges between $6 and $8 million annually, mainly driven by the fixed costs for labor, CAPEX, and utilities. The in-house manufacturing option is extremely competitive with the CMO option and provides substantial cost savings versus CMO of $30 million minimum over 10 years. Hence, a predicted return on investment of two to three years for the FlexFactory option for ArmaGen is envisaged.

Investment in the FlexFactory single-use platform and installation in ArmaGen’s retrofitted space was demonstrated to offer the most financially effective long-term manufacturing option compared to outsourcing to a CMO. While outsourcing eliminates upfront investment in risky CAPEX and does not require a long-term financial commitment, in-house manufacturing allows flexibility in the production scheduling while avoiding the uncertainty of the CMO’s production capacity and slot availability, provides control over the intellectual property of the process, and builds internal technical know-how.

Additionally, as CMOs are primarily equipped for fed-batch bioprocessing, which are simpler to execute and easier to schedule with less batch failure versus perfusion processing, there is limited CMO capacity available to execute ArmaGen’s perfusion processes. Therefore, the CMO perfusion capacity available usually demands a higher premium cost for non-standard processes.

Taking these factors into consideration along with the financial advantages, ArmaGen concluded that Cytiva's FlexFactory was the best strategy to establish and maintain efficient and productive manufacturing operations while also utilizing the expertise of Cytiva as a partner with a wide breadth of bioprocessing capabilities, giving them a considerable edge in today’s competitive market.