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Why Manufacturing Is the New Competitive Edge in Cell and Gene Therapy
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So I've worked myself for all three company types. And I think the time horizon is one that maybe earlier on in my career, I underestimated how impactful that is to somebody working for one of these companies. I mean, with biotechs, it's self-explanatory. If you're joining a pre-commercial launch, your trials need to go well and your drug needs to launch successfully, right? And that's the whole future of the company. But what I thought was fascinating when you're talking about the short horizon for VC firms, I'm not sure how this is in the CDMO space, but in software organizations, they're gonna send you up like a rocket ship. And if you make it to space, great, but nine out of ten are gonna explode in the atmosphere, and that's just part of the model, right? And so that can be a very weird place to operate. And it's something that I honestly sometimes surprised more procurement folks aren't interested in what are the models and where does that mean. I'm assuming C demos aren't quite that three years boom or bust. Hopefully you get a little bit more runway. Hello, hello, and welcome to Pharma Sessions, a place for pharmaceutical leaders to come and learn from each other. I'm your host, Jonathan Kaskey. Technology and market trends are bringing change at an ever-accelerating rate, and no person, team, or company can afford to be left behind. Here we dive into the strategies and tactics that our guests use to tackle these challenges and create new opportunities and how you can do the same in your own organization. This episode of Pharma Sessions is sponsored by Xunt, makers of the X1 reporting platform. On today's episode of Pharma Sessions, I'm thrilled to welcome Aitan Abraham, Chief Commercial and Technology Officer at Menaris Advanced Therapies, a global leader in cell and gene therapy manufacturing and biosafety testing. Aitan brings over a decade of experience across cell and gene therapy development, CDMOs, and biotech innovation with leadership roles spanning organizations like LANSA and Resilience. It's got a really unique perspective across both public and VC-backed and PE-backed environments to understand what it takes to build, scale, and optimized advanced therapy manufacturing. So today we're going to dive into how companies can choose the right C DMO partners, the future of cell and gene therapy manufacturing, the hard-earned lessons behind building sustainable high-performance organizations in a very complex area of medicine. Welcome to the show, Aton. Thank you so much. Great to be here. Absolutely. So before we do all that, it's always nice to get to know each other a little bit. And I have a question I like to ask, which is okay, it's 1.05 p.m. Eastern on uh on a Monday. What have you had to eat so far today?
SPEAKER_01I have had to eat uh coffee and soda water. Coffee and soda water. Wow. I know that's not uh considered eating more drinking, but uh yeah.
SPEAKER_00I certainly don't consider it eating. Um, but I I will say that I've had many guests who skip breakfast, very few guests who skip coffee. So I don't know, I don't know what that exactly that means for the future of the industry, but uh that that that's just something I'm noticing. It's a good sign that we're busy, right? I guess so. So Aitan, you spent your career really kind of at this intersection of science and manufacturing, commercialization. What originally drew you to the cell and gene therapy space and and what's kept you there?
SPEAKER_01Sure. So my PhD was in molecular biology and developmental biology. I think it's fascinating to see how organisms develop and obviously the very critical role, key role that cell division and cell function has as part of uh development. I actually worked on zebrafish model for neuronal development in the central nervous system. And that got me very interested in cell function and uh how what cells can do, the amazing things cells can tailor themselves to do.
SPEAKER_00Um and that would be- Can we just pause for a second? I I am not familiar with uh zebrafish or zebrafish research, why that and what did you actually learn through that?
SPEAKER_01Right. So zebrafish are a very common model system for developmental biology. The reason is that on one hand, they're vertebrates, obviously, but on the other hand, as larvae during initial uh stages of uh growth, they're transparent. So you can actually look into the fish, into the larva, and see what's happening in real time, as opposed to, for instance, mice that obviously are not transparent and they're also in utero. So you can't really see what's happening. So the system that I used is a zebrafish model to track a certain subset of neurons in the brain called GNRH neurons. We developed a transgenic zebrafish line where those specific neurons express green fluorescent protein. So you can real-time live in the live developing animal track those cells as they work and migrate and function within the animal.
SPEAKER_00It's like a live functional MRI that just continues going. That's very, very cool.
SPEAKER_01So that led me to be very interested in cells and what they can do. And then I started hearing about cell therapy and the fact that cells are being used as a therapeutic modality. And that sort of led me to my postdocate, which was focused on cell therapy and tissue engineering, primarily around um how to use cells, including cells in certain scaffolds to elicit a therapeutic result.
SPEAKER_00Excellent. And so then when did you make the jump to industry?
SPEAKER_01So after my postdoc, I mean, actually, frankly, during my PhD, I decided that academia is not what I want to do long term. So after my postdoc, which was more translational research as opposed to my basic research for my PhD, I immediately uh moved over to industry. My first job was with a uh early phase biotech cell therapy company working on using cells for various clinical indications, primarily cardiovascular indications.
SPEAKER_00So you were on the pharma side, and then eventually you through is that where you got exposure to the manufacturing uh piece of it, or how did that all work?
SPEAKER_01That was really interesting because uh, you know, the company I joined, we were maybe 20 people when I started. So, as you know, in starter biotechs in that size of the company, everyone does everything. Yes. So uh as part of that, the company was also developing their own proprietary manufacturing process, uh, which included a certain bioreactor with a packed bed, various ways of basically generating large numbers of cells for an allogenetic cell therapy. And that gave me really interesting and good exposure to manufacturing, what the considerations are, what the limitations are, how to think about it. And that sort of led me down the path of eventually moving to the CDMO space and really focusing on how we manufacture to make sure that these therapies can get to more patients. I think what is was really interesting for me in the CDMO space was not only that there is a big focus on that interface between technology and biology, but also that you're exposed to so many different types of cells, types of processes, different companies, right? You're not locked into only CART T, right? And so I've gained experience over the years in almost every cell type, every therapy type that's related to cell therapy and gene therapy.
SPEAKER_00That's fascinating. So let me ask you, having seen things from both sides, when a biotech or a pharma company is evaluating CDMOs for cell and gene therapy, what are the most critical questions they should be asking, but they don't?
SPEAKER_01It's been a very interesting evolution over time of how therapeutic companies evaluate and choose CDMOs. I think a decade ago, it was almost an afterthought. And frankly, even from an investor standpoint, investors wanted to see preclinical animal data. And as soon as that was in place, there was funding. And no one really thought about the fact that one of the biggest challenges and bottlenecks for the industry is actually the manufacturing. I think over time it's become very apparent, right, through trial and error, through the fact that you know that some of these early commercial salt therapies were having real challenges in terms of cost and scalability, that this is a critical component.
SPEAKER_00When you're saying this, right, I'm trying to imagine where people are feeling the impact of the bottlenecks. So are you saying that that essentially demand is outpacing what the companies are able to supply uh for some of these medications due to manufacturing challenges?
SPEAKER_01Absolutely. I think there are multiple examples of more demand than supply, and patients are waiting uh for these therapies. And again, these are patients that are this is their last hope, and they don't have much time. And since the therapy is not off the shelf in many cases, if it's autologists, they need their cells to be manufactured. So there is definitely a gap, not only in supply and demand, but also in terms of just what the price point is versus what can be afforded by private or public payers.
SPEAKER_00So how does how does talk to me about that, about that element? Because I'm not quite tracking what price point piece comes into things.
SPEAKER_01So I think one of the elements of cell therapy across the board, especially for autologous cell therapies, but also for on the genaic, is that the manufacturing processes are complex, they're immature from a standpoint of not being very closed and automated, they're still quite manual and open. And that, in addition to that, raw materials, which are quite expensive because they're not widely used, and that results in a very high cost of goods of the therapy itself. And then when you add on to that, obviously the margins that therapeutic companies need to get to continue developing new therapies, it results in very high prices for the patients or for the payers that are paying for the therapies. We're talking about as an example for a CAR T, hundreds of thousands of dollars, and for gene therapies, millions of dollars, right? That's a price point. Obviously, that might be okay for indications that are life or death, uh, and for a very small number of patients. But uh, since we're getting now to a place where it's becoming more widely used for larger indications, then it's really not sustainable. So as an example, and Americans don't always think about this, right? But in in European countries where it's a public payer system, they basically have a bucket of money earmarked to buy and pay for therapies. Yes. Uh, if that bucket is is exceeded, then somebody's not getting that drug. So with such expensive therapies, it's just not going to be possible to get these therapies to the patients that need them. Where and that's where we come in, right? Uh partially, right, as C DMO is, and we're working really hard at how do we actually get the cost of goods manufactured down so that more patients can receive the therapies.
SPEAKER_00Have you seen, just speaking about the difference between Europe and US and talking to others, one of the farmer terms, the side effects of this sole favored nation pricing legislation that's being pushed by the current administration is that sometimes pharma companies are saying, you know what, we're just not going to launch in Europe. And I would imagine this is even, I don't, I don't actually know, but I would imagine that for something rare and for something very expensive like cell and gene therapy, you might be seeing that. Are you seeing companies actually change their distribution plans based on this policy?
SPEAKER_01I don't know that based on this policy per se, because it's in very early days, but I can say that definitely there is a more of a reluctance to launch these therapies in Europe because the challenge of negotiating reimbursement to the level that is deemed by the therapeutic companies reasonable. So that that is definitely a challenge for therapeutic companies. Again, there are various ways that this needs to be addressed, and it does need to be addressed. But God one really, in my opinion, is reducing cost acquis, so that insurance the therapeutic companies can re reduce the price.
SPEAKER_00That makes a lot of sense, right? Because it seems like again, this is from a semi-outsider's perspective, not a true outsider, I guess. It seems like a lot of these systems, both around reimbursement, around insurance, around everything, is kind of the built up over decades around the traditional pharma model, which is that most of the cost of the drug is in the development, and then the pill itself is actually pretty cheap to manufacture. And this is a completely different scenario where it's expensive and oftentimes it's pretty rare. It's not like there are massive economies of scale that are coming about. So, how are you looking at figuring out what are the big opportunities to solve the bottleneck and to reduce prices for creating these medications?
SPEAKER_01That's a great point. I think that it's overlooked that it's a combination of factors, right? I think on one hand, traditional small molecule margins that a large farmer are used to won't work for this. Because, again, to your point, the cost of manufacturing is going to be higher and it's it's not gonna get lower to the numbers where chemistry and small molecules are. But I think that that's why we are focused on what is the gamut of elements that we need to bring into play to impact cost. And it's not one magic bullet, it's many things that need to happen simultaneously, right? One of them economies of scale, right? As we scale, we can create that to reduce costs, but there are many other things. There's, as I mentioned, the cost of the raw materials. There's how do we get to a point where we have less hands-on time in manufacturing the therapy? The biggest cost is manpower. Yeah, and these are skilled people, obviously. Uh, but how do we reduce that drastically by closing and automating manufacturing? Uh, how do we get to a point where obviously we're not failing batches because a failed batch is obviously could be for a patient, but it's also expensive because you're manufacturing something that never ends up uh reaching the patient and getting reimbursed. There are many factors, we have to bring them all together, and that's something that's happening, but it takes time and it also takes some new technologies to be adopted. Another key element is testing. These therapies undergo quite rigorous testing. Think about it as opposed to a therapy where you're making one batch to treat many patients. So your testing component, you amortize it across patients, it's not significant, but for a distance, every patient has a full testing schedule, then the cost of that suddenly becomes very critical as well.
SPEAKER_00My biggest exposure to this has been working with a CAR T company. And even just everything about their business is different, right? Where it's it's from apharesis collections, there's time involved, which again, I'm thinking about it from the patient perspective, right? It's like you need that time to be as short as possible, both for reduced costs, but also just because you really need the medication. Are you seeing technological innovations that you think are going to be, you had mentioned closed systems, improved testing methods? Are you seeing advancements on the near-term horizon that are going to impact this?
SPEAKER_01So we are. I am, and definitely some of them are already on the market, some of them are hopefully coming. But we focus on three things, and I can elaborate a little bit on what technologies are s or are coming in to support that. But one is as you would have been talking about, we how do we reduce the cost of goods? The second is how we reduce the turnaround time to get the therapies faster to the patient, and their manufacturing, but also testing has a big element. And thirdly, how do we really get to a point where we're manufacturing at a very high percentage success of batches so we don't have failures, right? And I think that uh there's some technologies like the Miltony Prodigy, like the Lonta Cocoon system, like the Ori Biotech system, like there are a bunch of systems aimed at closing and automating some or all of the manufacturing process. Those are very important things. Uh, there are also some upcoming technologies on the testing side, use of um NGS release testing as opposed to compendial testing methods from 50 years ago to do it faster and to do it cheaper, and frankly, also to do it in a way that gives us more data to understand the therapy and understand the cells and improve. So there are things I think that we need to keep working and developing these things, but also we need to adopt them, right? One of the key challenges is the therapeutic, the pharma industry is a very conservative industry, right? And adoption of new technologies and new methods is not always the simplest thing. So I think as an industry, especially in cell and gene therapy, we have to make sure that we have our minds open and that we're adopting the right technology to enable treating more patients.
SPEAKER_00If you've been enjoying the conversations here on Pharma Sessions, you should know they're made possible by the team at Excent. Excent helps life sciences companies turn complex data into clear, actionable insight. For years, Excent has made complicated data sets simple to help commercial, medical, and operations teams map what's happening, predict what's next, and make stronger decisions faster. And now there's an added AI layer that makes everything work so much better. I was actually pretty jaded about some of the AI approaches I'd seen, but when Excent showed me theirs, I actually left my job to come work for them. It's really awesome. So if you want to understand your market, your customers, or your performance with more clarity than ever, check out XSunt.com. That's XSUNT.com. All right, let's jump back into the episode. Just hearing you speak, this seems like an area where selecting the right CDMO is maybe even more critical than in traditional small molecule medicines, where it's really it's less of a requirement to have innovation, but here innovation is necessary. And so are the things that you're talking about changes you're hoping to see implemented as industry-wide standards, or are these areas that you're pushing the envelope at your particular organization?
SPEAKER_01Yeah, I think for sure it's the sum of both. And you asked me earlier about how do people choose, right? So I think the sort of old-fashioned way of approaching it is the CDMO dish needs to execute, and I'm gonna throw my profits over the fence and you just run it, end of story.
SPEAKER_00We told you what the drug needs to do, and then you deliver them on time and with uh certain quality, and your job is complete.
SPEAKER_01And I think those are still obviously key elements, but because the space is still nascent and because things are still developing, and because frankly, a lot of the biotechs that work on these therapies are not experts on the manufacturing and testing side, working with the CDMO that has the depth, the ambition to change things for the better, and the mindset of really collaborating to make it work, and for the therapy to be successful commercially, those are critical elements. And I know that in the current funding environment, a lot is really focused on how much is it gonna cost me? I don't think that's uh that's uh unreasonable. It still has to be competitive, but you know, thinking about ultimately are we gonna be successful commercially with cyst therapy, that takes a village. It takes a village and it takes part strong partnership.
SPEAKER_00The reason I keep asking these questions about uh things from the pharma side is because honestly, that's that's most of my audience is is in the pharma space. So let's put ourselves in their shoes. And you're one of these biotechs, maybe they're about to choose their first, they're about to launch their first product, choose their first C DMO partner. If they don't have that expertise in-house to do a proper evaluation, how would you recommend that they get that expertise and up-level themselves around what even questions should we be asking? And how do we these complex and you know, these are long-term decisions that have a major impact on the success of a company?
SPEAKER_01Absolutely. I mean, the way that we look at this is that, you know, you're giving the CDMO your baby, essentially, right? And if they fail, then then you fail as a therapeutic company because you don't have a second chance usually, right? You have you have this is a one shot thing, right? Either you succeed or you don't. That we very much acknowledge and are aware of that. I think there are various ways of doing it. I mean, obviously, there are consultants out there, they're consulting firms. You can also obviously recruit someone that has the right experience in terms of outsourcing and working with C DMOs. But I think frankly, ultimately, this should not be rocket science, right? When you go to a C DMO and you do a site visit and you talk to the people there about your therapy and about the considerations and about the bottlenecks and what you should be worried about. I think if you have reasonable experience in the space, even minimal, I think you get this is not something that is as we're discussing here, right? These are not things that are super difficult to understand. Obviously, when you get the more granular technical level, it's a little bit different. But I think you can gauge what the attitude is.
SPEAKER_00Yeah, it's funny. You saying that reminded me of a conversation I had around this topic with another person where he was describing the importance of a site visit. And what he was saying was that his evaluation basically it starts from as soon as he gets towards the front door with he wants everything clean. He wants is the glass clean? Is it presentable? When you go in, are people looking frenzied, or is there clean workstations? Everybody is operating in a way that feels manageable and very well put together. So that person was saying that the site visit was an incredibly important person, part of the evaluation. But I think what you're saying makes a lot of sense, right? Whereas like you have the big picture question, certainly around cost, speed, and quality, and then everything else can flow from there. So let me ask you, Eton, if we can just switch gears a little bit, because I think this is part of your background that is very interesting to me. But you've worked across public companies, venture-backed environments, private equity-backed firms. Have you noticed a difference in how these different models shape decision making, risk tolerance, long-term strategy, etc.?
SPEAKER_01Acknowledging here that I have an N of one right for right.
SPEAKER_00This is your you're just sharing your experience. We were just talking.
SPEAKER_01No, no, for sure. I just, you know, I I I you know I do tend to stay for a while once I join. So I don't have a huge N for each of those. But yes, I mean, I I do think that they're different drivers for different scenarios. And I think it's what you would expect, right? I mean, the public companies are looking more for the quarterly or yearly reporting, right, that they have to get, and what does that look like? And, you know, what do the obviously the stakeholders, uh, which are, you know, the investors among others, have to say about it, and the stock price, et cetera. And again, their pros and cons to the fact that that is is a key driver. Venture capital, more less risk-averse in the sense that, yes, they're invent investing in something big that has significant chances of failure, even if it is a CDMO in some cases, right? But also the bandwidth in terms of the time frame that um is available to make it work or make it not work or fail is sort of quite limited. And then private equity, which has a horizon of call it five to seven years, obviously, in many cases acquiring companies that are not doing very well. And it's a turnaround situation where you know you have to make some quite difficult, significant, quick decisions to stabilize and get the company to where it needs to be.
SPEAKER_00So I've worked myself for all three company types. And I think the time horizon is one that maybe earlier on in my career, I underestimated how impactful that is to somebody working for one of these companies. I mean, with biotechs is it's kind of self-explanatory. If you're joining a pre-commercial launch, your trials need to go well and your drug needs to launch successfully, right? And that's that's the whole future of the company. But what I thought was fascinating when you're talking about the short horizon for VC firms, I'm not sure how this is in the C DMO space, but in software organizations, they're gonna send you up like a rocket ship. And if you make it to space, great, but nine out of ten are gonna explode in the atmosphere, and that's just part of the model, right? And so that can be a very weird place to operate. And it's something that I honestly sometimes surprised more procurement folks aren't interested in in what are the models and and where does that mean. I'm assuming C demos aren't quite that three years, boom or bust. Hopefully you get a little bit more runway.
SPEAKER_01Yes, you because you need that. And and and I think the one thing I have found which is sort of obvious, right, is that the composition story of your investors and uh, you know, who's on the board is so critical, right? I mean, if you really have those people who have the depth and have the experience, and not just uh experience, period, but experience in the space that's relevant, right, to what you're doing, because it's it's quite nuanced, right? I mean, someone who has lots of experience from the FDA or lots of experience from therapeutic or large pharma companies doesn't necessarily know how a CDMO works and vice versa. So having that experience in depth and support uh by your investors and and on the board is really important for success. All right.
SPEAKER_00Well, let's end with just one forward-looking thought experiment, if you will. So let me ask you, Ethan, for leaders building in this space today, what mindset or capability will be most important to succeed over the next five to ten years? As an individual? Yeah, as an in you can take that however you want. As an individual to bring success to your organization, where do you see the change happening and and what are people going to need to what should people be spending their time on now so that they can be successful in the immediate future?
SPEAKER_01I think, you know, on the therapeutic side, I think the point choosing which daycare you put your baby at, right? Is is uh is absolutely critical. So do that assessment and really understanding that you're working with the people, that they have the right depth and experience and commitment and partnership mindset. Because your expertise is developing as a therapeutic company, your expertise primarily is developing the therapy, right? And understanding the biology and doing the clinical trials. And that's exactly what you should be doing, right? You don't always have that depth and understanding and capability in terms of manufacturing. And by the way, again, when money was free, biotech were building their own in-house manufacturing. You know, money was free. And and you know, almost everyone has moved away from that because they've understood it's not efficient capital use and it's also a distraction because it's not their core competency as a therapeutic company.
SPEAKER_00Yeah. Well, can I just jump like the thing that's interesting about that in the cell and gene therapy space is it seems like in the traditional space, you could say, all right, well, manufacturing isn't so much a place where you can gain a competitive edge because not to oversimplify, but it is simpler. But here it actually seems like if you were to bring that in-house, and I and granted that would be a hugely expensive proposal, I'm assuming, could that not be a competitive advantage for your company long-term if you were really good at this complex manufacturing piece?
SPEAKER_01I suppose and in some scenarios it could be, but it's hard for me to think about what they would be, right? I mean, I think commercial stage, if you want to bring it in-house, sure, that's a possibility. You're gonna need dual sourcing anyway. But what well, as long as you're in the clinic and you don't even know if you're gonna speed commercially, I just don't know ravenative street. No rationale, no rationale in doing that. And actually, you bring up a really important and interesting point, which is that it's almost the reverse with cell therapies, because you can't patent the target, right? So in small molecules, you can patent the molecule. In cell therapy, you're not patenting a molecule, and you can't patent the target because it's a naturally occurring biological element. Or one of the only places that you can create differentiation is the manufacturing. And since multiple companies are going after the same target, for instance, CD19, if you can be at a lower price point, that might be enough to really create that differentiation, which will drive market share for you. But I think almost in a dichotomy to small molecules, right, manufacturing is super important.
SPEAKER_00Yes, I love it. All right, let's end it there. This is one of the things I just love about this space, is there are there are endless wrinkles to the pharma industry, right? And just sort of thinking we have a sense of it, there's something new. So, Eton, uh thank you very much for your time. I really enjoyed the conversation. Thank you. It's been great. This episode of Pharma Sessions is sponsored by Exont makers of the X1 reporting platform. And that's a wrap on today's episode of Pharma Sessions with me, Jonathan Kaske. If you enjoyed today's conversation, don't forget to hit follow or subscribe and share it with someone else in the pharma world who might need to hear it. For more on pharma trends, career growth, and business strategies, connect with me, Jonathan Kaske, on LinkedIn. Until next time, thanks for listening.