Voice Over Recording:
Welcome to Insight Exchange, presented by L.E.K. Consulting, a global strategy consultancy that helps business leaders seize competitive advantage and amplify growth. Insight Exchange is our forum dedicated to the free, open, and unbiased exchange of the insights and ideas that are driving business into the future. We exchange insights with the brightest minds of the day, the most daring innovators, and the doers who are right now rebuilding the world around us.
Alex Vadas:
Welcome to another episode of the podcast focused on the transformative shift advanced therapeutic modalities are having on the life sciences industry, impacting everything from early research and development, drug discovery, drug development, manufacturing, and all the way through to commercialization of novel therapeutics.
I'm Alex Vadas. I've been with L.E.K. for over two decades. I've focused my career within life sciences tools, technologies and precision medicine. And I'm joined by my fellow Managing Directors, Jeff Holder, and Adam Siebert. Would you mind introducing yourselves, please?
Adam Siebert:
Thanks, Alex. My name is Adam Siebert. As you mentioned, I'm a Managing Director with L.E.K. I've been with firm over 10 years, spend all my time within the life science tools and biopharma manufacturing supply chain space, everything from thinking about how these drugs are made, both internally as well as with external partners.
Jeff Holder:
Thanks, Alex. Excited to be here. I'm Jeff Holder, Managing Director based out of the San Francisco office with L.E.K. Consulting. Scientists by training. I spend all of my time thinking about tools and services in the discovery and manufacturing of advanced therapies. Looking forward to the conversation.
Alex Vadas:
Thank you, Jeff and Adam. Why don't we start by talking about what are advanced therapeutic modalities and what is exciting about them and what's different about them and why are we even having this conversation today?
Adam Siebert:
Sure. So I can take that one. We at L.E.K. think of advanced therapeutic modalities into three main buckets, engineered cell therapies, gene therapies, and then the third one of nucleic acid therapies. As we think about engineered cell therapies, the genetic engineering happens to a cell outside of a patient and then those engineered cells are administered back into the patient and that is the therapeutic modality.
With gene therapy, the main difference is that the engineering actually happens within a patient's body. There's not as much complexity in terms of collecting material from the patient. And then nucleic acid therapies are very, very different. It's actually made more from a chemical way and is really brought to the forefront through the COVID vaccines in terms of using mRNA. But there are also other sub-segments called antisense oligonucleotides and RNA interference that alters the expression of proteins within the body.
These are really interesting and compelling in terms of clinical outcomes for patients, particularly within cell therapies. In gene therapies, they have the possibility to be curative, which is a fundamental change from how many of these very, very sick patients have been managed previously.
The nucleic acid therapies are a bit different from the cell and gene therapies in sofar as they enable diseases in drug targets that were previously thought to be undruggable to now be druggable and potentially treated due to the different pathways that they can be impacted. So the net result of this is a very interesting ability to not only potentially cure patients, but then also for other diseases to actually be able to treat previously untreatable diseases.
Alex Vadas:
Thanks, Adam. Maybe you guys can talk also a little bit about what is so different about advanced therapeutic modalities compared to more traditional drugs that we may think of including small molecule pills or even other biologic drugs like monoclonal antibodies.
Jeff Holder:
Yeah, that's a really great question, Alex. So when we think about the advanced therapy space compared to traditional biologics like antibodies or small molecules, there's a number of design features or modality features that are significantly different. So their advanced therapies are designed, they're modular, they can be personalized, they're more complex, and because of all these features, they tend to scale out in terms of their manufacturing.
So let's go through those characteristics one by one and talk a little bit more about what we mean. So designed. What we mean here is that while traditional drugs are discovered through a highly iterative process with screening millions of compounds, years of optimization in the laboratory with synthetic chemistry, advanced therapies are more designed. That means that components around their active drug mechanism can actually be configured against a known target.
So for example, if we're trying to treat a genetic disease where a gene is dysfunctional in the patient, we know that gene, we know it's sequenced, so we can design a gene of interest, a payload for one of these genetic medicines around that sequence. So they're designed, this dramatically accelerates discovery stage research compared to the traditional process for small molecules and other antibodies. The second feature is modularity.
So when we talk about being modular, what we mean here is that components of the advanced therapy of the drug itself are interchangeable. So a single design can be modified to serve a range of different functions. So we talked about that genetic payload that can be designed against the target. Well, if we can swap that out, if we have a delivery mechanism and we can keep, conserve that delivery mechanism, but swap out the payload, that's an example of modularity.
So that lets us evolve and change out known components that work for new components to make new drugs based off this modularity. So a good example of that is updating the sequence for the mRNA vaccines as new variants of COVID-19 came out into the market. The third characteristic is personalization or the ability to be personalized. And here we just mean specific to an individual patient.
So in these instances, either a patient's own cells might be used to make the drug as the starting material. So if CAR T therapies, for example, which is a common class of advanced therapy. A patient's own cells are taken out of their body and go into the drug manufacturing process. So it's very personalized and individualized drug to that patient. Alternatively, therapy can be designed against patient specific set of biomarkers, for example.
So we could look at a cancer patient, we can assess their tumor, we can find some diagnostic markers on the tumor that we can target. We could make personalized cancer vaccines that are specific to that patient's tumor, for example. So that's what we mean by personalization. Adam, do you want to talk a little bit more about the other factors, about complexity and scale out and how that impacts manufacturing?
Adam Siebert:
Sure. Thanks, Jeff. So as we think about the complexity, the advanced therapeutic modalities, we're no longer talking about a single molecule that's going to be used. It's often thinking about multiple components that come together to form a more complete therapy. So Jeff mentioned before about payloads and delivery vehicles.
As we think about the mRNA vaccine as an example, it had the mRNA sequence, so that's the payload that was inserted into, it was encapsulated into a delivery vehicle called a lipid data particle. Each one of those components needs to be made separately via different processes that are intricately complex. The other thing that I would say is as we think about the gene therapies and cell therapies, they're being made in biological systems, which is quite different from the small molecules that are the traditional therapies.
But then in addition to that, they're also made each individual batch is its own unique process that starts from the beginning. And so we are no longer relying on what are called cell banks that already have everything they need and it's just growing up the cells. Now you need to reinsert the genetic engineering materials into the cells each time, which adds to the complexity as well as to the cost of doing this for every single batch.
The other piece of the complexity that Jeff alluded to was specifically for autologous cell therapies where we are using a patient's own cells to make the therapy. And so the patient then will need to go and get their cells collected. Those cells would need to be prepared, sent to a manufacturing facility where they're then engineered over the period of a couple weeks and then sent back to the treatment center where it can be infused back into the patient.
So all in all, it's not just a manufacturing complexity, but then there's also the patient coordination and logistics complexity that comes into view as we think about these cell and gene therapies. As we think about the fifth area that is different between the advanced therapies and the more traditional therapies is on what we call the scale out.
So thinking about traditional therapeutics. As the demand for material increases, meaning that as more and more patients are being treated using the same therapy, the bioreactor in which these products are made increases in size. So you go from using a hundred liter bioreactor to a 1000, or even in the case of really large monoclonal antibodies, 20,000 liter bioreactors. But with the case of autologous cell therapies and even gene therapies, the model shifts to being a scale out, which means that the size of the bioreactor doesn't change, you just add more bioreactors to the process.
And this has some pretty serious implications when we think about the number of people that are required to make enough doses for the patients as well as the amount of facility space and infrastructure that's necessary to house the additional bioreactors. This is something that has come into focus a bit more over the past coming years as the demand for these products has increased and needing to find the right people to actually make these is really coming to the forefront as a critical need within this space.
The last point I would say is for the scale out that also drives this is in terms of batch failures. So right now, cell and gene therapies is still emerging as a technology that as a result there is a fairly high rate of batch failures where what you're making does not necessarily comply with the thresholds that need to be met to be released and used to treat patients.
And when we think about cell and gene therapies, the value of the critical inputs that are being used to make it, the value of that is so high that manufacturers do not want to risk having a batch so large that the value that they would have to pay if the batch fails is really a detriment to them. And so they restrict the size of the batches in order to protect themselves on the downside risk, which again drives more of the scale out model for gene therapies as we think about it.
Alex Vadas:
Thank you, Jeff and Adam. These advanced therapeutic modalities are absolutely different and thank you for describing those differences. Can you talk a little bit about how you see that impacting the industry, particularly pharma, when we think about the implications from everything from discovery to development through to manufacturing and commercialization of these therapies?
Jeff Holder:
Sure, Alex. That's a really pertinent question as we're seeing the paradigm shift that these advanced therapies are driving really play out in real time today. And the first element of that paradigm shift is really around timeline and risk management for R and D or of novels therapeutics. So what effectively advanced therapies do is they shift the timeline and the risk downstream from discovery.
So because we can design these drugs against known targets, so there's modular components and there's kind of less searching around in the dark screening like there is for traditional small molecules, discovery is shorter and has a higher probability of success in all likelihood to get to the clinic and to start using these drugs in clinical trials. So what happens is the risk shifts downstream from discovery, and so does the timeline. The discovery timeline truncates and the risk shifts downstream more toward manufacturing and commercialization.
So one of the key implications of this shift in timeline is that we can go from idea to clinic in months sometimes, not years, as is traditionally been the case with drug discovery. So I'm a chemist by training, worked in small molecule drug discovery. Some of those programs you'd be four or five, six years easily in discovery and lead optimization, preclinical. Sometimes as long as a decade before you can get into patients.
Whereas here we're seeing developers looking to go sometimes idea to clinic in 18, 24 months. We did a survey recently where we asked mRNA developers what they were expecting for timeline from discovery to filing an IND, which is the document you need to file to enter clinical trials. The plurality of our responses was 18 to 24 months. So much faster was the time from idea to clinic. The regulators are also supporting this.
I actually heard Peter Marks from the FDA speak. He mentioned that they're piloting what they call a START program, which is where they're looking to effectively take the concept of engagement with the regulators that we had during operational [inaudible 00:14:45] during the COVID pandemic and apply it to our rare disease genetic therapies. So genetic medicine is targeting super rare diseases.
So they're piloting that kind of much more close engagement with the agency from a regulatory standpoint, which will also be key to truncating that kind of time to clinic and time to market. So exciting developments in terms of the shift in timeline and the speed for the advanced therapy space. And there's other tools that are helping drive this. We hear a lot about artificial intelligence, AI, machine learning, silico tools and computer models.
These tools are also playing a role here in helping to accelerate discovery even further by providing some of the optimization and iteration at silico on a computer versus in the wet lab. So the combination of the innate characteristics of the advanced therapies, the regulatory environment, and certainly tailwinds from the COVID years and these advanced tools outside of the wet lab really driving a truncation timeline going fast and shifting that risk downstream from discovery.
The second impact that I'll talk about is the importance of manufacturing and supply chain for clinical and commercial success. Historically, manufacturing was a little bit of a given in these modalities that are more mature. So monoclonal antibodies we've been making for 30 years. Small molecule chemistry, been a well-studied science for over a hundred years. So we're able to make those drugs very reliably on scale economically at reasonable cost of goods.
So that manufacturing is rarely critical to your strategy or traditional drug. But in the advanced therapy space, that's different. Because of the complexity, because of the scale out dynamics that Adam was talking about for many of the modalities, manufacturing and supply chain considerations are critical to clinical and commercial success and being able to manufacture efficiently and rapidly and consistently can really be a differentiator.
A good case in point on that was in the CAR T space. So some of the early treatments in the CAR T space. The company Kite has a program called YESCARTA, and then Novartis has a drug called KYMRIAH. These were both looking running trials in earlier lines of therapy for oncology. And though they have the same mechanism, you would expect them to have a very similar clinical outcome. But Kite demonstrated clinical benefit over standard of care where Novartis's KYMRIAH did not.
And again, because both the drugs leveraged the same approach, it was very surprising that the outcome was different. And one of the significant contributing factors was determined to be the total, what they call vein to vein time. So the time needed to go from taking a patient's cells to making the CAR T therapy to reintroducing the CAR T cells.
During that clinical trial Kite's process delivered the CAR T cells, and I think it was about 25 days on average where it was almost double that, nearly over 50 days for Novartis. So and during that time, the patients of the Novartis trial were waiting, their health continued to deteriorate as they were quite sick and a result, the therapy didn't deliver as impactful a result due to that extended waiting time.
So with those delays, we saw not only a change in the clinical trial output, but certainly from a preference shared from a market standpoint too. The Novartis drug has a reputation. It's being less reliable longer to manufacturer. So physicians will often pick the competitor which is perceived to have a more reliable supply. So manufacturing and supply chain has critical important success factors for both clinical and commercial success. It's another major change for the advanced therapies. Adam, I think you had some thoughts you wanted to add on to that dynamic.
Adam Siebert:
Yeah. And it's more moving towards the commercial. Right? As we talked about earlier, many of these advanced therapeutic modalities are curative, and so there is more of an emphasis or importance to getting to market quickly and first. Right? Because now you're going to be essentially treating the addressable patient population and over time the opportunity for these very expensive to develop therapies and expensive to manufacture therapies, the opportunity for them and revenue potential will decrease.
And so it really puts the emphasis on getting through development quickly. And historically we have seen that, and currently right now we have a lot of the more advanced or further in development therapies and even the commercial ones that are using processes that are making the most out of the first generation technologies and tools in order so that way those therapies could get to market first. As a result of that, the process is not industrialized and it's not efficient.
And increasingly we are seeing companies that are looking to update the process so that way they can make it more efficient and lower the cogs. But then even more so, we are seeing new tools that are being developed that will greatly update the efficiencies of these processes. And now we're seeing more sophisticated biopharma companies as well as more sophisticated investors starting to look under the hood to understand what is the process that is being used to make these drugs and maybe we need to get to a more industrialized process sooner.
Well, it may slow us down by a little bit. At first, it will result in a more efficient and cost-effective process once we get to market. We are starting to see a little bit of a shift in terms of that thinking that sometimes it may be better to slow down a little bit and make a more efficient process so that way the opportunity and the profitability of these advanced therapeutic modalities increases once we get to market.
One of the big kind of unknowns at this point is as we think about moving to other diseases, will a cell therapy or a gene therapy be reimbursed at the same rate as a cell gene therapy that is being used to treat disease that is lethal for small children. Right? Or for cancer patients. Right? The dynamic shift a bit was when we start thinking about the reimbursement and as a result, the cogs becomes a much more important consideration for these advanced therapeutic modalities and the biopharma companies that are developing them.
Alex Vadas:
Jeff and Adam, beyond pharma who are being impacted meaningfully by advanced therapeutic modalities, could you talk a little bit about how these therapies may impact other parts of the life sciences ecosystem, particularly around tools, companies or critical input providers or CROs and CDMOs who may be manufacturing products for pharma?
Adam Siebert:
Great question, Alex. So on the CDMO side of things, we are seeing a lot of partnerships with CDMOs trying to explore novel platforms and technologies that would enable more efficient production of material for their clients. But the big differentiator right now is really having the people that have the experience that can take a product from process development, which is very, very early stage for an asset all the way through clinical development and into commercial manufacturing.
At this point, there's very few companies and CDMOs that had this experience and those that do are really starting to see the fruits of that experience, and they're seen as kind of the go-to CDMOs in that space. There are a lot of new entrants, right? That are trying to participate and trying to provide customers with an edge when it comes to the manufacturing process. We're starting to see them come up.
I think part of the challenge that they're having right now is really attracting the customers into their facilities. The if you build it, they will come mentality is one that is being put to the test right now and it's really CDMOs trying to show that they are differentiated both from a technological perspective but then in capacity perspective, but mainly from a people perspective is a key part of the CDMO mindset at this point in time. Jeff, what do you think about tools?
Jeff Holder:
So the tools opportunity for advanced therapies is interesting because it's one of the more attractive growth markets in terms of the rate of the pipeline scaling and the ability to potentially access a commercial end market, so a large scaled end market by providing consumables or reagents or even equipment into that end market. So it produces a path to scale in a new space where there's a demand for new fit for purpose tools that we didn't need before these therapies came through the pipeline.
So one of the shifts that we're seeing now is that this first wave of advanced therapies is validated. We're seeing the subsequent wave of fit for purpose tools being developed and coming to market to support these. That first wave of cell and cheap therapies, which was really industrialized on academic benchtop bootstrap processes and now finally starting to develop some fit for purpose tools around that space.
So that's one dynamic. The other dynamic is this idea of getting kind of locked in as a supplier for a commercial product. If you're a critical supplier, you're kind of written into the dossier and the regulatory filing. So it's very sticky relationship from a customer standpoint for these tools suppliers. So it's attractive both from the scale of the market opportunity as well as the stickiness of the relationship for these commercial therapies and supporting these commercial therapies.
So kind of being first in class in an area where you have the first GMP or good manufacturing practice grade offering has been a really popular growth story over segments of the region market, the critical input market in the last five to seven years. We've seen companies like Aldevron around plasmid DNA, these like polyplus around transfection reagents that really cornered a market early in terms of being the first GMP grade supplier and seeding the pipeline with their offerings and able to grow with that pipeline.
And as the pipeline matured and drove a number of commercial products, they too grew along with the customer into these commercial scale opportunities. So a question going forward that I have is really, are there going to be ways as we continue to look to bend the cost curve on the advanced therapies, are there going to be opportunities for really innovative offerings that could uniquely enable a workflow or offer very fundamental unique advantages such as dramatically simplifying something or reducing cogs in a step change fashion?
Is there a way to kind of jump the line instead of starting in preclinical and growing slowly, slowly, slowly through phase one, two, three with a product to actually get to the point where you can kind of jump the line and a cost curve on a phase two or a phase three program or potentially even a commercial program that's in flight and would see enough value in doing the comparability studies and upending the filings because of the advantage that this enabling tool or reagent would potentially offer.
So setting time in the tool space and certainly an active area of research to continue to stay on top of the next generation of offerings as the pipeline's not static and the types of tools and technologies that are going to be needed for the next wave of cell and gene therapies and nucleic acid therapies are probably not the same tools that would've been fit for purpose for the first wave. So we'll see where it goes and it'll be an exciting time to keep our eyes on the tools market.
Adam Siebert:
I agree there, Jeff. I think also thinking about the tools and how that evolves over time. One of the things that we haven't talked about yet is the evolution of the pipeline, right? So cell therapies historically have been used in hematological malignancies and cancers, right? The CD19 CAR T is the prime example of that.
And as cell therapies move beyond those diseases and move into solid tumors or move into non-oncology indications and use potentially different cell types, are there new tools or new processes that need to be put in place to actually harness the therapeutic and clinical benefit from these products, is a key question that I think we're just going to need to follow over the coming months and even up to two, three years out just to see kind of how this transcends.
Alex Vadas:
Thank you Jeff and Adam for sharing your perspectives on the advanced therapeutic modalities and their impact on life sciences. I encourage anybody who's interested in having a further discussion to please reach out to L.E.K and we're happy to talk to you about how and what this could mean for your business. Thanks again.
Voice Over Recording:
Thank you, our listeners for joining us today at the Insight Exchange presented by L.E.K Consulting. Links to resources mentioned in this podcast can be found in the show notes. Please subscribe or follow for future episodes wherever you listen to your podcasts. Also, we encourage you to submit your suggestions for future insights online at lek.com.
