ElevateBio, a newly launched pharmaceutical services firm near Boston, is not a traditional contract development and manufacturing organization (CDMO) that offers services for hire. It’s more like a biotech incubator. But different.
The Discovery Labs, another new services company, has some similarities to ElevateBio. The Philadelphia-area venture is perhaps more like BioCentriq, a university-based services firm now opening in New Jersey. But there are differences.
These three companies and others like them are directing their services at the burgeoning cell and gene therapy industry. In the process, they are helping create a completely new branch of the pharmaceutical CDMO world. They will be competing with one another and with a handful of giant services firms that are also investing in the cell and gene therapy sector.
The pharmaceutical services sector has existed since the 1970s—ever since, as lore has it, the drug company Smith, Kline & French sought outside help making raw materials for the ulcer pill Tagamet. In the ensuing years, the sector has grown beyond such pharmaceutical chemicals to encompass ingredients for biologic drugs as well as drugs in their finished-dose forms. But the cell and gene therapy services sector has the look and feel of a wholly separate services sector—one serving a market primed for rapid growth.
The US Food and Drug Administration has approved only 7 cell and gene therapy drugs, but the new product pipeline is teeming with approximately 1,200 experimental therapies, more than half in Phase 2 clinical trials. Estimates of annual sales growth are about 15% for cell therapies and nearly 30% for gene therapies. And the number of cell and gene therapy developers is rising rapidly; the Alliance for Regenerative Medicine estimates 1,100 such ventures in 2020, an increase of about 10% over 2019.
Services companies are challenged by the newness of the cell and gene therapy field. They find themselves in the paradoxical position of trying to establish standard processes for research and manufacturing—essential to fast, efficient, low-cost operations—at the same time that they have to bring innovation to a new field.
Moreover, the demand for services currently outstrips supply—supply not only of research and manufacturing capacity but also of an educated, fully trained workforce. Competition for talent, by all accounts, is cutthroat.
“Workforce development is definitely a problem,” says Peter Bigelow, president of xCell Strategic Consulting. “The field is growing so rapidly and is so new that experienced people either don’t exist or are difficult to source.”
The most likely pool for talent is the pharmaceutical industry, Bigelow says. “For instance, people with mammalian cell culture experience can bring important capabilities for cell line development, downstream processing, and analytical methods.” As such, there are clusters of potential good hires in Boston, San Francisco, and Bethesda, Maryland. But these locations are also emerging as hubs for services firms, making competition fierce and staff retention a problem.
Bigelow also notes the challenge of working in an emerging area of science. “Processes are not optimized because they are being developed and installed for the first time,” he says. “There is significant trial and error underway.” He expects regulators will eventually impose a greater sense of order in an industry where, currently, parameters are to some extent set by suppliers of technology and equipment such as single-use bioprocessors.
John Khoury, executive vice president of Project Farma, a consulting firm in the area of emerging medicines, says that innovation hubs, where services firms exist near universities and institutions developing cell and gene therapy science, will expedite technology transfer and commercialization.
But he agrees with Bigelow that the lack of standardization currently hampers efforts. “The fundamental challenge in cell therapy,” Khoury says, “is that you’re building the plane as you fly it.”
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