Maintaining the Relationship with a CMO

• Calcott Consulting LLC

Successfully navigating the setting up and use of contract manufacturing organizations (CMOs) is a daunting task, or actually, tasks. Over the years I have set up and managed these relationships successfully and now as a consultant I am often brought in when problems arise. What I find is often the planning is weak and the execution even weaker. My father used to warn me that with any endeavor “I cannot guarantee success if you plan well but I can guarantee failure if you plan weakly”. And so it is for using a CMO.

There are really four phases in the use of CMO. That is, in chronological order of events:

1. Choosing the CMO
2. Developing the relationship
3. Qualifying the CMO, and
4. Routine operations

For this article, I am going to focus on the last two parts. The first two parts have been covered in detail in other articles I have written over the last few years.^1,2 But I will recap the key elements to put the rest in context.

1. Choosing the right CMO is as critical as it sounds. But before you go to choose the CMO determine what you want to outsource and why. It is only after this is determined can you make the right decision. There must be a good technical fit as well as a desire to work with you. The technical fit comprises the physical plant (do you have all the unit operations for your process and product?) and the expertise of the individuals (do they know what they are doing?). The desire to work with you is demonstrated by their degree of cooperation in the setting up and other early phases. If they do not cooperate in the initial phase of selection, I can guarantee it won’t get any easier. Other questions that must be addressed include: Do they have capacity for me when I need it? Do their long term plans fit mine? Some CMOs focus on early phase clinical (read small batch sizes), others mid-term clinical (larger batches in a semi routine fashion) or commercial phase (large batches on a routine schedule). Do your needs fit their desires? This is usually determined sequentially at many levels including a quality audit as well as a business assessment. Any one of these can cause a potentially good relationship to fail to come to fruition. Oh, by the way, do due diligence with respect to their compliance status (FDA 483s or Warning Letters and the EMA database as having passed inspections and issued a certificate of compliance).
2. Developing the relationship. With a clear understanding between all parties, now is the time to delineate who will do what. This is usually defined partly in the business contract along with the business drivers but also more tactically in the Quality or Technical Agreements. These have been commonplace in Europe for the last twenty years and reasonably common in the US over the last 15. Just two years ago, the FDA finally issued a Guidance on Quality Agreements which spells out the responsibilities of all parties involved.^2,3 This will become the framework for ongoing activities.

Which brings us now to the basis for this article. How do you go from this Quality Agreement to routine operations? Clearly the Quality Agreement delineates who will do what but how is it implemented? And how can you be sure it will be honored continuously?

The Quality Agreement is a comprehensive document that clarifies the relationship and defines roles and responsibilities. As such it is the framework for operations. But at this stage the CMO has yet to make any product for you. So just like any relationship where you are outsourcing to a third party, the first step is to qualify them for the activity they will be routinely doing. This transfer and its success becomes the documentation that is used to describe and support the qualification of the CMO as the new manufacturer of your product.

Typically, this usually involves a technical transfer of operations followed by a formal qualification of the activities or making product. As with any successful technical transfer it takes planning and execution. In fact, the differences between technology transfer from research to your own commercial operations and from you to a CMO, is just who owns the operations. In both cases, a clear technical technology transfer is best performed with a clearly defined plan. This often takes the form of a protocol defining all key elements including deliverables from the sponsor to the CMO to initiate the activities, and deliverables from the CMO to the sponsor at the end. It also defines who is going to do what and how the project will be managed. It will also include clearly defined stage gates to trigger movement from one phase to another. That includes how many practice runs are performed before GMP begins with acceptance criteria defined. It will also include the expectations of support from one party to the other party for all activities. It will also detail out the communication pathway and expectations. In one case it is between different branches of a company and the other between two separate commercial entities. The challenges are really very similar.

Which brings us to a key set of steps to ensure success. A successful transfer and ongoing cooperation between both parties is dependent on the establishment of trust between both parties. But trust does not come quickly or easily. It starts with a communication phase, which leads to a relationship with open, honest conduct leading to trust (Figure 1). But this trust can be lost very quickly when communication and relationships break down. It does not matter whether it is between departments or companies: the principles are the same.

Figure 1. Interplay Between Communication, Relationship and Trust

How can you set off on this voyage and maximize its success? The communication phase is the most critical. Fail in this and the whole relationship does not form. The communication has to be based on an open forward thinking strategy of inclusion with the least amount of hidden information or agenda.

I am reminded of a successful relationship I had with a CMO many years ago. In that situation, we were a small company that did not have the production capacity that we thought was needed for this potential blockbuster or the capital to provide for a commercial facility. In fact, in previous years we had banked on another product becoming a blockbuster and had invested in a facility to accommodate this market growth. And you guessed right, it was not a blockbuster and every day we were reminded of the wrong decision when we went to work. It is not surprising that the CFO did not want to be burned again. So we were dependent on the CMO for market entry. Contracts were drawn up and relationships defined. But part of the relationship was to discuss the future and several scenarios were described and elaborated on. If this product was a minor success then we would stay with the CMO. If however, it was a major success, then we would need much more capacity. We discussed routes including expansion at the CMO and also building at our own plant that would be constructed in due course. If the latter scenario was needed, we would need the CMOs help in technology transfer to the new plant. It was this open, forward thinking communication that allowed this relationship to move forward.

This strategic communication must also be matched in the tactical communication arena as well. That is the communication between various departments. And this brings up to another key point in relationships and that is to put yourself in the other person's shoes. Very rarely, does a CMO have a single customer. In most cases, CMOs have multiple. In the early phases of technology transfer, it is critical to delineate who is responsible on both sides for each activity and charge these people to assure that it is successful. This communication of asking for information and receiving it must be orchestrated with clear conduits being established. If not, picture this. You have multiple people phoning, emailing requests for information to multiple people in the other company. Visualize the CMO with 10 clients and the permutations and combinations grow exponentially. Having clear point people allows the communication to be managed and not get out of hand (Figure 2). During this phase, communication overall is also managed via a project team mechanism to assure harmonization across functions with plenty of feedback. This technology transfer phase is where the relationship is built. As time goes on trust begins to form.

Figure 2. Communication Pathway Between Two Companies During Technology Transfer

Communication is critical during the technology transfer but it does not stop at the transfer but rather continues during routine operations. The number of routine communicators at the operational level decrease to the bare minimum needed to assure continuity (Figure 3). Usually, it is logistics and quality. Logistics is to assure that production is being executed against the plans. These plans are short, medium and long range. The degree of communication is in general proportional to the event horizon. That is communication on short range plans (when individual batches will be needed) requires more frequent than long range plans (production forecasts for next and subsequent years). Quality is routinely engaged focusing on both short and longer range goals. Short corresponds to the next few lots while longer range will encompass changes to the operations driven by change control and other improvements. If nothing untoward happens then routine communication need not involve any other party. However, things do go wrong and mishaps occur. It is then that we engage other parties to solve technical, regulatory and other issues. These parties are engaged to solve the problem and then disengaged when the issue is solved. In addition effective communication set up between Logistics groups and Quality groups in each company must be complemented by a strong communication within each company between Logistics and Quality: one party (Logistics) communicating schedule and changes, while the other (Quality) delineates progress to goals. Trust is strengthened when each party communicates openly, quickly and honestly with the other party.

Figure 3. Communication Between Two Companies During Routine Operations

It is important to define communication in sufficient detail to manage all expectations. Usually, the communications for routine operations are defined in the Quality Agreement (for GMP related activities) and also the Supply Agreement (for logistics). This should entail not just that communication should occur but it will delineate who (which parties are responsible and involved), when (frequency), what (the content including level of detail), how (phone, video, written report or in person) and why (the purpose). This may sound like a lot of detail but it is critical to manage peoples’ expectations. To one person frequent may be hourly but to another once a month. To one a report of progress might be “all on track” while to another it might be a detailed Gantt chart.

During routine operations, there are other types of communication that are critical. These include less frequent communication (the above routine communications can occur as frequently as daily or weekly depending on the type and urgency). These less frequent types involve more long range topics and include quarterly reviews and the “Annual Product Review”. As a sponsor for the product, engagement is paramount. Keeping track of slightly longer trends is important and part of a rigorous continuous improvement program and as such you are very dependent on the cooperation of the CMO who is the holder of all process information. These quarterly reviews are often conducted via reports with a video conference to engage both parties. In these cases, the heavy lifting of review is done offline after receiving the report and the video conference serves to highlight and trends, and to review general plans for the future.

A venue for communication – the Annual Product Review – is also a great opportunity to develop the relationship and build trust. If done well, this meeting (and I recommend face to face), is an opportunity to not just fulfil a regulatory requirement but to add value to the product and the relationship. In these meetings, there is opportunity to not just look at the product and process characteristics and liabilities, but to explore opportunities for improvement to product, process and systems: that is to engage in continuous improvement.

Of course, during all this we are examining the outputs of both parties and fine tuning the operations. With the development of trust, you can even consider backing away from the day to day activities as confidence and trust prevails. But be cautious and to quote Ronald Reagan during the Cold War, “Trust but verify”.

What are the signs that the relationship is healthy or not? There are many indicators of the health. All of them come down to how open, honest and timely the communication of bad news is.⁴ A definite sign everything is going well is when both parties (and I mean people) are comfortable to sit down over a refreshment which is not a formally scheduled event. To this day, I have had dinner or refreshments with an ex-colleague that dates back 15 years – a person who I met when both our companies were engaged in a CMO relationship.

References

1. Calcott, Peter (2011). Outsourcing Strategies. European Biotechnological Reviews. pp. 52-58
2. Calcott, Peter (2014). Managing Contract Relationships with Quality Agreements. Bioprocessing International 12. pp. 10-17.
3. CBER/CDER/CVM. (2013). Guidance for Industry: Contract Manufacturing Agreements for Drugs: Quality Agreements. Food and Drug Administration, Rockville MD. May.
4. Calcott, Peter (2014). Tackling serious organizational failure. The Medicine Maker. October.

Peter H. Calcott, Ph.D. is President and CEO, Calcott Consulting LLC which is focused on delivering solutions to pharmaceutical and biotechnology companies in the areas of corporate strategy, supply chain, quality, clinical development, regulatory affairs, corporate compliance and enterprise e-solutions. He is also a Senior Consultant with NSF-DBA LLC and an Academic Program Developer for the University of California, Berkeley’s Biotechnology and Pharmaceutics Postgraduate Programs. Prior to this he was VP at the executive team level at PDL BioPharma where he was responsible for development and implementation of Quality & Compliance strategy across the corporation. Previous to that he was Chief Quality Officer and led the Quality and Compliance function at Chiron and Immunex Corporations and was Director of Quality Assurance for SmithKline Beecham and for Bayer for their biotechnology and biologics businesses. He has also held positions in research and development, regulatory affairs, process development and manufacturing at other major pharmaceutical companies. He has successfully licensed products in the biologics, drugs and device sectors on all 6 continents. Dr. Calcott holds a Doctorate degree in Microbial Physiology and Biochemistry from the University of Sussex in England and completed his post-doctoral work at McGill University in Montreal, Canada. Recently, he was chair of the Regulatory Affairs committee of BIO and presently serves on the Board of BayBio, a biotechnology industry association in San Francisco. He has been a consultant for 17+ years to various governments, industries and academic institutions during his career. Dr. Calcott has authored over 80 original research papers, reviews and books.