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BioPharm International, October 2011 Issue (PDF)

One does not have to look very far these days to see dramatic changes in the pharmaceutical industry. The basic science needed to understand therapeutics 20 years ago has been eclipsed by entirely new fields, such as pharmacogenomics.  

Our knowledge of possible pharmacologic targets has broadened our view of the receptors and pathways available for drug therapy. Even manufacturing a relatively simple and well-understood small molecular weight protein, such as insulin, has been revolutionized from the animal-extraction methods employed a few decades ago. Also, many diseases are multifaceted and therefore, involve complex pathophysiology and subsequent pharmacologic intervention. 

Many of these changes have been most apparent in the area of biopharmaceuticals. Every area of pharmaceutical R&D is markedly different when one increases the molecular weight by a log scale or even more dramatically. A small molecule synthesized on a laboratory bench is much less complicated than a protein with more unique chemical bonds and multiple conformational attributes. 

Understanding these trends, it is important for all of us to be well versed in the new sciences that impact the development of protein therapeutics. Someone coming out of college might have had a biochemistry training course to learn the basics of proteins, but needs practical knowledge of the field. An old-timer like myself may have many years of drug-development experience, but needs a new scientific base to contribute on a project team developing a monoclonal antibody or vaccine. 

The American Association of Pharmaceutical Scientists (AAPS) is initiating a web-based training course to satisfy these educational objectives for our membership and for the pharmaceutical community at large. AAPS Biotechnology 101 consists of 25 online lectures organized into five modules: Introduction and Overview of Tools; Chemistry, Manufacturing, and Controls of Biopharmaceutical Development; Preclinical Development; Early Clinical Development; and Late Clinical Development and PostApproval Changes. 

The lectures will be presented by experts in their field and reviewed by other experts for content. The contents of each module are packed with the current crucial knowledge with minimal overlap. The viewer will be educated on topics in an easy-to-follow format and may take the entire training course or specific modules or lectures according to one's interest. An online training course offers flexibility for the audience and the ability to review content more than once. Questions following each topic are available to test learning and retention.  

AAPS Biotechnology 101 will be available for purchase by the end of 2011. AAPS has been pleased with the enthusiasm of the training course organizers, presenters, and the scientists awaiting this material. We hope that this training course will be the first of several needed to provide extended pharmaceutical education for the scientific community. 

Biopharmaceuticals are here to stay. In fact, their use will only continue to increase, because of a huge unmet medical need for effectively developing large proteins to treat many diseases. We must be certain that the ability of trained scientific staff is not one of the limiting factors impeding the effort to meet this need. All of us have much to learn and will have many opportunities to apply this knowledge. 

, is president of the American Association of Pharmaceutical Scientists. 

Guest Editorial

It is important for all of us to be well versed in the new sciences that impact the development of protein therapeutics.

Education and Training in Biopharmaceutical Development

 Over the years, outsourcing has grown from being a short-term tactic into a long-term strategic alternative. What are the two or three key factors that have contributed to this change? 

 This is an obvious trend that we have observed. [Companies] really want to get fixed costs off of their balance sheets; they don't want to continue investing in bricks and mortar any more. They want to focus their resources on their R&D pipeline, especially as blockbusters are coming off patent. The outsourcing world has grown up tremendously in the last 10 years for biologics and pharmaceuticals in general, so companies have a lot more outsourcing options. So, I think [the factors are] moving fixed costs off of their balance sheets, focusing their energy on building their pipeline, marketing their existing products, and that there are many more good options for outsourcing. 

 Are certain types of companies—start-ups versus established companies, for example—more likely to have long-term outsourcing contracts? 

 Thirty years ago, the model followed by many small companies was to raise as much money as possible, and then attempt to become a fully integrated pharmaceutical company, with in-house development and manufacturing capabilities. That model is no longer an option for small companies. Investors aren't willing to invest in infrastructure; they want to invest in technology. Most small companies that we work with have research capability, but frequently they outsource all development activities. They'll come up with a molecule, do some early animal work, then outsource everything else; process development, analytical, manufacturing, and regulatory and clinical. What's changed is that the larger companies are beginning to adopt this model, outsourcing more and more. We have observed a 20–40% increase in outsourcing development and manufacturing among our larger clients, and believe the trend is continuing. There are challenges with this model also, in that they're giving up a lot of control and they need to mitigate that risk the best they can, by working with CMOs they can trust. 

There has been movement among manufacturers towards consolidating their contract services and securing strategic relationships with a single or so-called preferred provider. Has your company increased its offerings to accommodate this trend, or does it plan to?  

 In the past, we offered only clinical manufacturing, for Phase I, Phase II, and a bit of Phase III. We now have everything in place to support commercial manufacturing projects as of April [2011], when we completed our first FDA pre-approval inspection. We'll continue to support early development products, but now we're working with both our existing client base and new clients, to assist in the commercialization of several exciting therapeutic products. We have in place all the commercial capabilities to do fill-finish projects in either syringes or vials. And we're moving towards commercial production with some of our biologics clients, as well.   

To further complement our expanded production capabilities, we've added additional development resources. About a year and a half ago, we partnered with a company called WindRose Analytica, in Camarillo, California. They provide analytical services from early development through commercial validation. The collaboration has allowed us to quickly expand our capacity and our service offering for product release testing as well as for process development of biologics. 

Another area we needed to add as we moved into commercial [manufacturing] was packaging. Again, we decided that was not one of our core competencies. Rather than starting from scratch internally, we partnered with a company called Sherpa, that located their packaging and labelling facility right next to our campus. We've also really expanded our process development capabilities. We can now take a molecule that a company has made on bench scale, and scale it up to commercial manufacturing scale, do all the process validation involved, and support the regulatory submissions as well.  

We've continued to focus on biologics manufacturing, which for us is in microbial systems as opposed to mammalian [systems]. We decided not to go into mammalian production, but to focus on microbial and do it very well and at larger scale. We used to be at 100-L scale for fermentation, but are now at 1000-L, which gets us to commercial manufacturing scale. On the fill-finish side, we had a very nice clinical business that we've expanded to commercial production for both vials and syringes.  We can fill batches up to 100,000 units per batch in either vials or syringes.     

 As industry increases its focus on biologics, has the complexity or scope of your projects changed, and if so, in what ways?   

 Yes, they have. On one hand, we have seen larger companies that have increased the number of projects that they outsource and on the other we're seeing virtual companies that outsource everything.  With the virtual clients, we have contracts now where we're performing all the development work including the very early stage work. A typical company in this category is a small biotech company that has some laboratory capacity and a maybe a small vivarium.  A number of biogeneric and biobetters [companies] have a few people in offices and no laboratories at all. They're asking us to do the entire development: generating the gene of interest, the cell banking, all the process development and stability, and container compatibility studies. These projects move very quickly. The timelines are very aggressive, and the projects call on all the resources that we've developed. 

They're also looking for an edge. Some are happy to have a molecule that's the same as what's already marketed, while some are really looking for a biobetter. For example, if the innovator is in a vial, perhaps they want to market it in a single-use syringe, or they want a formulation change so that instead of daily injections, the patient can get weekly or monthly injections.  And we have some technology around that space. One of our former clients, Altus Technologies, developed a process for crystallizing a wide variety of proteins. They developed a crystallized form of human growth hormone that allowed patients to get injections once a week [instead of once a day]. We were able to acquire that portfolio of products and IP, and we're now offering that to clients who want a formulation change that will give their product an advantage in the clinic. Several CMOs have unique, proprietary technologies. In addition to the standard contract manufacturing offerings, they may have a proprietary cell bank or purification technology. On the formulation side, we have this crystallization technology, which has been of interest to a number of our clients who are looking for delivery advantages or solutions.  

 As manufacturers are increasingly adopting a QbD paradigm in their internal manufacturing operations, have you seen an expectation that their outsourcing providers will also implement QbD?  

 We had QbD in place for several years before our customers started regularly asking for it. What we like about it is we have some clients who want us to go from a small-scale process as quickly as possible to making GMP material for a clinical trial. Some are resource constrained and are willing to take risks to try and move as fast as they can. We try to accommodate them as much as possible. The challenges are, if you get lucky and it works, great, but if not, you have to figure out why. QbD is really developing a rational process so that by the time you get to GMP production you've had a chance to do some engineering runs that allow you to identify the variables and specifications you need in place. You've had a chance to do a shakedown of the process and find out what it's able to deliver before you begin the critical manufacturing runs. We're big proponents of QbD and are happy to see more and more industry leaders adopting it. 

 What specific adaptations have you made to implement QbD?  

 We've built up our process development group and integrated it as completely as possible with our analytical development group. One of the first things we do before we start process development is to make sure we have assays in place that are reliable and rugged enough to detect the purified product and impurities along the way. We'll do an initial qualification of those assays so that when we start process development and we begin generating a lot of samples we know that we have a reliable, quantitative assay for testing them., As we're going through the process development and comparing different process steps we have procedures in place that allow us to do a rigorous mass balance and a thorough evaluation.  This way, when we come to a decision point in the process, we have very reliable data we can share with our client which allow us to make a well-informed decision together on how to proceed. 

 As you know, drug shortages are on the rise, especially for many crucial drugs, such as those targeted to treat cancer. Reports blame uncertain supply chains and inadequate capacity. Would you agree with this assessment?   

Hancock: To me, the biggest issue is that a number of these products are older products, and some are very low margin. I think that a number of companies in these challenging economic times are focusing on the highest return products when they look at their portfolio. For products that are extremely low margin and very competitive, companies may be forced to drop product lines and focus more on higher margin products. A whole lot of people dropping these product lines at once have created shortages, so the prices will likely increase. The markets are very fluid and I think they'll adapt, but it will be some period of time before it happens. 

Another factor to consider is that there are inherent manufacturing and supply chain challenges associated with some of these products, such as with high potency products. Historically, a company may have been able to [manufacture these products] fairly easily, but as occupational safety and containment regulations have become more stringent, some companies have realized that they need to make a large investment to comply with the newer standards or they may have decided that that's not a direction they want to go, or they don't have access to capital. 

 Is it a fair characterization to say that there is overcapacity in biologics outsourcing? How do you see this issue playing out in the next few years? 

 [In microbial manufacturing] in the US, we have not observed an excess of capacity.  There may be at the small scale.  When we did a survey a while ago, we found that if you wanted to do microbial fermentation at 100-L scale, there were about 30 companies you could go to. When you get to the 1000-L scale, that number goes down by a factor of 10. At the small scale, there is plenty of capacity, perhaps over capacity. At the larger scale, based on what we're seeing, there is a lack of capacity. 

Our estimates are that for all biotech products, 35–40 percent are produced in microbial systems (

, yeast, any other microbe) and the rest are produced in mammalian systems. As Althea has expanded, we have considered adding mammalian production several times. However, in watching all the new plants coming on line, I always thought there would be a bit of a glut. For mammalian production, a new facility can be accomplished with very little capital by using a WAVE or other disposable system, which really lowers the barriers to entry. For microbial production, stainless steel tanks are required and represent a much higher capital investment. When I talked with larger and more established friendly competitors in that area [mammalian-cell manufacturing], it seems like many of them are really busy. A lot of their facilities are booked for the next year to 18 months. Again, I believe there to be plenty of capacity for early stage or small-scale projects. However, at large scale or for commercial projects, there is a limited pool of companies that can really do it well, have approval produce commercial products, and that have robust quality and regulatory systems required to support these programs.  As with most things, the companies that execute well are very busy, so it seems like there really isn't an excess of capacity at that scale and level of performance. 

I can look out as far as 18 months or so.  Similar to how companies are now accustomed to producing many of their small molecule APIs in China or India, I think many companies will become more comfortable producing their large molecules in those countries as well. Many of the concerns are IP related and recently the governments have taken steps to address these concerns. Also, they haven't made a lot of these types of products so their quality systems are not as robust as many clients will require and there are not as many FDA-inspected facilities from which to choose. They're building a lot of very large facilities so if you combine that with a very well-trained and relatively inexpensive workforce, Asia could become an attractive option for biologics manufacturing very quickly. The flip side is that there are a lot of biotech drugs in the pipeline, and with biogenerics, instead of one facility producing the world's supply of a product there will be 2–8 major players who will each have their own facility. I don't see shortages in capacity because of all the new facilities coming on line in the US and Europe, but [I don't see overcapacity because] there are enough products to support that capacity. 

Features

A Q&A with Rick Hancock, president of Althea Technologies. This article contains bonus online material.

Trends in Biologics Outsourcing

As outsourcing and offshoring become part of mainstream operations, biotherapeutic developers are more effectively modeling and assessing the value delivered by their outsourcing partners. As such, they are expecting increasingly more value and efficiency from their partners' services. Companies are more aggressively incorporating outsourcing as a manufacturing strategy, rather than as an 

 method of adding flex capacity or to simply eliminate overhead costs associated with lower-value production activities. As a result, choosing the ideal CMO is taking on greater importance.  

With this in mind, BioPlan Associates researched key problems of the CMO–client relationship that may be inhibiting productivity. In this year's 8th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production, we identified 20 problem areas and discovered that nearly 95% of biodevelopers are concerned with their CMO's timeliness  (see also, the sidebar on "Survey methodology")(1).  

The BioPlan survey, which received responses from 352 global biomanufacturers, asked respondents to identify the critical issues they face when considering outsourcing biopharmaceutical manufacturing to a CMO (see Figure 1). Respondents said their number-one concern is that the CMO "stick to a schedule," with 93.2% of respondents indicating this attribute as "important" or "very important." The concern surrounding this attribute may reflect the difficulties in managing complex projects in an environment where timeliness is crucial. In biologics, manufacturing delays can affect an entire drug-development program.  

Figure 1: Critical attributes (ranked as "very important" and "important") of a CMO as identified by biopharmaceutical manufacturers when considering outsourcing (2011). (ALL FIGURES ARE COURTESY OF THE AUTHOR)			

When analyzing the "very important" responses to the survey, only the "comply with my company's quality standards" choice (59.1% of respondents) beat out scheduling problems. In other words, while scheduling issues are generally "important" to almost all biomanufacturers, quality standard compliance is "very important" to more than half. 

Continuing to sort by "very important," the next critical attribute, according to respondents, was "protect intellectual property," which approximately 57% chose. Biomanufacturers expect that their product-specific manufacturing operations will be kept proprietary, and this concern may be the result of the increased focus on outsourcing of operations to new destinations. Even so according to Dr. Wolfgang Noe, a senior consultant at BioProcess Technology Consultants, this expectation should not be a large concern because any CMO that violates IP practice is not likely to be in business long (1).  

Following IP concerns, survey respondents in the "very important" factor area said a CMO's ability to "effectively handle cross-contamination issues" and to "stick to a schedule" were next on their list of critical factors. This trend aligns with the 2010 survey results in which sponsors demand greater levels of professionalism, performance, and effectiveness in both managerial and technical areas from their outsourcing vendors (2). 

Contrary to anecdotal commentary from both CMOs and sponsors, the importance of a CMO's location showed up as being relatively unimportant (2.3% of 2011 respondents say the factor is "very important," as opposed to 10.4% who said so in 2006) (see Figure 2). This decrease may be a function of the industry's increasing globalization, particularly with respect to manufacturing clusters appearing in Asia. These clusters in aggregate, according to BioPlan's Top 1000 Global Biopharmaceutical Manufacturing Index, rival those of Europe in terms of number of facilities, if not in overall concentration of manufacturing (3). The lack of concern shown for location also reflects the offshoring of greater numbers of successful production projects and the degree of outsourcing-management expertise that sponsors are acquiring.  

Figure 2: Critical attributes (ranked as "very important") of a CMO as identified by biopharmaceutical manufacturers when considering outsourcing (2006â2011). 			

We contacted Dr. Sonia Kansal-Kalavar, associate director of Biotherapeutics and Vaccine Outsourcing at Pfizer, who noted that the single most important trend in outsourcing today is the ability for chief officers to cull "the most qualified vendor to fit the gaps in their drug development." Determining how a vendor makes the grade over time is an important trend to follow, and one which we explore in our 8th Annual Report.  

BioPlan found that during the past 5 years, the rankings of critical CMO attributes have shifted. For example, "establish a good working relationship," moved from the number-one spot in 2009, to the number-six spot this year, with 45.5% of respondents indicating this factor as a "very important" selection attribute. "Comply with my company's quality standards," perennially ranks as a leading concern, and takes the top "very important" spot this year, as it did in 2010.  

As the industry matures, it seems that customer service and "establishing good client-vendor relationships" are improving.  Maintaining  good client–vendor relationships continues to be important, but the persistent "working relationship" issues may be taking on less importance. This change may be due to the current economic situation, where effective working relationships are becoming more vital because companies are experiencing internal staffing cuts.  

STRATEGIES TO ADDRESS OUTSOURCING CONCERNS

Evaluating the changes in factors that sponsors use to select a CMO provides perspective on how effective CMOs have been at addressing these critical concerns. During the past four years, these shifts have been relatively significant. The largest increase has occurred in the importance of CMOs' handling of cross-contamination: this factor jumped significantly during the past five years, with an additional 32% of the survey respondents identifying this attribute as "very important," or "important." In contrast, capacity issues have shrunk substantially, by almost 1 in 5 respondents in just 4 years, reflecting the worldwide overcapacity situation.  

Partly as a result of the current economic climate, biopharmaceutical companies seem to have recognized the need to focus more heavily on productivity, processes, and quality. As such, companies are becoming increasingly risk- and cost-averse, especially for high-risk, high-cost outsourcing projects such as those involving biologics. These economic pressures have created stress and problems in the client–contractor relationship. The BioPlan study makes clear that despite ranking shifts during the past 3–4 years, the core critical attributes of an ideal CMO, such as quality standards and IP retention, remain consistent. For biodevelopers increasingly working within a globalized, competitive landscape, the benchmarking of these concerns is essential to getting the most out of the client–contractor relationship.  

Our survey also analyzed the client–CMO relationship from the perspective of CMOs. We identified 11 critical issues that CMOs claim to be the most common mistakes their clients make. The data offers insight into gaps that exist—and that can be improved—in the client–CMO relationship. We asked respondents to rate client-driven problems as "very common" or "common" (see Figure 3).  

Figure 3: Most common mistakes (ranked as "very common" or "somewhat common" problems) made by biopharmaceutical sponsors according to CMOs.			

Unsurprisingly, CMOs  identified the top problem as "clients don't build in sufficient time for the project (unrealistic timeframes)." This year, 92% of CMO respondents indicated this attribute as a problem. The factor grew significantly from last year when it also topped the list at 80%. Indeed, timelines are now a critical factor for 60% of CMOs who responded to the survey, as compared with less than half of 2010 respondents. 

Clearly, the issue of timeliness is a stress point on both sides of the client–contractor relationship. According to Noe, this problem is "often the case in client–CMO collaborations.... In one scenario, an inexperienced small company [had very] unrealistic ideas about how to achieve high-performance processes, then move into clinical manufacturing, release clinical grade material, move into IND-submission, and have patients recruited for early clinical studies."  

The most widespread critical problem, identified by 92% of CMOs as either "very common" (74%) or "somewhat common" (18%), was that "clients want to contain cost by doing development runs, but still expect successful full-scale manufacturing." Resolving this problem may require better management of expectations, improved project management, and more controlled exchanges of information.  

Interestingly, although further down the list of critical factors affecting the client–CMO relationship (at 84%), the concern among CMOs that "clients don't recognize the variability in process development" suggests that the majority of biomanufacturers, who are under increasing cost and time pressures, are pushing that stress onto their suppliers and contractors.  

Other pain points on the part of CMOs include: "clients don't appreciate the difference between small-scale and full-scale manufacturing" and "clients don't understand their [i.e., the CMO's] role in regulatory submissions." Both concerns involve the need for effective time- and project-management; in a high-stress environment, these factors may be in short supply.   

As predicted, virtually all of the problem areas evaluated in the client–CMO relationship from the CMO perspective went up in level of importance compared with the 2010 survey results.  

The largest jump was seen in how CMOs find they are expected to resolve the most difficult technical problems (90%). This increase over last year (from 68%) may represent a change in how bio/pharmaceutical clients are allocating their internal staff resources, largely expecting CMOs to work harder on challenging technical issues. Some representative comments offered by study respondents include: 					

"Client expectations are too high (e.g., want the best service for the least price and completed in an unrealistic timeframe)."

"Clients are often their own biggest problem [regarding delays] because they do not provide deliverables or timely document review."

"The biggest problem by far is that clients want to limit or eliminate development and engineering runs to save costs; this ends up hurting their production runs with unforeseen problems."

"Clients sometimes don't provide enough information in their raw materials, cell lines, etc." 

There is no question that outsourcing is becoming more important as more companies, including virtual companies, search for opportunities to get their products into clinical trials and to the market. Established companies will continue to search for partners to help move their outsourced products to free up capacity for new, upcoming products from their pipelines. An additional market will arise as recognized "innovator" companies enter new markets and need to create capacities for those activities. From this perspective, the future for the outsourcing business is bright.  

Yet, economic realities dictate that Big Bio/Pharma continues to move back toward "core competencies." They are cutting costs wherever possible and increasing productivity to do more with fewer available resources.  

Another trend observed in these  difficult economic times is the urge to cut corners, such as avoiding engineering runs and long-term investigations. Taken together, these strategies do not benefit client–CMO relationships. An understanding of each partners' situation and a greater willingness to communicate, manage staff and time, and to compromise are required to build effective and long-lasting relationships. 

 is president and managing partner at BioPlan Associates, and a member of BioPharm International's editorial advisory board, tel. 301.921.5979 

8th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production: Survey of Biotherapeutic Developers and Contract Manufacturing Organizations

7th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production: Survey of Biotherapeutic Developers and Contract Manufacturing Organizations

3. BioPlan Associates, BioPlan's Top 1000 Global Biopharmaceutical Facilities Index, 

The BioPlan Associates 8th annual survey identifies key outsourcing concerns of sponsor companies.

Survey Examines Trends in the Outsourcing Relationship

Recombinant bovine trypsin has been produced in transgenic maize as a pathogen-free alternative to the animal-derived reagent. Biological reagents intended for pharmaceutical purposes require comprehensive analysis including detailed information about sequence and posttranslational modifications. In this study, several techniques, including mass spectroscopy (MS) analysis of the intact protein, peptide mapping, and MS analysis of released glycans were applied and an in-depth characterization of maize derived trypsin was achieved, revealing an unusual nonconsensus 

The protease enzyme trypsin is produced in the pancreas and has many uses in the pharmaceutical sector. As well as being used to digest proteins for laboratory analysis, where it specifically cleaves at arginine and lysine residues, it also has applications in pharmaceutical production, such as producing insulin from pro-insulin and making vaccines. For any pharmaceutical process, it is essential that the enzyme is free from pathogens, which may be present in animal-derived products.  

The increasing desire of industry to avoid reagents from animal sources has inspired many attempts to express bovine trypsin in alternative platforms. For that reason, the expression of trypsin in maize for large-scale industrial and pharmaceutical applications was developed and optimized by Woodard et al. (1). The task was accomplished by expressing the enzyme in an inactive zymogen form that accumulates in the endosperm of the maize seeds. The zymogen gene was inserted into maize plants and cultivated in open fields. The purified enzyme is currently commercialized by Sigma-Aldrich under the trade name TrypZean. While more expensive than animal-derived trypsin, its cost is more than offset by the elimination of regulatory costs associated with viral-clearance studies that are needed when using the animal product.  

The biophysical and chemical properties of TrypZean and native bovine trypsin are compared in Table I. TrypZean has the same amino-acid sequence as the bovine-sourced product. Functionally, its activity appears to be identical to that of the native bovine protein. However, pancreatic trypsin is not glycosylated, whereas characterization of the maize-derived trypsin has shown that corn glycosylates the enzyme. It was important to pinpoint precisely where the protein was glycosylated, so that the exact structure could be known for pharmaceutical applications, and to fully understand the biological processes. To provide this full characterization, a novel way of preparing the samples was developed. 

Table I: Physicochemical properties of native bovine trypsin and TrypZean. 

Glycosylation is a common post-translational modification, with around half of all human proteins bearing some form of sugar functionality. There are two major forms of glycosylation, 

-glycosylation, the sugar can be attached to the hydroxyl group of a serine or threonine residue anywhere in the protein. For 

-glycosylation, a well-defined rule states where in a protein sequence 

-glycosylation can occur: it is always attached to the amide group of an asparagine residue that is followed first by any amino acid other than proline, and then either serine or threonine. This so-called consensus sequence does not occur in trypsin, which implied that TrypZean was 

The following are the three standard methods for the analysis of glycosylated proteins using mass spectrometry (MS): 

1. Liberation of the glycans from the protein by chemical or enzymatic means, followed by derivatization of the glycan before MS analysis 

2. MS analysis of the intact protein with no pretreatment (i.e., top-down strategy) 

3. Peptide mapping, with proteolytic digestion of the glycosylated protein followed by MS analysis of the resulting digest (i.e., bottom-up strategy). 

The choice of technique depends the amount of information required. Although the first, more conventional method of releasing the glycans for MS analysis is useful in assessing the overall glycan population, it requires more sample, time, and manipulations than the other two methods. MS analysis of the intact protein can give information about the protein's molecular weight and glycan masses, and in combination with tandem MS, can confirm the combination of glycan building blocks in the observed masses. The bottom-up strategy has advantages when there is more than one glycosylation site, or more sequence information is needed, including information about where the glycan is attached. These data can usually be generated in a single liquid chromatography–tandem mass spectrometry (LC–MS/MS) experiment, but the data analysis is more complex and time-consuming. 

All three strategies were applied to TrypZean. First, the accurate molecular weight was established using a high-resolution electrospray ionization - time-of-flight (ESI–TOF) mass spectrometer on the intact protein. The deconvoluted spectrum of recombinant bovine trypsin (see Figure 1a) shows a peak with a mass of 23,294 Da, which is consistent with the theoretical molecular weight of native bovine trypsin. In addition, seven glycoforms, labelled with the numbers 1 to 7, were observed (2). 

Figure 1: (a) Deconvoluted mass spectrometry (MS) spectrum of intact TrypZean. The delta masses above the nonglycosylated base peak correspond to glycan species; (b) matrix-assisted laser desorption/ionization mass spectrum of released permethylated glycans from TrypZean; (c) electrospray ionizationâMS spectrum of triply charged glycopeptide Ser70-Lys89.  Peaks 1â7 in all spectra correspond to the same glycan compositions.  

Previous attempts to release the glycans on TrypZean by 

-glycosidase A had not been successful (1). The investigators speculated that the protein was 

-glycosylated, because the normal procedures to release 

-linked glycans did not work. The standard 

-glycosylation release method of [beta]-elimination also failed to work. The glycans were ultimately released using a more aggressive [beta]-elimination procedure and subsequently permethylated to enhance detection during matrix-assisted laser desorption/ionization mass (MALDI MS) analysis. Analysis of released and permethylated glycans provided additional evidence of the presence of the seven glycoforms (see Figure 1b). The release conditions used were so harsh that it remained unclear whether the glycosylation was 

To identify the site of glycosylation, LC–MS/MS analysis of glycopeptides was carried out. First, a sodium dodecyl sulfate polyacrylamide gel (SDS-PAGE) separation was performed, as shown in Figure 2. The gel showed the presence of two distinct forms of the protein. The lower band is consistent with the migration of the 23 kDa native bovine trypsin, and the upper band corresponds to the glycosylated form. These two bands were excised, and peptide mapping carried out for each using LC–MS/MS. Data from each band correlated well with the sequence of native bovine trypsin, giving sequence coverages greater than 85%. One 20-residue tryptic peptide was absent from the peptide map of the upper, glycosylated, protein band, implying that the glycosylation was likely contained within the sequence of this tryptic peptide, 

Figure 2: (a) Sodium dodecyl sulfate polyacrylamide gel electrophoresis (SDSâPAGE) gel bands excised for electrospray ionization liquid chromatographyâtandem mass spectrometry analysis; (b) sequence coverage of glycosylated protein band (upper) and nonglycosylated band (lower). 

To confirm this hypothesis, the LC-MS/MS data from the tryptic digest of the glycosylated band was manually searched for the presence of glycopeptides. The glycan moieties of the seven observed glycopeptides all seem to be attached to the same tryptic peptide (see Figure 1c), and had similar masses to those found in the intact molecular weight and released glycan analysis, as shown in Table II. 

Table II: Summary of identified glycans found in TrypZean. 

The 20-amino acid tryptic peptide identified as the location of the glycosylation contained four asparagine residues, three serines, and one threonine, any of which might have been glycosylated. Despite the  best efforts using these standard characterization techniques, the authors were unable to determine the precise nature of the glycosylation. Standard tandem MS spectra of glycopeptides tend to yield fragments resulting from cleavage of the glycan rather than the peptide backbone, and this proved to be the case here (see Figure 3). New electron-driven dissociation technology (ETD), which fragments the peptide backbone without losing post-translational modifications such as glycosylation, was applied. The ETD data suggested that the glycosylation was at Asn-77, however, this could not be definitively confirmed because of the incomplete fragment ion series that was obtained (3). 

Figure 3: Product-ion (CID) spectrum of TrypZean glycopeptide Ser70âLys89 (peptide + Hex3HexNAc2Xyl1Fuc1). The triply charged ion of m/z 1154.5253 was the precursor ion. Blue square is N-acetylglucosamine or HexNAc; red triangle is fucose or Fuc; green circle is hexose or Hex; yellow star is xylose or Xyl. 

In collaboration with Michael Gross's group at Washington University in St. Louis, MO, the authors developed a novel method for preparing the sample that allowed the enzyme to be analyzed more precisely. The normal procedure for digesting a protein for characterization involves using porcine trypsin to generate peptides. Instead, a novel sample preparation was investigated that uses a different enzyme: pepsin. Unlike trypsin, which cuts at arginine and lysine residues only, pepsin has limited specificity and produces smaller fragments that are more amenable to ionization and MS analysis. 

The pepsin was used in immobilized form attached to agarose beads, and the tryptic glycopeptide was exposed to it for varying amounts of time. The theory behind this strategy was that by exposing the glycopeptide briefly, a peptide with only the first amino acid cleaved would be generated. Then, taking a sample a little later in the digestion, a peptide with the first two residues gone could be generated, a longer digestion still would yield a peptide with the third residue cleaved, and so on. By nibbling at the end of the peptide in this way and taking mass spectral data at each point, it would become clear when the amino acid bearing the sugar was removed. 

Figure 4: Pepsin cleavage chart of TrypZean glycopeptide Ser70âLys89; the distribution of modifications, including glycosylation and oxidation, on various peptic peptides is listed. 

By working down the amino acid sequence of the glycopeptide in this way, a series of 12 peptic fragments was generated (see Figure 4). MS3 analysis of the various peptide fragments showed definitively that the glycan was attached to Asn-77 (see Figure 5). This result occurred despite the fact that the sequence was asparagine–serine–asparagine, which, according to the accepted consensus sequence rules, should have precluded 

Figure 5: Product-ion (MS3) spectrum of TrypZean glycopeptide Ser70âAsn77 (peptide + Hex3HexNAc2Xyl1Fuc1).  

The small fragments created using this technique make it easy to identify with confidence the exact site of glycosylation in cases such as this one where several possibilities exist. In straightforward cases, standard porcine trypsin digestion remains adequate, but additional pepsin digestion should prove useful where multiple post-translational modifications or modification sites occur. The less specific nature of pepsin digestion leads to a ladder series of fragments that can help definitively identify the site of modification. 

The combination of techniques used in this investigation allowed the authors to show definitively the location of the glycosylation in TrypZean. As far as the authors are aware, this work is the first definitive experimental proof that a nonconsensus 

-glycosylation occurs in maize-derived bovine trypsin. Small amounts of glycosylation may occur at other sites, but it is evident that glycosylation at the Asn-77 residue is by far the most abundant. 

 is a senior R&D scientist in analytical R&D, both at SAFC.  *To whom correspondance should be addressed 

2. P.R. Jalili et al., Proceedings of the 56th ASMS Conference on Mass Spectrometry and Allied Topics (Denver, CO, 2008) pp. 1–5. 

4. E.E. Hood et al., NABC Report 17: Agricultural Biotechnology: Beyond Food and Energy to Health and the Environment (National Agricultural Biotechnology Council, Ithaca, NY, 2005) pp. 147–158.  

An in-depth characterization of maize-derived trypsin revealed an unusual nonconsensus N-linked glycosylation.

Characterization of TrypZean: a Plant-Based Alternative to Bovine-Derived Trypsin (Peer-Reviewed)

Market volatility in August 2011 battered life-science companies that went public this year, wiping away nearly $1.3 billion in market capitalization. Tumultuous trading activity hit the sector harder than the broader market, affecting initial public offerings (IPOs) in general, and biotech stocks as a whole. 

The market's gyrations, triggered by the United States' debt-ceiling fight, worries about the nation's creditworthiness, the debt crisis in Europe, and the stalled economic recovery, threw US life-science IPOs into a dramatic reversal. As a group, the return from the 13 US life-science IPOs completed in 2011 on US markets had moved into negative territory by the end of August, down an average 7.4% from their IPO price compared with the 17.2% gain they had realized by the end of July. The group in August fell 18.9%, with 3 advancers and 10 decliners compared with 9 advancers and 4 decliners at the end of July.  

In all, the life-science IPOs had actually outperformed broader market indices by the end of July, but at press time were significantly underperforming the Dow Jones Industrial Average, the Nasdaq Composite Index, the Burrill Biotech Select Index, and the AMEX Biotech Index. As a class, they have also failed to match the performance of US IPOs overall, which were down 3% at end of August, according to Renaissance Capital. 

Investors took flight from risk in the recent market turmoil, and that does not bode well for life-science companies hoping to complete public offerings. If the volatile market activity that characterized August persists, it could cause private life sciences companies to turn away from the IPO market and seek financing elsewhere. 

Life-science companies have demonstrated a willingness to seek funding outside the US, going where they felt they had the best chance of raising money in difficult markets. Two US companies did manage to go public in August, but on exchanges outside the US. EcoSynthetix, a renewable chemicals company, completed a $101.6 million offering on the Toronto Stock Exchange on August 4. GI Dynamics, a medical-device company commercializing nonsurgical treatments for diabetes and obesity, closed an $85 million offering on the Australian Securities Exchange on August 30, and began trading on September 7.  

Table I: Performance of 2011 US initial public offerings (IPOs) in August. 

That's a trend that's likely to continue. Genomatica, a renewable chemical company, added itself to the IPO queue, raising the total to 36 life-science companies in registration globally. 

IPOs were not alone in being punished within the life sciences sector. Dendreon had the misfortune of reporting disappointing sales for its groundbreaking cancer vaccine Provenge as markets tumbled in response to the Congressional fight over raising the debt ceiling. The company saw nearly two-thirds of its value wiped away as its shares closed at $11.69 on August 4, down from $35.84 the previous day. Dendreon's problem in ramping up sales spilled over to other companies as investors grew concerned about the pace at which other recently approved drugs will be able to realize their market potential. 

Overall, the life-science sector in August witnessed nearly 6 decliners for each advancer for stocks trading over $1 at the end of month. With values depressed throughout the sector, it could fuel increased mergers-and-acquisition activity among cash-rich pharmaceutical companies looking to expand their pipelines.  

At the same time, Big Pharma's problems have not gone away. The need to find new sources of revenue to replace income from sales of drugs going off patent continues to fuel dealmaking. With values depressed, acquirers will likely find more bargains today when they go shopping. We could see a pick-up in activity between now and year-end. 

The stock market's wild swings dampened activity in the capital markets for life-science companies across the board.  In August, the immunotherapeutics company Agenus was the only life-science company to complete a follow-on offering. It raised just $7 million. Only four public companies in the US drew private investments, raising a total of $83.6 million. 

 is chief executive officer at Burrill & Company, San Francisco, CA, 415.591.5400,  

Burrill on Biotech

Volatile Markets Take a Toll on Life-Sciences Initial Public Offerings

The data from the first three quarters of 2011 in the Nice Insight Pharmaceutical & Biotechnology Outsourcing survey showed that annual expenditure among survey respondents remained consistent (see Table I). However, there were shifts in where resources were allocated and important differences between traditional, small-molecule pharmaceutical companies, and biotechnology companies. Understanding these shifts can help CRO and CMO providers position themselves for capturing business.  

Table I: Expenditure on outsourcing by survey respondents, by quarter. 

The data indicate that traditional pharmaceutical companies—from Big Pharma to specialty and niche businesses—will be cutting back on outsourcing. Big Pharma respondents planned reductions in 15 of the 20 services reviewed in the survey. Fill–finish; stability, storage, and testing; and product characterization were three service areas where Big Pharma outsourcing remained consistent. High-potency compound projects experienced the steepest drop in Big Pharma spending. However, this work appears to be shifting to specialty pharmaceutical companies, which increased high-potency compound and cytotoxic outsourcing. On the other hand, biopharmaceutical companies indicated that they would increase their numbers of outsourced projects across 14 services. Five remained constant, and one (lyophilization) experienced a modest drop after peaking in the second quarter.  

Figure 1: Services with an increase in forecast market size for each quarter of 2011. (ALL FIGURES ARE COURTESY OF THE AUTHOR) 

According to survey respondents, anticipated spending increased in 11 service sectors included in the Nice Insight survey. Six of these services experienced an increase in the forecast market size during each quarter of 2011 (see Figures 1 and 2). These services were bioanalytical testing, clinical research, drug-delivery systems, high-potency compounds, logistics and distribution, and pharmaceutical analytical testing. Of these services, bioanalytical testing had the greatest increase in projected spending. The level rose approximately 50% from $136.5 million to $200 million.  

Figure 2: Services with an increase in forecast market size for each quarter of 2011. 

Anticipated spending on consulting services, regulatory support, and custom manufacturing increased overall in the second quarter and dropped off slightly in the third quarter (see Figure 3). Projected spending on consultants increased roughly 20% over the first three quarters of 2011, and regulatory support spending increased by 30%. For two service sectors, chemical synthesis and fill–finish, anticipated spending increased between the first and third quarters (see Figure 4). However, the spending in the second quarter dipped lower than its level in the first quarter.  

Figure 3: Services with an increase in forecast market size that peaked in Q2 2011. 

Five of the service sectors covered in the pharmaceutical and biotechnology outsourcing survey remained steady throughout all three quarters. Projected spending stayed within the $5-million range from the first to third quarters. Product characterization, lyophilization, and cytotoxic projects received similar allocations of funds through all three quarters (see Figure 5). Interestingly, sterile compounds and stability, storage, and testing experienced a drop in second-quarter projected spending, though projected budget allocation stayed consistent from the first quarter to the third (see Figure 6).  

Figure 4: Services with an increase in forecast market size that dipped in Q2 2011. 

Respondents predicted a drop in spending on four of the 20 services reviewed. The services with a decrease in projected market size were packaging, formulation and preformulation, process optimization, and toxicology testing (see Figure 7).  

Figure 5: Services with consistent forecast market size during each quarter of 2011. 

After identifying the shifts in budget allocation for outsourced services, the survey authors looked for patterns among the different types of pharmaceutical and biotechnology companies that outsource: (e.g., Big Pharma, specialty pharmaceutical companies, emerging companies, niche or startup companies, Big Biotech, and emerging biotech). This knowledge can help CROs and CMOs target the businesses that are most likely to be seeking their services.  

Figure 6: Services with consistent forecast market size despite a dip in projected spending during Q2. 

Big Pharma survey respondents indicated the most change in allocated spending on outsourcing during the course of 2011. Anticipated spending on outsourcing projects decreased among Big Pharma respondents in almost every service sector. Projected spending by this customer base decreased in each of the service sectors that otherwise experienced an increase in overall market size. The one exception was fill–finish projects, which received a steady allocation of funds from Big Pharma during all three quarters of 2011.  

Figure 7: Services with a decrease in forecast market size from Q1 to Q3 2011. 

Service sectors with a consistent forecast market size also faced a decrease in outsourcing from Big Pharma, with the exception of stability, storage and testing, and product characterization. Allocation for each of these services remained consistent. Not surprisingly, allotted funds from Big Pharma also decreased among the service sectors that had an overall drop in spending. The services with the largest drop in Big Pharma funding were high-potency compounds (–17% from the second to the third quarter) and process optimization (–12%). Budget cuts and the goal of maintaining profitability have influenced where Big Pharma allocates its funds. It will pay off to prepare for this constriction by expanding partnerships to include alternative customer bases. 

Specialty pharmaceutical companies exhibited similarities to Big Pharma, with respect to where this customer base expects to spend its outsourcing funds. As with Big Pharma, projected spending dropped for se-veral services that had an overall increase in forecast market size, such as pharmaceutical analysis, bioanalysis, and logistics and distribution. Unlike Big Pharma, however, specialty pharmaceutical companies showed an increase in planned spending for high-potency compounds, while drug delivery and clinical research received consistent fund allocation during the three quarters analyzed. In the service sectors where the forecast market size remained consistent, specialty pharmaceutical respondents indicated that spending on cytotoxic projects would rise. The increase in outsourcing spending for high-potency compounds and cytotoxic projects indicates specialty pharmaceutical companies' current focus on oncology. Decreases in other sectors reflect the same budget cuts currently affecting Big Pharma. 

Respondents who classified their company as an emerging, niche, or startup pharmaceutical business showed the greatest potential for increasing their spending on specific services. As the year progressed, respondents indicated an increased need to outsource logistics and distribution, regulatory support, consulting, manufacturing, process optimization, and packaging. Other services covered in the survey received consistent allocation of funds from this respondent group, with the one exception being a diminishing need to outsource cytotoxic projects. The businesses that make up this customer base depend heavily on investment dollars to keep their company operating, yet they are also the best target for small-molecule CROs and CMOs looking to maintain or replenish their project pipeline. 

While the three pharmaceutical customer bases' outsourcing funds have been constrained during the past year, it has been an exciting time for biotechnology companies, as pharmaceutical companies have turned to biopartnering to rejuvenate their prospective pipelines. Accordingly, respondents who work for biotech companies indicated an increase in outsourcing spending for pharmaceutical analytical testing, bioanalytical testing, clinical research, high-potency compounds, chemical synthesis, custom manufacturing, regulatory support, cytotoxic projects, stability, storage, testing, sterile compound research and development, product characterization, process optimization and formulation, and preformulation. Spending for drug-delivery systems, logistics and distribution, consulting, fill–finish, toxicology, and packaging remained consistent during the first three quarters of 2011. The only service sector for which the biotech customer base's projected spending decreased was lyophilization, which dropped modestly from the first quarter to the third after peaking in the second. 

Emerging biotech showed much of the same outsourcing behavior as Big Biotech, with an increase in outsourcing bioanalytical testing, custom manufacturing, chemical synthesis, sterile compounds, product characterization, lyophilization, and cytotoxic projects. This customer base represents a small segment of the market, yet its consistent and increasing need for outsourcing partners makes it a good customer base to target for new projects. This conclusion is particularly true given that survey respondents from emerging biotech businesses indicated that their companies would outsource an average of five services in 2011 (see Figure 8).  

Figure 8: The average number of services outsourced in 2011 by company type. 

is a research manager at Nice Insight, 6 W. 20th St., Second floor, New York, NY 10011, tel. 212.366.4455, fax 212.366.4419, 

A survey provides insight into drug companies' plans for spending on outsourced services. This article contains bonus online material.

Contract Services Spending: Who's Spending What, and Where?

It's flu season again, which always focuses public attention on the reliability and availability of the nation's vaccine supply. The Centers for Disease Control and Prevention (CDC) expect to have more vaccine available this season—166 million dosages versus 157 million in the 2010–2011 season—and have launched a major campaign to vaccinate more healthcare workers and pregnant women. Last year, about 42% of Americans were immunized, more than usual, but still far below the 80% goal set by the federal government. While the vaccine community won plaudits for responding quickly to the 2009–2010 influenza pandemic, the World Health Organization (WHO) came under fire for slow distribution of vaccines in poor countries, as well as charges that it hyped the danger of the epidemic to boost drug company sales. A blue-ribbon panel rejected those charges, but the debate reveals the highly-charged political environment surrounding immunization programs.  

Vaccines have even made it into the Republican presidential race. Texas Governor Rick Perry publicly disavowed his earlier backing of the human papillomavirus (HPV) vaccine for all young girls. Perry signed an executive order in 2007 mandating that all sixth-grade girls in Texas receive Merck's Gardasil vaccine to prevent cervical cancer. Now, candidate Perry says he made a mistake—an about-face that reflects concerns raised by social conservatives about vaccine mandates overall, and specifically about endorsing a preventive for a sexually-transmitted disease. 

Other important developments this year brought good news to vaccine producers and advocates. The US Supreme Court ruled in February that manufacturers cannot be sued in state courts for injuries allegedly caused by their products. The case, 

(Feb. 22, 2011), should discourage plaintiffs from trying to circumvent the protections created by the 1986 National Childhood Vaccine Injury Act, which provides compensation from the industry-funded Vaccine Injury Compensation Program (VCIP) to patients claiming injury from vaccines. This federal pre-emption of state-based injury suits is crucial for protecting manufacturers from costly tort litigation that would drive them from the vaccine business. 

The high court's decision came on the heels of reports fully discrediting earlier studies linking vaccines and autism, a claim that has plagued vaccine makers for years. The 

published a series of articles by journalist Brian Deer documenting that data published in a 1998 paper by British physician Andrew Wakefield and colleagues was not just bad science, but deliberate fraud (1). 

 which had published Wakefield's  original paper, retracted it in 2010, but too late to repair the extensive damage to public health from antivaccine forces, which has fostered a re-emergence of measles in the United Kingdom and in parts of the United States (2, 3).   

Perennial concerns about vaccine safety prompted an in-depth analysis by the Institute of Medicine (IOM), which documents in great detail that vaccines cause few adverse effects and have no links to serious health conditions. The expert committee's August 2011 report on "Adverse Effects of Vaccines" finds little scientific evidence that of health problems caused by eight widely used vaccines, and further discredits links between the measles-mumps-rubella (MMR) vaccine and autism (4). The report confirms the huge health benefits of vaccines and should encourage more parents to vaccinate their children; it also will help the US Department of Health and Human Services (HHS) decide vaccine compensation cases under the VCIP program.  

Despite lingering safety issues, vaccine research and new product development is expanding, generating optimism for new discoveries that will guard against AIDS, cancer, and multiple infectious diseases. Led by the Bill & Melinda Gates Foundation, which has committed more than $10 billion to support vaccine innovation, donor nations are boosting support for global vaccine R&D. Researchers anticipate that a dozen new vaccines may be rolled out in the next decade against diseases such as typhoid, malaria, and dengue fever. Gates has signed up the world-famous Barcelona soccer team to promote polio eradication, despite fears of some health authorities that complete elimination of the disease is too difficult and costly.  

discussed strategies for achieving Gates' "Decade of Vaccines" in a special June 2011 issue that explores new vaccines in the pipeline along with new models for financing and paying for vaccine development and delivery. The promise is that investing more in immunization science and expanding vaccine distribution globally will reduce healthcare costs, promote economic activity, and save the lives of more than 6 million children through 2020.  

Pharmaceutical manufacturers now regard vaccines as a potential source of steady revenue, if not blockbuster profits. The world market for preventive vaccines exceeded $20 billion in 2009 and grew to nearly $30 billion in 2010. Projections call for 10% annual growth during the next five years due to new product introductions and broader use. Expanded global production of seasonal flu vaccine is setting the pace: by 2015, WHO predicts that some 37 vaccine makers will be able to produce 1.7 billion doses of influenza vaccine, enough to handle any pandemic. Merck, GlaxoSmithKline (GSK), Sanofi Pasteur, Pfizer, and Novartis dominate the market and continue to invest in the field.   

A main target of vaccine research is the development of new treatments for third-world diseases. A new meningitis A vaccine has been distributed to more than 19 million people in West Africa, providing a model for collaboration to produce and distribute a vaccine that costs less than 50 cents. Sanofi Pasteur is testing the first vaccine for dengue fever, which sickens some 2 million children a year, primarily in Latin America and Asia.  Researchers have begun early clinical trials for a new vaccine for tuberculosis, with initial results expected next year. Colorado-based Inviragen is collaborating with the University of Texas and federal agencies to develop a novel recombinant chikungunya virus vaccine. Vaccines are under development for schistosomiasis, hookworm, rabies, and  Ebola virus. Earlier this year, Merck and Britain's Wellcome Trust announced a joint project to design an oral rotavirus vaccine that will be cheaper and easier to use than current shots. Several groups are working on new malaria vaccine projects as well.  

Despite numerous failures in developing an AIDS vaccine, scientists remain optimistic that success is possible. Researchers point to advances in understanding the complexities of an AIDS vaccine and are developing new vectors, delivery technologies, adjuvants, and immune assays to address these challenges. For example, the International AIDS Vaccine Initiative (IAVI), Scripps Research Institute, and several biotech companies recently reported the isolation of novel antibodies capable of neutralizing a broad spectrum of variants of HIV. Researchers were encouraged that this could provide new targets for the design of vaccine candidates that can elicit similar antibodies to protect against the virus.  

New cancer vaccines are on everyone's wish list, encouraged by success in developing HPV vaccines for cervical cancer and the prostate cancer treatment, Dendreon's Provenge. A recent announcement from the Mayo Clinic in Rochester, Minnesota, cites plans for Phase I clinical trials for new vaccines to prevent the recurrence of ovarian and breast cancer.  

Bioterrorism threats also are spurring vaccine development. Last year, the HHS Biomedical Advanced Research and Development Authority (BARDA) awarded approximately $50 million to organizations seeking to reduce the time and cost of testing new medical countermeasures. Projects aim to increase the shelf life of influenza vaccine stockpiles for future use in a pandemic and to develop adjuvant formulations to enhance influenza vaccine immunogenicity and cross-protection to new viral strains. BARDA is providing Emergent BioSolutions with $100 million over several years to develop a state-of-the-art production facility for  its anthrax vaccine. More than $1 billion in contracts during the past six years have gone to manufacturers developing cell-based technology for seasonal influenza production, plus recombinant technology and adjuvented influenza vaccines. The expectation is that these innovations will foster development of other commercial products and medical countermeasures, such as next-generation smallpox vaccine.  

Vaccine development generates tension among companies regarding how to make  R&D profitable enough to encourage private-sector investment while also being able to offer sufficiently low prices to make products available to poor nations. While public health officials admit that the most cost-effective vaccine is one that's free, the stated goal is to provide emerging markets with vaccines that cost less than $5 per dose. UNICEF is supporting this effort by publishing the prices it pays individual manufacturers for immunizations as a way to encourage competition in vaccine pricing for developing nations. In response, manufacturers are cutting prices significantly on vaccines for developing nations. At a June 2011 meeting in London to secure donor funding for the Global Alliance for Vaccines and Immunization (GAVI), India-based manufacturers promised a record low $1.75 per dose price for pentavalent vaccines that protect against five diseases: diphtheria, tetanus, pertussis, hepatitis B, and Haemophilus influenzae type b (HIB). GSK and Merck reduced rates on rotavirus and HPV vaccines, and other leading manufacturers announced similar moves.  

Even in the US, high prices appear to limit vaccine utilization. Sales have been sluggish for Dendreon's Provenge despite a positive national coverage decision from Medicare that has  prompted insurer coverage. Full treatment still costs more than $100,000 due to a complex regimen that involves manipulation of a patient's own immune cells. Physicians appear reluctant to prescribe Provenge because of tight insurer requirements, high copays, and limited evidence of effectiveness.  

Price may be a factor in slow vaccination rates for the HPV vaccine as well. A 2010 CDC analysis found that more teens received vaccines to protect against meningitis (63%) and tetanus-diphtheria-pertussis (69%), but only 49% of young girls received one dose of the HPV vaccine, and only 32% received the full three-dose regimen. "Our progress is stagnating," complained Anne Schuchat, director of CDC's National Center for Immunization and Respiratory Diseases. "Now that we have the tools to prevent most cervical cancers, it is critical that we use them." The CDC report noted lower HPV immunization rates among poor and minority teens, a sign that the $400-price tag for the full course of treatment probably is a problem. Moreover, some parents have raised concerns about side effects linked to Merck's Gardasil, and that some teenagers may regard vaccination as a green light for premarital sex.   

Merck's efforts to expand Gardasil's label to include male protection from anal cancer also has run into opposition due to cost and effectiveness issues. An analysis for CDC's Advisory Committee for Immunization Practices (ACIP) indicates a much higher cost for vaccinating boys and men in order to prevent cancer and death, due to much lower incidence of the male disease.  

Although cost issues may limit utilization of some vaccines, adult immunization has gained support from health reform legislation. President Obama's Affordable Care Act requires insurers to cover all recommended vaccines for adults, with no copays or deductibles, as part of efforts to expand preventive care. The policy applies now to new group and individual health plans, but is expected to affect all coverage over time.  

While policymakers wrestle with cost and access issues, manufacturers still face difficulties ensuring the quality of vaccine production. One reason for low utilization of Merck's Zostavax vaccine for shingles has been supply shortages due to manufacturing problems at Merck's West Point, Pennsylvania, vaccines plant; reports of  charred particles in vials have further complicated remedial efforts. Merck's adult vaccines for hepatitis A and hepatitis B also are in short supply, and the company has stopped producing its ProQuad varicella-MMR vaccine.  

Indian manufacturers seeking to ramp up production of low-cost vaccines also have run into production problems. WHO recently removed combination vaccines produced by Panacea Biotech from its prequalification list due to inspections that found quality management deficiencies at the firm's plant near Punjab. 

Meanwhile, FDA has concerns about manufacturing deficiencies and particulate contamination at several vaccine companies. FDA sent a Warning Letter to Australia-based influenza vaccine maker CSL in June after an March 2011 inspection indicated that the company had not addressed manufacturing problems identified at a site visit in April 2010. The initial FDA investigation stemmed from adverse-event reports citing reports of fever and convulsions in children taking its influenza vaccine in during the 2009–2010 pandemic, but uncovered a number of deficiencies in recordkeeping and quality control.   

The challenges in ensuring vaccine safety and quality were illustrated in 2010 when FDA suspended the marketing of GSK's rotavirus vaccine, Rotarix, for several months to assess the effect of adventitious porcine virus found in this product. After evaluating the issue, FDA recommended that physicians continue to use Rotarix, as well as Merck's Rota Teq vaccine, which has a similar problem. The agency cited strong safety records for the products and no evidence that the viruses pose a safety risk to humans. The case points to difficulties in adopting advanced analytic technologies that can uncover previously undetectable contaminants. The challenge for regulators is to weigh the risk of halting vaccination for a dangerous health condition,  against uncertain effects of apparently benign extraneous viral material. 

Washington editor, Chevy Chase, MD, 301.656.4634, 

4.  IOM,Adverse Effects of Vaccines (Washington, DC, 2011), 

Regulatory Beat

Manufacturers fund research and reduce prices to tackle diseases around the world.

Global Health Challenges Spur Vaccine Development

The past six months have seen a spate of large acquisitions in the pharmaceutical services industry intended to create giant-scale service providers with global reach. Noteworthy deals are INC Research's acquisition of Kendle International, which boosted INC to $700 million in revenues; inVentiv's purchase of i3 and PharmaNet Development, which created a $900-million CRO; and Catalent Pharma Solutions' $400-million acquisition of Aptuit's clinical supplies business, which pushed Catalent into the number two slot in clinical packaging. 

The rationale cited for these megadeals is that global bio/pharmaceutical companies favor large CROs with broad capabilities in their selection of preferred service providers. These "strategic partnership" deals are the cornerstone of global bio/pharmaceutical companies' current sourcing strategies, which seek to leverage their massive buying power while reducing sourcing overhead expense and improving coordination with the CRO.   

The list of publicly announced preferred provider deals (see Table I) shows that global bio/pharmaceutical companies have clearly embraced the large multiservice provider, at least for now. However, there is a substantial probability that sourcing models will change significantly in coming years and threaten the business model upon which the recent megadeals are based. 

Table I: Publicly announced preferred-provider deals. 

FROM FUNCTIONAL SERVICE PROVIDER TO INTEGRATED SERVICE PROVIDER

We have already seen a major shift in sourcing strategies at one of the largest bio/pharmaceutical companies. Pfizer was an early proponent of the functional service provider (FSP) sourcing model but has now shifted to the integrated service provider (ISP) model. In the FSP model, Pfizer sought to engage the best-in-class service provider in each clinical research activity (e.g., site monitoring, data management, or central laboratory services) and to have those best-in-class providers support all of their trials. However, Pfizer executives found the FSP model too costly because too much internal overhead was required to coordinate the activities of the various FSPs.  

In its most recently announced strategic CRO deals with Icon and Parexel, Pfizer has moved to the ISP model in hopes of eliminating the high internal overhead costs. Now, Icon and Parexel will provide a broad range of services to each of the clinical trials they will manage on behalf of Pfizer. 

It should be remembered that both the global bio/pharmaceutical companies and their CRO partners are still very new to the strategic sourcing process. They have barely begun to progress down the learning curve of how to establish and manage these relationships; the bio/pharmaceutical industry is thought to be a decade or more behind other industries in its sourcing practices. As both sides gain experience and as some of these relationships blow up, as they inevitably will, the sourcing model will evolve in directions that have not yet been anticipated. 

At many of the global bio/pharmaceutical companies, the senior executives that negotiated these strategic sourcing deals had little previous direct experience in managing CRO relationships and often did not involve lower-level colleagues who did. It is likely that they underestimated the risks and challenges of those sourcing deals and the abilities of their partners to handle them.  

The consequences of adopting a radical new sourcing strategy with untested partners could be dire, if not catastrophic. Boeing demonstrated that with its Dreamliner supply-chain fiasco. The company outsourced major components of its new 787 Dreamliner passenger jet (including large sections such as the wings and fuselage) to partners around the globe. The company found out too late that many of its partners were not up to the task, which resulted in delaying delivery of the new plane by at least two years. In one case, Boeing had to acquire one of the partners providing critical components in order to regain control of the supply chain. 

Boeing ran into these major problems despite decades of experience in outsourcing major components for its civilian and military aircraft programs. It is not a big leap to imagine newcomers to strategic sourcing, which the global bio/pharmaceutical companies are, having significant problems themselves as they learn to master the new model. In circumstances similar to Boeing's, several bio/pharmaceutical companies have been forced to buy back manufacturing facilities that they had sold to startup contract manufacturers after those CMOs ran into financial problems and put the bio/pharma companies' product supply at risk. 

The point here is not to question the major acquisitions cited above or to question the business strategies of CROs and CMOs aimed at expanding their service offerings. They are a response to what the global bio/pharmaceutical companies are actually doing today and to ignore that would risk being shut out from the biggest opportunities. 

The further risk, however, is that in the two or more years it will take to fully integrate the parent and acquired companies into a genuinely single entity, the sourcing paradigm may have moved to a different place. The lessons of the first strategic partnering efforts will have been learned and applied to different sourcing arrangements.  

CROs that have made big acquisitions could be outmaneuvered by evolving sourcing models.

BioPharm International-10-01-2011