Panelists (from left to right) Ruby Casareno, Yuyi Shen, Xiao-Ping Dai, Tad Thomas, and Anne Montgomery

On 21 March 2018, a panel discussion during BPI West in San Francisco addressed ways to improve working relationships between sponsors and contract manufacturing organizations (CMOs). Our goal as organizers was to avoid retreading overfamiliar ground: Many outsourcing articles stress the importance of good communication without delving into actual strategies for improvement. So I asked the panelists to focus on the word better and what that actually means in this context.

The most productive way to approach such a discussion was to identify from examples where and how team expectations can become misaligned from the start of a project. That helped the panel focus on specific strategies they have found for creating better working relationships.

Because the panel did not include representatives from CMOs or contract development and manufacturing organizations (CDMOs), we began by encouraging those persons in the audience to share their perspectives with us at various points in our conversation. When asked, almost all audience members indicated that they work or have worked with CMOs.

The Panelists
The panelists contributed insights and examples from many years of industry experience in managing outsourced relationships.

Tad Thomas is the global lead for process transfer and new product launch at Bayer HealthCare LLC. For 20 years, he’s focused about half of his time on managing contract-manufacturing relationships. He noted that many best practices have been published over the past few decades on how to manage such projects, but that very little attention has been given to managing the relationships themselves.

Xiao-Ping Dai is senior director for biologics development and manufacturing at Celgene Corporation. Her interest in outsourcing stems from nearly two decades in the industry, holding positions that range from benchtop lead scientist in biotechnology companies to management of a company’s program for early and latestage development in midsize and large biopharmaceutical companies. Her roles in CMO relationships have included multiple technology transfer projects, sometimes with multiple CMOs at the same time working on different drug substances and drug products. She ended her introductory comments by noting that “Relationship is important. Partnership is important. That’s essential for your success. That’s why I’m here.”

Yuyi Shen is a principal scientist at Grifols SA. She focuses on recombinant process development and scale-up and internal and external technology transfer. She emphasized the importance of establishing well-aligned expectations early on, getting things right at the beginning so as to avoid learning lessons the hard way otherwise — and to improve efficiency in process transfers.

Ruby Casareno leads the chemistry, manufacturing, and controls (CMC) department at Allakos Inc., a fiveyear-old company that employs 45 people in San Carlos, CA. Her company focuses on developing therapeutic antibodies to target allergic, inflammatory, and proliferative diseases. She started her career as a purification development scientist at Xoma Corporation, and from 2005 on she has represented several companies in working with both CMOs and CDMOs, with a total of 14 projects to date for drug substance and drug product. Her positions have included serving as a subject-matter expert (SME) and leading CMC teams, and she now serves as project lead.

Identifying Misalignments Between Sponsors and CMOs
Montgomery: What are the fundamental problems in achieving an appropriate alignment on both sides of an outsourcing relationship? Can they be identified, and if so, what might they look like?”

Thomas: We are focusing on building better working relationships because the fundamental goal is to build a high-performing joint project team. Fundamental structural misalignments can occur at the outset of these relationships. If we recognize them early on, then we can work to improve our relationships and build the high-performing team that we need. But without such recognition, teams on both sides of a relationship can experience frustration, confrontation, and assumptions of ill-will.

Every client–CMO relationship is unique, but certain generalizations can be made. For example, a small biopharmaceutical company typically is focused on just one or two products. By contrast, a CMO is a multiproduct, multicustomer company that has to manage its resources across numerous projects.

At most small biotechnology companies, employees take a lot of pride in their ability to move through projects quickly. They are very flexible and quick at decision-making. But CMOs tend to be far less flexible. They are more focused on resource constraints and good manufacturing practices (GMPs). Typically, team members at a small client company are research or process-development experts, many of them with little to no direct experience working in GMP compliance. Given that a typical CMO by necessity focuses more on GMPs, these two groups begin with very different perspectives on how to approach problems.

Dai: I see possible misalignments in other areas as well. For example, if your internal team has its own misalignments, then you need to be able to communicate (and mitigate) those. If a team is not well managed, then different people working in it may communicate with CMO counterparts separately and get different information. This can send confusing messages to the CMO, which is neither good for a project nor for the overall relationship between the companies involved.

As another example, if the technical team members are confident in pushing a project forward, but the quality assurance and control (QA/ QC) group at a CMO needs to take more time, that can be a source of miscommunication.

In the interface between a sponsor and CMO, communications can take place on a project level, business level, and technical level. For example, if the expression titer is not where it should be, that could be either a technical issue or an operational issue. So it is important to understand the problem and put a right strategy in place.

Casareno: I joined a team that was already well established. There had been a high turnover in personnel internally, but not at the CMO. In such a case, misalignment within the sponsor team itself can require many more discussions between the CMO and a sponsor. So I also emphasize the importance of internal alignment at a sponsor company because it is critical that a client presents a united front in discussions with a CMO. Misunderstandings within a team also are not productive.

Sharing Risk Benefits Both Sides
Montgomery: How can differences in expectations between sponsor and CMO affect assessment and management of risk levels throughout a project?

Shen: Misalignments usually occur in matters of quality, timeline, deliverables (such as by batch or by grams), or regulatory compliance. Acceptance of risk will shift between sponsor and CMO at different project stages. Consider a small biotechnology company working on an early stage development project with the help of a CDMO. During gap assessment, usually the sponsor company is less willing to take risks. By the time for commercial launch, the CDMO has all the raw materials sorted out, a process settled, and all the equipment ready. At that time, if the sponsor company says, “We prefer to make process changes because we’re concerned with some issues from a compliance or regulatory perspective,” then often the CDMO will be party that resists the risk to make those changes.

Risk is always there. If you are willing to make process changes, then put both parties together for risk-sharing rather than relying on one side to take full ownership of the risk. We also need to share the responsibility for risk-assessment activities. When a misalignment happens, it is important to focus on what is needed and project what the outcome would be and provide some rationale to reach agreement on expectations — the earlier the better — and document that. You don’t want surprises in the end and conflicts about who will be responsible for unexpected outcomes. That doesn’t do the relationship any good. So the right attitude toward risk-taking and risk-sharing is very important and critical to establish early on. Clearly understanding the expectations helps build a mutually beneficial relationship.

Thomas: Clients tend to be very focused on minimizing risk, primarily regulatory risk — anything that could come up as a problem at the time of filing for market authorization. They’ll focus all their attention on trying to identify and manage every risk possible, whether to regulatory or timeline or otherwise. On the other hand, a CMO is much more focused on efficient management of its resources and adhering to project plans and timelines. Those differences will influence significantly how problems are approached.

For example, a client company might want its process implemented as developed because every change made to that process presents a risk either to the timeline or to the sponsor’s ability to defend product comparability to regulatory reviewers. But that process must fit into a multiproduct facility. The CMO will want it to conform to standardized processes that it uses for all its customers. That reduces cost, minimizes training, and lowers the risk of potential mistakes made during manufacturing activities. You can see that these differences would lead to different attitudes toward making process changes.

What kinds of problem will occur, and how will the two companies’ approaches to a resolution differ? When a problem arises, the first thing a sponsor will ask is how to solve that problem: How do we fix it, and what resources will be needed to do that while keeping to the project timeline? The client wants to move immediately to a solution or resolution.

Although the CMO ultimately wants to get to that same place — both sides want the problem to be solved — it will move in a different direction. The CMO’s question becomes, “Is it necessary to fix this problem? Do we have the resources needed, or are they already committed elsewhere?”

One example I’ve seen is that when a process is transferred to a CMO, laboratory-scale experiments are performed initially to confirm the success of that transfer. The results may be that all product-quality attributes (PQAs) are met in that small-scale model, but the expression titer has taken a significant hit. What would be the approach to that problem? The client’s immediate concern is on cost of goods (CoG) and the desire to solve the problem. In addition, the sponsor worries whether this will affect its ability to defend comparability of materials manufactured by the CMO.

However, the CMO will point out the lack of impact on PQAs, saying that CoG should be a secondary issue. For the CMO, it’s even an advantage for CoG to go up — thus requiring more manufacturing runs. The CMO will be more aware of its already committed resources and how changes would affect its own business. In this situation, no one can move toward solving the problem because the two parties have different ultimate goals in what they want to achieve and thus view the impact of the problem differently.

Audience Questions and Answers
Audience Member: The term misalignment to me covers three things: deliverables, timelines, and costs. This is where you can have an issue with a CMO. A big misalignment can come from many small misalignments. Do you ever have the experience when a CMO has signed a contract and promised delivery on critical items such as clinical materials and common technical document (CTD) sections, then ultimately delayed on those? That delay could affect the people in charge of CMC at a small biotech company significantly because they’ve missed their goals; the company has missed its goal. Have you seen this phenomenon, and how would you resolve such an issue?

Dai: What you describe is possible, especially for a very small team. Resources are limited, so you contract with an experienced CMO, especially if your product is complex. Imagine a case in which most every timeline is laid out, but then the technical part does not pass. There are two aspects to the solution: One is to share the responsibility and the business aspiration, and the other is to share the technical challenges. If you can, send your SMEs over to the CMO and work together to resolve the problem as soon as possible. We have a success story: We resolved such an issue and kept our timeline on schedule and maintained our IND timeline. Again, the relationship and partnership are important. But you can’t forget about technical aspects.

Casareno: In one case, a CMO did not deliver on process validation studies, which resulted in a complete response letter (CRL). In this particular instance, trust was completely lost between the CMO and client. For the repeat studies, the client had to design those and micromanage their execution — escorting the samples collected on the manufacturing floor to QC and overseeing real-time filling out of sample sheets. In the end, the desired outcome was achieved, but it put a lot of strain on the working relationship.

Thomas: I’m basically of the opinion that you’ve created 95% of the problems that you’ll face the day you sign the contract, depending on how well and thoroughly you’ve thought out and captured the needs of your project. It’s very important to do so right up front, more so with these contract manufacturing relationships than any other type of relationship that I’ve been in. The leverage shifts dramatically toward the CMO the moment that you sign a contract. It becomes the only leverage the client has. So you’ve created your own problems if you’ve haven’t put things into the contract that will maintain some leverage and ensure it. For instance, you should spell out he focus on timelines being met.

Audience Member: Whenever we talk about working with CMO/CROs, I think the partnership aspect is critical. It’s even more than that: If a CMO or CRO fails, then we will fail as a client. We won’t be able to meet our timelines. I think that’s one of the most important things for them to know.

But the days are over when “Big Pharma” could dictate what needs to be done. Now it’s important to be in that relationship and work closely together, get things done, and maintain a good relationship. I have seen a lot of misalignment because it was not made clear to internal teams what their relationship should be with their CMO and how they should work together. So it’s very important for those working at the highest level to make that clear to their teams.

As you said, the contract is the most important place to define how quality systems will look, how we will resolve issues, and so on. It’s important to discuss it right there and right then, and everyone should understand that. These are critical things we should do before we get into a working relationship.

Aligning Expectations Through Teamwork
Montgomery: We are already talking about some strategies. How can we define them for aligning expectations, maintaining good relationships over time? What role do team leaders play in ensuring effective communication?

Casareno: From my experience, whenever we set up a team that would transfer a process to a CMO, it’s critical to include knowledgeable team members. Then you can have SMEs in each area who also are people with very good interpersonal skills. In the end, it’s really a people relationship, a team, a partnership.

We start with a kick-off meeting, preferably face-to-face — even if it’s with an international CMO — so that we actually engage with each other. We have a team dinner. That is really critical in my experience. We use weekly meetings to follow up on action items and update each subteam on the overall progress. We monitor action items in a project-information file.

It’s also good to define up front the roles and responsibilities of everyone involved. And we also should have an escalation route. If there is misalignment at a certain point, we cannot just keep discussing that issue for weeks and weeks. With an escalation route, a joint steering committee (JSC) can resolve issues when they affect business, timelines, and costs.

Shen: I agree. If we put a highly functional team together, that will get things moving pretty fast. Sometimes you don’t necessarily have all the best resources on the team. Sometimes there is a misalignment within the team, as well. Successfully navigating the team toward one common goal is crucial to overall success. For a team leader, it is often helpful to have an effective communication strategy and plan things in detail with all stakeholders at a routine meeting, updating them in a common shared
folder. Often things change quickly every day, but not all stakeholders will get notified immediately. A common shared folder will streamline the communication channels and give everyone access to, for example, Gantt charts, reports, and other documents that people can easily access.

So it is important to plan in detail, and expect the unexpected. Look out for one another, and provide flexibility when changes are proposed. Have an open, honest, and timely communication route for when things go wrong. Follow through and be proactive to provide solutions for removing barriers during the meetings.

Also, try to keep the work complexity at an optimal minimum. You can have 10 people working on the same project, but 10 people with different areas of expertise may have different concerns based on their different perspectives. It is important to dedicate ownership to the SMEs so that one person speaks on regulatory issues, a technical representative addresses technical questions, and so on. When you know the product and the group member who handles which part of the project, that delegation simplifies the workflow instead of having 10 different people asking similar questions from different points of view. This way, decisions and mitigation proposals can be made quickly by the right people. That simplifies and streamlines a project and helps keep workflows efficient. It is important to base this strategy on mutual trust to create win‒win situations.

Dai: It’s important to have a projectleader interface on both sides of the outsourcing relationship. It’s important to understand the dynamics within your own team and also the joint team. For example, a weekly conversation between project managers is important to resolve issues and keep mutual goals in mind. Again, this is a partnership, not simply money paid for a service. When the CMO understands how important your program is, the people involved can be motivated. And from the sponsor side, don’t hesitate to point out when the CMO does a good job. Saying “We appreciate your efforts” goes a long way.

Strategies for Success
Montgomery: Do you have some examples of teams that worked and others that didn’t?

Casareno: I worked for a company where we had persons-in-plant (PIPs) as full-time employees at the CMO site. Having them onsite is beneficial in terms of early notification of issues so a client can influence decisions that a CMO makes. In this particular instance, the CMO had a habit of making decisions without involving the client’s quality and manufacturing teams. Having the PIPs as eyes and ears of the client company, and enabling them to serve as such, facilitated timely, open communication.

Another experience that I can share is from outsourcing manufacturing to a smaller CMO that did not have good quality systems. It had high turnover of manufacturing personnel and poor deviation investigation and report writing. That resulted in contentious discussions most of the time. What this CMO cared about the most was the financial outcome — often manipulating the situation just so financial gain was achieved, but compromising integrity. It was a most frustrating and unfortunate situation to be in. The working relationship was beyond repair. To move things forward, the client ended up shelling out more money because that was the only way to engage the CMO. It was very sad, but true. Thomas: The basic premise here is that differences in perceptions and priorities can make relationships difficult. If a team is not working well together, that will make solving every problem require protracted negotiation. That can have a serious impact on a project and its timelines. So the question is how to get around that. I’d like to offer four points of strategy.

Thomas: The basic premise here is that differences in perceptions and priorities can make relationships difficult. If a team is not working well together, that will make solving every problem require protracted negotiation. That can have a serious impact on a project and its timelines. So the question is how to get around that. I’d like to offer four points of strategy.

First, thorough planning up front in contract negotiations is very important. To do this well, it might take a month or two longer to finalize a contract than you would prefer, but I guarantee that it can save years on your project. Customers are always in a hurry. But it’s short-sighted not to make sure that all potential issues are anticipated and addressed during contract negotiation.

Next, keep in mind that changes in scope will occur during the life of a project. You should plan for that in your budget and ensure that money won’t be an impediment in dealing with problems as they arise. Sometimes a problem arises simply from negotiating with your own organization just to get the necessary funds to address issues that need to be addressed. So deal with this up front as well. Recognize that problems will arise, and you can prevent them from delaying your timelines with careful planning.

Third, plan for the major inflection points in your project. Some things can be easily anticipated. A facility-fit exercise will require changes that you’ll have to mitigate. Results coming out of your laboratory-scale transfer experiments are very likely to create issues that you’ll have to mitigate. So will the results of your engineering runs. On so many projects that I’ve worked on, whenever we hit those inflection points, people were surprised. We plan for success. So when changes become necessary because of new data, all of a sudden that’s a problem. Why not turn it into an expectation and build structures that will enable the companies to deal with these inevitable inflection points?

Finally, once you have a well thought-out plan, be prepared to be flexible as well. Planning ahead is important, but it’s worthless if you end up completely tied to it and inflexible and thus unable to deal productively with your partner when unexpected issues arise.

S. Anne Montgomery is cofounder and editor in chief of BioProcess International, amontgomery@bioprocessintl.com.