Workshop C: Tools for a Successful Outsourcing Program

1. Workshop C: Tools for a Successful Outsourcing Program Paul Woitach Managing Partner Pharmaceutical Advisors LLC 316 Wall Street, Research Park Princeton, NJ 08540 609-688-1330 pwoitach@pharmadvisors.com IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

2. Workshop Approach • Management perspective • Not a development planning discussion per se • Assume you know what to do BUT some insights • Checklists and tools • Tips and suggestions • Assuming all can read so will speak to the key points rather than discuss every bullet • Geared for first GMP but applicable to all stages and commercial • Structured to leverage the experience of CMOs and Sponsors in the workshop • Discussion, Debate & Reconciliation / Group hugs • Help you to walk away with a robust package • Using term CMO and Vendor interchangeably – can often apply to packaging, analytical etc. IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

3. Agenda • Case study examples and tools for developing an outsourcing program, whether it’s a single compound or you need more structure to managing multiple programs • Understanding how to find CMOs, contract with them, and maintain leverage and look after your interests in structuring the business and technical relationship • How to be a good business client for speed and value • Anticipateand handle specific problems with outsourcing • Case Studies - Bumps in the road that others have had and what you can learn from them • Tips on running programs with a limited internal budget and resources IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

4. Launch Planning RM API DP PAIn Planning RM API DP DP Stability ICH DP Stability Planning RM API DP ICH Stability If You Are Just Starting to Outsource… Nomination PhI PhII PhIII NDA/MAA Approval Evolving API… Demand & Drug Product… API/DP Launch Enabling Technology & Supply Manufacturer API/DP Technology/Supplies RM API DP PhIII Supplies DP Technology API Technology API Activities Raw Materials Demand Enabling DP Activities IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

5. Lead Times and Need to Be Prepared • If you are starting to outsource manufacture of DS or DP • Lead times can be • 3-6 months to ID and secure CMOs for CTM or more • Can be longer for commercial • Many factors can add up / compound the issue • Screening / ID CMOs true capabilities takes time • CDAs can take time • 2-4 weeks to prepare a good response to RFP • Timing of scheduling site visits and audits depends on working around existing client schedules • No two CMOs are exactly alike • Sometimes technologies / unit opps are not ubiquitous or all in the same location • The CMO you want may not be interested or feel comfortable with your project • Negotiations & Contracting iterations • Seasonal factors can stretch lead times further IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

6. Tools on The Checklist Descriptions and Tips IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

7. Tools - Outsourcing Checklist for Success IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

8. 1. Integrated Development Plans You’d be amazed at how infrequently we see them! • Integrate DS & DP at the very least • Tox and clinical timelines and quantities are important for your planning • Create a strawman assumptions if you cant get answers • Consider impact on today’s and tomorrow’s needs of • Approval & Investment Strategy • Development Plan beyond IND • Factor in Lead times • CMO selection & contracting • Product release across CMOs and report turnaround times • Experimental failures • Not Doing it is a huge source of problems • Beware of oversimplified plans / rules of thumb • Make communication across functions happen! Even if its just with yourself! IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

9. Symptoms of a Planning Gap to be Filled Dangerous Assumptions We Hear… • “We don’t need to think about that because we’re going to license out in Phase II…” • “Our licensing partner will worry about that…” • “Let’s just get GMP material for everything…” • “We’re going to use GLP material…” • “We’ll get a consultant to write the CMC section when the time comes…” • “We need a Quality Manual? But We’re virtual…” • “It’s too early to be thinking about a Quality Agreement – it’s just development work…” IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

10. 2. The Right SOPs • Not a thick binder but a few enabling tools • Leverage Contractors Quality System & SOPs • Minimal core internal Policies and SOPs to enable running through contractors • Can also invest proactively in your Quality Agreement Template and Roles & Responsibilities Matrix to reduce need for certain SOP detail • Important to understand what you need in place before contracting and before GMP activity • It’s still your product with your responsibilities IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

11. Pre-Outsourcing SOP Gap Analysis Leveraging the Contractors SOPs in Your SOPs Example IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

12. Pre-Outsourcing SOP Gap Analysis Leveraging Your Quality Agreement Example IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

13. 3. Data Plan • You are not just buying supply, you are buying • Material • Technology & Other IP • Registration Enabling Information • Understand data needed for submission, to make decisions and to achieve objectives with future partners or for your commercial objectives • Where will it come from • Who will write what • In what form do you need • Implications for your RFP / Requirements • How will you file and access the info IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

14. Often Overlooked Data Consideration • Development Reports • Deliverable of detailed development, analytical, and production report • What was tried, results, and evolution of the procedure, linked to notebook records and preliminary reports.  • You then have a good record of what works and doesn't work • How the process and analytical procedures evolved into a manufacturing process and quality control test methods • Enable learning / problem solving & QBD for registration IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

15. 4. Internal Resources -Small Molecule Internal expertise needed: • Medchem • Process chemistry & API Manufacturing • Dosage form Development • Dosage form manufacturing • Pharm Tox • Legal • Analytical • Quality • Packaging • CTM logistics • TPL Management • Sourcing • Regulatory • Project Management IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

16. 4. Internal Resources - Biologics Internal expertise needed: • Bulk - Cell line development & selection, Fermentation, DSP • Dosage form Development • Lyophilization • Dosage form manufacturing • Pharm Tox • Legal • Analytical • Quality • Packaging • CTM logistics including cold chain • TPL Management • Sourcing • Regulatory • Project Management IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

17. Relationship & Project Management Company Needs Program Requirements Long list of candidates Kick-off & Tech Transfer Resources Project Requirements Short list Proactive Management Leverage and Alignment Timing Internal issues Finalists and selected CMO 5. Structured Process for Selection Strategic Context Integrated Development Plans Sourcing & Selection Process Boundaries Clinical & Safety Requirements & CMO ID Investment Strategy Action Plan & Key Indicators of Success Drug Substance & Drug Product Screening RFP & Selection Strategic Skills Regulatory and other Negotiation Contracting & Scope Approval & Regulatory IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

18. Overall Sourcing & Selection Process Table IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

19. 6. Your Requirements – Some Variables IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

20. Technical Package and Tech Transfer Drug Substance • Technology • Raw Material specs & vendors • Unit Operations as practiced • PD History, if any • Batch Manufacturing History • Current IPCs at R&D stage, rationale and CPPs • Storage requirements for raws, in process and final product • Mass Balance as complete as possible • EH&S info; Process Risks and Controls – incl waste streams, MSDS • Analytical Requirements • Dev Reports, Methods protocols, tech trans plans, & validation reports, if ready • Proposed specs for API • Batch size assumptions – CTM, Reg batch, validation batch, commercial and projected forecast Drug Product • API and Excipient grades & suppliers • Batch Mfg. History • Specs for API and excipients incl micro • Excipient functionality • EH&S info, risks, incl waste streams, • Detailed characterization • PD History Report • Current IPCs and rationale and CPPs • MBR & , ancillary batch docs • Storage for raws, wip & final product • Dev. Reports, Methods protocols, tech trans plans, & validation reports, if ready • Stability information (API, intermediates and final product) • Cleaning procedures and tests: operator exposure, disposal etc. • Packaging • Batch size assumptions – CTM, Reg batch, validation batch, commercial and projected forecast IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

21. 7. Finding CMO Candidates • Quickly Getting Some Material Made…It’s just kit & people right? • Don’t assume one stop shops actually exist • Tech transfer has to happen across scale anyway • DP & DS are different disciplines • Technical specialization needs • Skills & Creativity across disciplines • Service oriented culture • Right business model, business size (to align with you) • Capital structure / health • Location • Very few direct capability overlays in comparing CMOs • And the golf course issue… • Plan on 3-6 months for development and potentially longer for commercial IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

22. Tips for Making it Easier • Start with your requirements… • For this project and the follow-on…if you are successful • Create a Long List • Capabilities & specialties • Capacity • Location • Reputation • Information Resources • Your functional team members / consultants • Peers • Industry directories i.e. Contract Pharma • Trade-Shows & Conferences • AAPS, Informex, Interphex, Chemspec, CPhI, Contract Pharma, DCAT IQPC, etc. • Create and maintain a “living list” IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

23. “Living” List of Potential Vendors is an Asset • Document and refresh findings on candidates • Lack of fit today may not apply to the next project • Reduce search time later • Decide what you will share and what stays internal • Compile for various functions i.e. DS & DP etc. • A strategic asset This knowledge often “walks out the door” when employees or key consultants move on IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

24. 8. Criteria – Often Overlooked • Capacity / Scale • Stage now vs. later needs and implications • Overall Capability • Tech Transfer ( in and out) • Experience updating the CMC sections • Understand ability to source of all raw materials • Project Specific Technical Capability • For development, unique technical deliverables and their “transportability” • Response to RFP and scientific approach • Quality • Capabilities / FDA inspections or approvals • Import / export processes of material for CTM & Commercial • Strength of their Vendor Qualification Program • Location • Your capacity to manage distance and cultural issues • Internal tech transfer capability across locations. • Proprietary technology/tech transfer • Does CMO propose to use proprietary technology and what is impact on royalty rate burden or ability to transfer process or qualify back-up CMO • Other • Adequately capitalized • Must be able and willing to produce references IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

25. 9. RFP Package • The Package • Workscope • Technical and Timing Requirements • Terms & Conditions • Quality Agreement • The RFP should be structured to • Enable objective and complete comparison of the candidates • Expedite the development of a contract • Help CMO to understand required scope, potential for expansion / change and their risk • Help CMO to understand their risk • Avoid taking on a project with more scope that visible • Understand potential impediments to meeting timeline • Fit with their skills and schedule • Both the RFP and CMO response should be complete enough to provide the basis for workscope, pricing and terms IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

26. RFP Contents – DP & DS • Brief description of your company (optional) • Brief description of the product (along with Material Safety Data Sheet and handling instructions) • Overall project objectives and timeline • Detailed scope for CMO’s portion of the project: • Process description with flow chart and bill of materials • In-process and product test methods and target specifications • What will be delivered to CMO and by when • What the CMO is expected to deliver back and when • Desired pricing structure (i.e., fixed price versus time and materials, mass unit price versus batch price, etc.) • Requests for information, including: • Financial status of the company and description of pharmaceutical development and commercialization programs, if any. • Confirmation of absence of conflicts of interest • References, inspection history • Manufacturing success rate • RFP response instructions (due date for submission of response, name and address of person to whom the responses should be directed, etc.) IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

27. 10. Contracting and Negotiations • The contract is critical to the balance of leverage in a relationship. • Negotiation is part of relationship management, and should be considered part of the selection process, not a formality • Behavior demonstrated during negotiation of challenging aspects of the contract is a good indication of how the other party will behave during challenging points in the relationship. • Goodwill and trust are critical to productivity of inter-organizational relationships. • Often contentious negotiations are not contained and impact the project team members perceptions of the other party. • Anticipate, understand and balance risks on both sides as they change from development to commercial stage activities • Integration with Quality Agreement saves time and money and operationalizes the relationship quickly IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

28. Master Services Agreement Concept • The future needs of a project cannot be fully anticipated at the outset of a project • A “Master Services Agreement”, provides flexibility • General terms of the relationship between the parties • Scope of Segments of the project(s) can be described, • Can provide a basis for amendments combine refined or new scope and already agreed pricing structures • Can be overkill for some one-offs BUT a balanced MSA can be executed rapidly and accelerate things later on IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

29. Business Checklist for Contracting IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

30. Other Business Agreement Elements Future issues can be avoided by anticipating needs and building them into contract terms • Provision for future supply and/or additional projects • The right of the client to all IP and know how required to produce the product • Rights to process and analytical methods and technology • The right of the client to transfer the production technology and qualify other sites to produce the product • Pricing to manage risk • Payment obligations that are triggered by acceptance of deliverables (i.e., reports, QA release, etc.) • Fixed pricing on each segment of the project as its scope becomes well defined (i.e., both parties are motivated to complete the work in a timely fashion) • Bonus payments for development and demonstration of specific process yields, which in turn tie to lower unit pricing for product supply • Dealing with risk of loss • Ability to negotiate assumption of risk of batch failure increases with process maturity, validation • Typically, fill-Finish and DP CMOs do not add enough value to take on risk of loss of API value IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

31. 11. Quality Agreement • Clearly articulate technical and regulatory roles and responsibilities • Phase appropriate differences • Integrated with Terms and Conditions, MSA or Supply Agreement • Roles and Responsibilities matrix is more easily read and used by operating personnel than a legalese document IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

32. Quality Agreement R&R IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

33. Being a Good Client …and how to anticipate and proactively work to avoid issues IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

34. Other Side of the Desk – The CMO • Contract manufacturing is a very challenging and often “lumpy” business • Scarcity of capacity can sometimes drive price more than level of quality • It costs real money to generate a proposal • CMOs focus on doing what customers ask • Don’t expect them to stop you from making mistakes - It’s Your Development Plan • Will they stop you from making process changes that affect impurity profiles or bioavailability? • Development Stage vs. Commercial Stage CMO needs • Differences between US, EU, India and China IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

35. Challenges CMOs Face in Serving You • CMOs are a service business and you are one of many clients • CMOs can be very service oriented but need to balance your project needs and changes with all those of all other clients • CMOs do not always have resources, capacity and schedule availability to meet all needs exactly when required. • CMOs do not have unlimited surge capacity • Ability to add FTEs is limited • Ability to go back when there are significant technical hurdles or unplanned failures may not be immediate • Lead times impact on responsiveness may not be their doing • RM not always available when required • Flexibility is not always possible • The best CMOs often don’t have much flexibility • Clients that keep changing their mind create a ripple effect of cost • Be wary CMOs offering too much flexibility! IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

36. Maximizing By Being a Good Client • Success enablers are often set before kick-off • Provide Well considered specificity - “Cocktail Napkin” TIPS Cost Your Money and Time! • Have realistic expectations of timing • Apply adequate internal resources for CMO guidance, oversight and to cover distance & cultural issues • Proactive management & metrics • Planning - only certainty is that things will go wrong so plan accordingly • Plan with contracting and scheduling lead times in mind • Build in scheduling lead-times for when problems occur and iterations for to-be-demonstrated technology • Execution • On-site involvement early in the relationship and more time on-site up front, less time fixing things later • Proactive vs. Reactive • In-person builds relationship & personal commitment • Clear project management and information flow BUT do not impede scientist-to-scientist interaction when needed • Strive to be easy to do business with while being clear and firm on your requirements • Understand how your changes impact the CMO IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

37. Issues Good Clients Can Anticipate & Avoid IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

38. Issues Good Clients Can Anticipate & Avoid IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

39. Issues Good Clients Can Anticipate & Avoid IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

40. Metrics & Managing • Keep metrics simple • Understand how your demands change as you progress • Consider impact on the CMO • Put in the effort to be a good client • It’s Your program – you need to lead the CMO • Get on-site early • Less investment needed avoiding vs. solving IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

41. Tips for Outsourcing with Limited Internal Budget …And Tips to Help the Timeline IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

42. Keys to Managing to a Lean Budget • Have the right expertise on YOUR side of the desk • Knowledgeable internal resources • Invest in being prepared • Specificity & minimize scope change, rework, risk ID • Be proactive • Get on-site early • Convert fixed costs to variable where possible • Right level of functional team members • Complement your internal expertise • Requires hard-to-find mix of hands-on AND strategic • Need experience with outsourcing and current knowledge of CMO performance • Seek to minimize your coordination costs of all the resources IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

43. FTE Effort Examples IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

44. FTE Effort Examples IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

45. Driving Down Internal FTEs • Leverage FTEs • Make sure there’s operational regulatory experience in the functional team members, not just technical • Can put PM responsibility into one of the functions until there is critical mass / portfolio need • Supply is ongoing so CMC or CTM logistics can make sense • Better the quality and the better integrated team, the less specialized PM you need • Build and maintain internal tools • Templates • Vendor database IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

46. Hub and Spoke • Can surround a limited internal core team / individual with internal functional experts • Can serve as Advisors in the background or use the ring of Advisors to each run all the various functions • Can have external Project Management Advisor as well IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

47. Drive Down Total Resource Use • Can reduce overall and individual FTEs with the right cross–functional experience to take on informed, broader roles in adjacent functions • PM effort can also be led by one of the functional team members • Can enable success efficiently with an almost completely virtual “internal” team IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

48. Other Sources of Cost Reduction or Speed • A detailed well constructed RFP • Have the tech transfer package ready to go • Realistic expectations and requirements • Take rework and risk out • Compress Contracting Time and Get Started • Do good pre-screen Get Ts & Cs and Quality Agreements across the table early • Legal and purchasing review – especially with larger sponsors and CMOs is a bottleneck • Can break up workscope to start under a PO • Ask the CMO • They can contribute ideas • Production • Can reduce # of batches i.e. no demo batch if comfortable with the technology and tox risks • Submissions • Sponsors routinely underestimate the analytical rigor and effort required for a filing – plan ahead IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

49. For Discussion … • One stop shops • Global outsourcing • Centralized analytical • Taking on risk IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech

50. Bumps in the Road Others Have Had… …and what you can learn from them IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech