7 minute read
Across Canada
Respondent#2 Lee BuckLer CEO AnD REPLICEL PRESIDEnT, LIFE SCIEnCES
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QBiotechnology Focus: What do you outsource and what role does outsourcing play in your business plan?
Lee Buckler: We’re a biotech company with three cell-therapy products in development called RCT-01, RCS-01, and RCh-01, and we are also developing an injection device for delivery of our RCh-01 and RCS-01 products. Our whole business is driven by a couple of philosophical views. One, we consider ourselves an R&D licensing shop, so we don’t aspire to take any products to market. Second, we want to create high-value assets through to mid-level clinical development and then position these assets into the hands of co-development and licensing partners. With this philosophy, we try to minimize the amount of infrastructure and obligations we have and keep things as flexible as possible - focusing solely on our products. Essentially we are a virtual company, and we outsource almost everything. For starters, we have a contract research agreement with the university of British Columbia, where our chief scientific officer is employed, and we do a lot of our early stage research in that lab. We use a contract manufacturer for our biologics, and this CMO has tremendous process development capabilities. We also use CROs for the management of our clinical trials, so we don’t have armies of clinical management staff. On the device side, we use contract designers and contract manufacturers. Essentially, we have more consultants and contractors than we do employees. Our reasoning is we aren’t looking to build a multi-generational empire or saddle ourselves with infrastructure; we’re simply looking to play a very important role in bringing key products to market while at the same time creating value for our shareholders. Outsourcing also allows us a lot more flexibility when negotiating strategic collaborations, joint ventures, licensing, and partnerships. Since we aren’t saddled with a tremendous amount of hard infrastructure, it’s easier to turn things off and on much quicker. Geography plays a part here too. We’re located in Vancouver, Canada, and it’s not a cheap place to have infrastructure here, and it has its limitations in terms of talent. If you can wrap your head around managing people virtually, by outsourcing, we’re able to cherry-pick teams to contribute to our projects based on the best available expertise and experience from around the world - not just who happens to be in town. From our regulatory consultants in Boston, our CMOs in Austria and our CROs in Europe, it allows us to bring in top notch people that are more defined by expertise, cost, and experience, rather than by geography.
QWhat factors do you consider important when you are designing an outsourcing plan or strategy?
That depends on whether you’re talking about vendor selection or managing the outsourcing strategy. Regarding selection, it’s really about who you think has the best expertise and experience and is a good corporate fit. When it comes to management, when you’re so heavily dependent on outsourcing key components, you have to be prepared to do a little more plane time and also find online tools that you can use to help you stay in touch with your vendors.
QWhat are some of the key factors when you go through the vendor selection process? How do you balance the desire to pick the best vs. someone you trust? What’s more important to you?
us rather serendipitously through relationships, and as we started to engage them, that relationship just continued to grow and solidify. I’m almost convinced it wouldn’t have been the party we would’ve chosen to if we’d gone the RFP route, but it’s the perfect fit for us right now because it grew organically through relationships. When you’re starting out cold, you don’t have any of those relationships or preferences, and you’re doing just an RFP kind of process. For the most part, the people who rise to the top and get on the short list, have the basic expertise, and they all have the alleged experience. They probably don’t differ so much in terms of cost, but cost does become an important differentiator. But at the end of the day, it’s who you think is the best. Also, while I’m not a fan of calling these conceptual relationships partnerships because it is just a fee-for-service kind of relationship, but it feels a lot like a partnership because they’re so embedded in everything you’re doing, and so the fit factor becomes really important. Also, especially in our field which is relatively new – cell-based therapeutics – there is a lot of young and small players. What I’ve seen and experienced on both sides of the equation, is this factor that when you have to justify a really big contract, like manufacturing for instance, to your Board, and it’s someone they’ve never heard of, there’s a comfort level that comes with an entity that’s well-established and proven - even if they’re more expensive - because the risk of them disappearing on you, or not being able to meet their obligations, is perceived to be less.
QWhen you design a contract with your outsourcing vendors, what are some of the key terms to look for within that contract?
For small companies like us, any type of risk sharing is an important discussion to have. Exit or flexibility clauses also become an important consideration because to be successful at what we’re doing; we have to be nimble. We can’t lock into multi-year contracts with a lot of take or pay obligations and no exits. At our stage of development, we need partners that can, to some extent, be flexible. now, they have a business to run too, so that’s a tension you have to balance.
QAs a cell-based therapeutics company, you mention that many potential outsourcing partners in your space are very young. As such, are there challenges in this space to finding a partner that aligns to your needs?
One of the overriding considerations in our field that really dictates whether or not they use a contract manufacturer is that there’s still a lot of process, product and manufacturing optimization that’s taking place even while you have product in clinical testing. So we’re still learning a tremendous amount about these products, how to manufacture them, the costs of goods and the technologies that are critical to them. So to some people, particularly those with more complicated products where the science is still really evolving, I feel that in order to develop their product optimally, they need to be really close to it, much closer than a contract manufacturer allows them to be. There’s still a lot of unsolved manufacturing being done in cell therapy because it’s not just about economics and you’re not just leveraging standardized procedures, technologies and tools, you’re iterating constantly. Therefore, people have a desire to be close to that iteration, to drive it, to see it, and feel it every morning when they get into the plant. For us, it’s a little different. All of our products are innovative but also in a way, more innovative because of their simplicity than a lot the gene modified cell-therapy products out there today. We don’t gene modify our cell products or differentiate our cells. We’re not working with a stem cell. Our technology is a simple cell expansion play, and we’re investing heavily in different kinds of bioreactors, cell expansion technologies and media formulations to optimize our products, but that science and technology is arguably less complicated than what a lot of people in the industry are doing. For us, with the kind of products we’re developing, it’s arguable that it’s easier to do it without outsourcing partners. Other companies just might not feel comfortable at the same stage.
QHow can you make sure you are getting the most out of your outsourcing partner? How do you monitor that relationship?
Like I said earlier, I think you have to be prepared to spend more time on a plane because real-time, face-to-face interaction, and being on site, matters in maintaining a connection to your vendor. You also have to spend more time on the web, and on the phone, than in the boardroom - in terms of project management. If you’re sloppy and you’re not constantly talking with your vendors, there are a lot of things that can just slip through the cracks. One of the other things we did was embed a person in our CMO’s plant. This helps to alleviate some of the need to be there; we feel like we know what’s going on because we have a person there full time. not every contract manufacturer allows that, but we have a relationship that allows it, and it’s become pretty critical to us because it’s someone we know and trust, and at the end of the day, we know is working for us. If it was a contract manufacturer a couple of hours away from us, it might not be as important, but it’s a long flight and on another continent. I think it’s also important to make sure you have external people available to come in, do inspections and audits, on an as needed or on a regular basis, to keep people honest and to be assured that things are going well.
