Magazine Article | March 1, 2016

Did You Hear The One About The Supply Chain Infrastructure?

Source: Life Science Leader

By Louis Garguilo, Chief Editor, Outsourced Pharma

Building a reliable supply chain infrastructure; technology transfer challenges; scale-downs and scale-ups; CMO realities vs. pharma requirements; biotechs, startups, and virtual business models and their financing; small and large molecule strategies; global or domestic outsourcing; measuring everything that moves and breathes; risk mitigation and risk-sharing assessments ... we are a serious lot, with a lot on our minds.

Therefore, from time to time, all of us in this philoprogenitive pharmaceutical industry can use a dose of levity. In fact, I think we find those of us in the outsourcing-related sectors, if maybe a little nerdy (hey, speak for yourself), are a pretty fun-loving and good-natured group of individuals.

That includes Kent Pryor, chief operating officer of ZZ Biotech. He starts with the company name. It takes the “Zs” from the first letters of the last names of neurology researcher Berislav Zlokovic and financier Selim Zilkha. “However,” Kent says, “people wonder if we are fans of the rock group ZZ Top. Well, in fact, we make our headquarters in Houston where ZZ Top was formed in 1969.”

Pryor once found himself on a stage seated as a panelist at an outsourcing conference, along with representatives from much bigger powers such as Pfizer and Sandoz. Representing his bootstrapped biotech, Pryor at first appeared miscast for this discussion on “How to protect yourself by building an outsourcing infrastructure.” He ended up stealing the show, as they say. We’ll listen in to the insight and wit from this representative of a company that relies on global outsourcing for the clinical and commercial development of a new drug. I’ll add some asides. And Ray Kaczmarek, VP commercial manufacturing and supply chain operations, Pacira Pharmaceuticals, another panelist that day, also will interject to provide some perspective.

"We have a single product on a tight budget. I’m involved with everything, the glue that holds the activities together. I hope I avoid getting stuck."

Kent Pryor
COO, ZZ Biotech

Here’s how Kent introduced himself: “I’m the chief operating officer at ZZ Biotech. We’re almost as big as Pfizer … We have two employees. Half the company is sitting right here. We’re going to have different perspectives on what infrastructure means. I’ve worked in small public companies and small private companies, but ZZ Biotech is the smallest. In a nutshell, we fit in a nutshell.”

Pharma makes headlines when they talk about their supply chains. The Shire outsourcing model comes to mind. I recently wrote an article in OutsourcedPharma. com on Janssen’s approach. Gilead’s contract with Cambrex to make the API for their Hep C drug was of interest to most everybody. But what of the growing cadre of biotechs, startups, and virtual companies like ZZ Biotech? What does the supply chain mean for them?

Back to that panel discussion, the moderator skipped through thoughts on subjects such as “alliance management,” and the processes in determining how to manage external outsourcing infrastructures. Pfizer and Sandoz representatives had enlightening descriptions, some best practices, and interesting anecdotes. All the while, panelist Pryor listened intently, wearing the thin shadow of a Cheshire cat’s smile. He was asked to explain the different plans for establishing an outsourcing infrastructure if your goal is to take a program to Phase 2 and sell it, versus taking it through commercialization.

“I don’t know what my plan is,” Kent said to some laughter. “Maybe somebody will buy us after we finish Phase 2 or after we finish Phase 2-B or maybe after we pursue another indication. Or we might take it all the way. But we are not going to build in a bigger infrastructure than what we need for ourselves to drive the project today. Right now, if we don’t need it, we aren’t building it.

“That’s not to say I don’t think about different strategies,” he added. “I think about our strategy every day. I know the types of people I would need to hire at different times in the development process, as we go as far down this road as it makes sense to go.”

Let’s move the spotlight to Kaczmarek. He amplifies some of what Pryor says, but also tells us of an experience that saw some of Pryor’s approach lead to an approved commercial product.

“When I started Pacira, I can truly tell you we weren’t looking at our long-term infrastructural pieces whatsoever. We were trying to survive day-to-day. Then, when in early 2012 we got approval for our drug, the only problem was we couldn’t even manufacture it at scale yet. In other words, we had to figure out how to make it, because we were starting to sell it. What are you going to do in that situation? Well, you simply start driving that tactical piece as hard as you can to gain your supply chain.”

Kaczmarek continues: “But as you grow and gain experience as a company, you start to understand how important it is to look at your integration of outsourcing, to manage that strategic profile, and understand the various capacities. You may start by designating someone within your organization to focus on the long-term strategy. Or, if you’re just doing it step-by-step – even as a virtual exercise – it’s critical to think about how the pieces are to be managed.

“Yes, it’s hard to look out past what you’re dealing with on a daily basis. At the same time, there are so many potential faults at the back half of the process you can address earlier in your phases. This will help provide a successful commercial launch later on.

“Even if you’re looking to sell off the product during phase study, you need a scalable process. You want to ensure you put yourself in a position to sell profitably. Have you set milestones up? Internal oversight and consultants can help align a supply chain for small companies. I’ve been with big players in the past like Wyeth and Bayer; they all have those strategic plans and those planners. They are focused on how that whole product line is going to be developed and utilized, from nuts to bolts. These are the differences between big and small companies, but the small companies should plan ahead as much as possible.”

Returning to Pryor, the next question he had to handle was on “alliance management.” I thought he might say something poetic like, “Alliance shmalliance!” Here’s what he actually said.

“I don’t have a group for handling that sort of thing. Perhaps here there are a few minor differences between Pfizer and ZZ Biotech. We have a single product. I believe they have more than that. Our company was set up to develop this product. We don’t have many different things going on at different stages. We’re either manufacturing that drug, or we’re not manufacturing that drug this week. We’re either doing a stability study on that drug or not doing a stability study. I make use of consultants who have specific backgrounds in specific areas as needed.

“I actually just got back from Australia, where I was doing a site audit of the biomanufacturing facility we’re going to use. I went with my quality consultant. I have other consultants for cell line development work and for helping design animal toxicology studies. I hope this doesn’t offend anybody, but I only pay for them when I’m using them. Internally, we just keep things really, really small. You could say we are trying to get big by staying small.”

Kaczmarek made some comments we can use for summing up. He said that supply chain management comes down to assessing your company’s risk and tending relationships accordingly. “Up front in outsourcing, the technical piece is important, but you have to weigh the relationship with your company’s risk profile. How much do you really need to invest in, and manage, each relationship?”

And my final aside: As Pryor knows, humor can deliver the clearest message. He’s shown us that for this era of burgeoning biotechs, startups, and virtual companies, the “supply chain” is a strictly scaled and lean apparatus built piece by piece and impermanent. “Like many companies today,” Pryor says, “we have a single product on a tight budget. I’m involved with everything, the glue that holds the activities together. I hope I avoid getting stuck.”