Summary.    The shift to advanced therapeutic modalities (ATMs) promises to change the nature of competition in the pharmaceuticals industry. ATMs include engineered cell therapies that reprogram cells to fight disease, gene therapies that involve replacing or editing...

The life sciences industry is undergoing a fundamental evolution in how drugs are discovered, developed, and manufactured. The industry is shifting from traditional drug research and development techniques used for small molecules and antibodies to advanced therapeutic modalities (ATMs), a category that encompasses engineered cell therapies that reprogram cells to fight disease, gene therapies that involve replacing or editing dysfunctional genes, and nucleic acid therapies that promote or shut down production of a protein (e.g., the mRNA vaccines indicated for Covid-19 from Moderna and Pfizer/BioNTech).

The therapeutic impact of ATMs may read like science fiction: patients cured after their immune cells were removed and reprogrammed to fight a fatal blood cancer, or an infant spared from rare genetic disease by hijacking a virus to deliver a corrective gene. The business impact is also massive. The arrival of ATMs at scale is upending industry players by shifting the nature of drug R&D risk and establishing manufacturing as a critical strategic priority alongside therapeutic safety and efficacy while also introducing new commercialization challenges. In total, the shift toward ATMs will put pressure on stakeholders to make profound changes in strategy, investment, and risk management.

This upheaval is well underway. Apart from Covid-19 vaccines, ATMs have so far been a niche — but they’re about to become the future. The global ATM pipeline grew at a rate of approximately 20% per year from 2017 through 2022, and ATMs now account for about 20% of worldwide therapeutics pipeline activity. Driven by landmark approvals of cell and gene therapies by the U.S. Food and Drug Administration (FDA) and the global success of mRNA Covid-19 vaccines, the ATM category attracted significant funding and drove nearly $90 billion total potential deal value from 2020 through 2022, according to the Citeline database. Analysts forecast that ATM drug sales (excluding Covid-19 vaccines) may reach a market value of $45 billion to $60 billion by 2027, according to an L.E.K. analysis of analysts’ forecasts compiled by Evaluate Pharma.

Designed, Not Discovered

While medically they can border on the miraculous, ATMs introduce significant changes for industry leaders and stakeholders. The reason is the very different pathway from research to realization. Traditional drugs are discovered, a years-long process of iterative synthesis, optimization, and testing. The ATM process is radically different — so much so that it fundamentally shifts R&D timelines, challenges, and sources of risk.

Here is how ATMs differ from small molecule and traditional biologic drugs:

• ATMs are designed. Their active drug mechanism (such as a genetic payload) is precisely configured against a known target. This can dramatically accelerate discovery-stage research compared to the years-long screening and optimization required of the traditional small molecule development process.
• ATMs are modular. The “modules” of an ATM can be interchangeable, and a single design can be quickly modified to serve a different function. Examples include swapping a new genetic payload into a viral delivery mechanism to address a new therapeutic indication or updating the mRNA vaccine sequence to address new Covid-19 variants.
• ATMs can be specific to an individual patient — either derived from the patient’s own cells or designed against patient-specific biomarkers (as in personalized cancer vaccines).
• ATMs are not simple chemical compounds or single proteins. They are large, complex biomolecules or even whole cells. Often, they require an appropriate delivery mechanism or “vector” — a virus or a nanoparticle. These complex structures require state of the art, multistep, multisource manufacturing processes.
• Because the manufacturing process is so complex, and because, in some cases, the end product is personalized, it is often impossible to scale up manufacturing. ATMs often must be “scaled out,” that is, manufactured via multiple smaller batches instead of a single large batch, resulting in non-traditional supply chain logistics and manufacturing economics.

All of this means that industry stakeholders need to prepare for a shift in development costs and risks away from discovery and toward downstream manufacturing. Timelines from discovery to clinical trials can be much faster for ATMs than for traditional therapies that require extensive screening and iterative, time-consuming optimization. But ATMs also impose the challenge of higher manufacturing costs due to the emerging and dynamic nature of their manufacturing processes.

Put simply, for many ATMs, the process is the product. Here is what that means for life sciences companies.

The focus on manufacturability presents both risks and opportunities.

Stakeholders need to understand that while safety and efficacy will remain essential, they must now focus even more than in the past on manufacturing speed, cost, and consistency in delivery. These will become key differentiators. To succeed with ATMs, it is critical for developers to invest in robust and scalable manufacturing processes early in development. It will also be increasingly critical for developers to invest in technologies and process improvements to reduce the cost of goods for ATMs, which will be necessary to unlock market access in larger, less-rare indications where high reimbursed drug prices cannot be supported.

Failure to address manufacturing early enough can prove costly to biopharma. A case in point: When investigating CAR-T cell therapies for use earlier in a patients’ treatment plan (as opposed to use after multiple prior treatment options), Kite Pharma’s Yescarta demonstrated clinical benefit over standard of care while Novartis’ Kymriah did not. Both drugs leverage the same approach to target patients’ cancers, so the difference in clinical outcomes was surprising.

A contributing factor was the significant differences in the drugs’ “vein-to-vein time,” or the total time needed to extract patients’ immune cells, reprogram them, and reintroduce them as CAR-T cells. During the clinical trial, Kite’s process delivered CAR-T cells to patients much faster — in approximately half the time it took Novartis. While patients in the Novartis trial were forced to wait longer for their drug to be manufactured, their health continued to deteriorate. As a result, the therapy failed to deliver impactful results. With these delays in mind, Novartis invested in its own next-generation CAR-T manufacturing platform with the stated goal of significantly reducing vein-to-vein time.

Biopharma must focus earlier on ATM manufacturing and supply chain.

The additional manufacturing considerations present both risks and opportunities. Biopharma companies must proactively manage their manufacturing and supply chain strategy to ensure reliable, cost-competitive, and rapid ATM production at scale. They must invest earlier into process development as well as planning for future manufacturing strategy. A critical question is whether to outsource production to contract partners. Early innovators such as BioMarin, uniQure, Fate Therapeutics, and BlueRock Therapeutics all invested in proprietary platforms to maintain strategic control of critical IP and to control supply chain to help avoid clinical development delays.

However, companies must weigh IP and manufacturing control against the significant cost of building capacity and carrying the overhead on their balance sheets. This means that ultimately biopharma firms will need to carefully navigate investment, operational costs, relative strategic value, and potential risks of their options when considering their manufacturing strategy.

Intensified focus on manufacturability is not limited to the ATM arena. Witness Novo Holdings’ $16.5 billion acquisition of contract development and marketing organization (CDMO) Catelent to ensure supply of its blockbuster drugs Ozempic and Wegovy. Eli Lilly voiced immediate concerns with the deal and how it could impact its ability to meet patient demand for its drugs, including Mounjaro, a competitor to Ozempic and Wegovy.

Contract development and marketing organizations (CDMOs) must continue to invest in enabling tools, technologies, and talent.

Within the ATM sphere, CDMOs that are positioned to win are those that have built fit-for-purpose capacity and that have demonstrated their ability to support clinical and even commercial programs. However, capacity itself is rapidly becoming table stakes, and determining how the organization can differentiate on talent and technology will be critical questions to address. Talent, especially teams skilled in process development and scale up, is increasingly a differentiator as biopharma seeks CDMO partners with a track record of regulatory success and expert teams who can reliably support their complex ATM manufacturing processes.

Additionally, tools and technology will be critical to attract customers — particularly technologies that are unique in their ability to support critical workflows. For example, Lonza developed the Cocoon platform, which integrates and automates autologous cell therapy manufacturing. Ultimately, CDMOs will need to grow comfortable investing in a manner that complements the evolutionary nature and rapid innovation cycles of ATMs.

Suppliers of raw materials, tools, and equipment can benefit from “lock in” — if they can identify innovative solutions.

The need for Good Manufacturing Practice (GMP)-grade materials — those that are manufactured according to FDA-regulated quality standards — when ATMs go into commercial production is creating large markets for these materials. In emerging segments, fewer suppliers exist, which creates pricing leverage for early participants. ATM developers typically lock in their suppliers when a program reaches large-scale GMP manufacturing, which creates an opportunity window for suppliers to capture early-stage customers, seed the pipeline with their offerings, and grow with their customers to achieve scale.

The best way to ensure an ongoing supplier role is to offer innovations that address key bottlenecks in the market and can become critical to customers’ success. For example, innovations that enable unique advantages (such as dramatically simplifying workflows) or that fundamentally enable biopharma to address new therapeutic areas (such as enabling targeted drug delivery to new organ systems) are most likely to emerge as future staple technologies. Tools players and input suppliers should develop strategies to identify emerging innovations with disruptive potential and evaluate where and how to invest.

Most importantly, stakeholders should become and remain fully aware that advanced therapeutic modalities are no longer just niche programs at the bleeding edge of science. They are moving rapidly into the mainstream and will soon be a standard modality — another arrow in the quiver available to researchers seeking to develop new medicines. Now is the time to consider the impact of ATMs on the health care market and to develop strategies to participate in the next wave of medical biotechnology innovations.