Specialist
Former senior director at Thermo Fisher
Agenda
- Recent developments in CGT (cell and gene therapy) outsourcing trends, including where CDMOs (contract development and manufacturing organisations) could capture market share
- Expected gaps in Thermo Fisher’s (NYSE: TMO) offerings
- Thermo Fisher’s acquisition of PPD and potential for further M&A
- Thermo Fisher's potential areas for expansion – pre-clinical, post-commercial and cryopreservation
- Industry outlook and growth expectations, highlighting lead times and labour dynamics
Questions
1.
What are your thoughts on recent developments in the broader outsourcing market, particularly those within cell and gene therapy?
2.
Could you expand on how the cell and gene therapy markets differ around outsourcing? You mentioned there’s much more hesitancy in the cell therapy segment around where to invest, because the workflows are still being developed. Could you expand on that? What’s happening with the supply-demand dynamic? You mentioned gene is significantly under-capacity.
3.
How do outsourcing rates differ across gene vs cell therapy? You mentioned outsourcing is much more feasible in the gene therapy segment. How do you expect those outsourcing rates to trend in the next two years, once the cell segment stabilises? How might that play out across early clinical, late clinical and into commercial over the next 1-2 years?
4.
You highlighted the lack of economies of scale in the market. How have yields and turnaround times trended across cell vs gene therapy in the last 1-2 years? Do you expect an inflection point in efficiencies to warrant a higher outsourcing rate?
5.
You mentioned companies perhaps are more focused on adding capacity vs actually disrupting the workflow in gene therapy. Why do you think that is? Do you expect any significant shift here? What companies stand out as doing significant work here? You mentioned Resilience and being impressed by what it’s done so far.
6.
What are the challenges around changing CDMOs’ [contract development and manufacturing organisations] mentality in gene therapy to become more proactive around developing technology? Do you think it’s more complex technologically, given where we are in the industry? Do you think it’s just a matter of potential expense? Do you expect any sort of shift in this regard and if so, when? Who might that responsibility for driving increased efficiency fall to, if not CDMOs?
7.
You mentioned many players are creating capacity via M&A or through investment organically. What risk might this pose? There’s a lot of demand, but also potential oversupply in the industry in the next five or so years, particularly when we reach an inflection point of greater efficiencies in gene therapy. How might this play out? Is there the risk that larger CDMOs overinvest and add capacity, when all of these factors are playing at the same time?
8.
How does the process differ when creating capacity that has the flexibility to be used in multiple workflows? What considerations come into that? Does the actual facility itself need to be different? How difficult would it be for another player that perhaps isn’t thinking like this to adopt a similar strategy later on in the process?
9.
Talent continues to be an increasingly-important factor in sponsors’ evaluations of CDMOs. We’ve heard that WuXi experiences a disproportionate level of turnover due to perceptions around its talent retention. Where does Thermo fall in that regard?
10.
We’ve discussed Thermo largely, highlighting the value of its product and services suites. How might CDMOs more broadly address current roadmaps, particularly beyond viral vector manufacturing? In which meaningful areas where Thermo leads could other players potentially enter and disrupt that lead?
11.
Where do you think Danaher is now playing in this sector since its acquisition of Aldevron in August 2021? What are you expectations? How would you think about scaling that up, or planning the company’s strategy in he next five years if you ran the company?
12.
What are your thoughts on Thermo’s acquisition of PPD, given the very clear goal of being an end-to-end provider? What do you think is next? We know that Thermo doesn’t really have a preclinical offering on the CRO [contract research organisation] front. How might the PPD acquisition prompt further M&A?
13.
You described the PPD acquisition as scary, particularly compared to Patheon or Brammer, which were much more logical in your opinion. What might be the cross-selling ability or how much overlap could there be between traditional manufacturing and the company’s product suite vs contract research? Covance has preclinical and clinical research and perhaps hasn’t experienced as much crossover between the two. Would you expect a similar dynamic for Thermo Fisher with PPD?
14.
On the preclinical research front, Charles River very recently entered into manufacturing, particularly cell and gene therapy manufacturing. What are your thoughts on this move? Could it lead to more conversion between manufacturing and research, to a point that on the sponsors side there could be more conversion around who’s making those decisions in the Thermo case for cross-selling a little bit easier?
15.
We’ve discussed the key areas for Thermo to monitor, particularly the cross-selling ability for a CRO offering. What other capabilities should we monitor across or beyond the traditional CDMO offering? We’ve spoken to platforms, media, cryopreservation. In which areas do you think Thermo has a unique opportunity to expand or expand into?
16.
Thermo has so many touchpoints across the supply chain, which is an advantage. Do you then think the company is better-positioned to take on BioLife as a challenger? How might that materialise, given the difficulty of displacing or changing sponsors’ mindsets? How could Thermo do this as efficiently or effectively as possible vs just investing here for investing’s sake?
17.
We discussed Danaher and its potential to more significantly enter the services portion of this business. What are your expectations for Bio-Techne and where it stands in the industry?
18.
What other players are you monitoring that might make any meaningful move either in manufacturing or tangential services such as cryopreservation?
19.
What are your thoughts on allogeneic technologies? Could you outline Thermo’s work here? Which players might be leading in the segment?
20.
We discussed the strength of Thermo is thinking through all contingencies, being able to shift production and not necessarily being stuck with a particular process in mind. How might allogeneic and autologous therapies play together in retrofitting or rethinking a facility? How might that work in a worst-case scenario, where allogeneic displaces autologous therapies more than expected?
21.
Lead times of around 18 months are quite standard among top CDMOs such as Thermo. How do you think this is trending? Smaller CDMOs have about 12-month lead time, which, depending on the sponsor, is quite significant.
22.
What are your thoughts on pricing, considering increasing labour costs? We’ve heard it’s perhaps of lesser concern here, given larger CDMOs can command high prices, particularly given those lead times. How might this trend?
23.
Is there anything else you would like to cover? What are you most excited about or plan to monitor diligently?
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