An industry development success story

Attracting global CMO Patheon to Brisbane

A CASE STUDY OF THE SUCCESS

STORY

Attracting global CMO Patheon to Brisbane

Front entrance of the CMO facility

Translational Research Institute adjacent (right)

Cell culture suite from visitors’ viewing corridor

View of cell culture cleanrooms from production space

2005-2006 - setting the scene in Australia:

origins of the BPA deal

• Big pharma present; but small molecule (imported API) with product packaging focus

• CSL providing well trained bio cGMP workforce

• Multi billion biomedical R&D investment by government …. but how to translate to economic benefit?

• Clinical research strength but fledgling biotech industry (especially biologics)

2005-2006 - setting the scene in Australia:

origins of the BPA deal • State and Federal governments wanted a mammalian

cell facility

• ‘Capability gap’ argument in developmental supplier chain

• Queensland government provided $7M seed money

• Initial activity – develop business case – BPA spin-out

• Federal government offered $10M special purpose grant

• Iconic new translational institute sought cGMP capability

Business model issues

Government perspective

• Wanted inclusive clinical network focus

• Had considered incubator model; not self-sustaining

• Leery about running risky businesses

• Only had AU$7M committed

• Self-funding project implementation vehicle if possible

• No trailing operational financing risk for facility operation

• Arms-length from project implementation vehicle (hence BPA Pty Ltd)

• Project implementation decisions independent of government (fallout protection)

• Independent Board of Directors (no government directors)

Business model issues

BPA perspective

• Globally attractive/competitive or not at all

• Must cater for preclinical to market launch

• CMO solution to avoid commercial risk to government

• CMO calls the shots regarding design and operation; forget quasi public incubator

• Structure deal to provide operational funding for BPA

• Local networking synergies = nice-to-have

Why a CMO model?

• As at 2006 - clear market trend over 5+yrs to using CMOs, why…

• Time-to-market pressure – CMO’s offer faster route

• Offset capital investment risk – test the market first

• Focus capital on clinical development – basis for asset value

• Allow developers to focus on areas of strength• IP generation• Clinical trials

Business model issues

CMO side

• 100% contract manufacturing facility, not in-house (product conflict-of-interest)

• BPA was agnostic to technical platforms beyond mammalian cell culture

• All operational matters to CMO

BPA side

• Leverage other clinical development capabilities (egcollaborative marketing)

• Had to find funds beyond AU$7M

Funding

• BPA forecast requirement for AU$50M to build a facility

• Queensland government committed AU$7M for capital plus AU$3M for BPA’s operations

• BPA bid for AU$10M federal government grant• Secured AU$33M commitment from

Translational Research Institute project + land (government owned)

• Quid pro quo for latter was leasehold structure and future rental flow from CMO

Partnering Strategy

• Expressions of Interest invitations issued widely

• Request For Proposals issued to EOI respondents

• RFP structured, with deadline

• USA pitching tour to shortlisted RFP respondents

• Pitch

• we design and build for you .. up to AUD50M

• Highlight the ‘Australian advantage’

• 27 years experience as mammalian cell CMO

• Not interested in microbial manufacture

• Excellent audit record

• Experienced with broad range of mammalian cell-lines

• Backed by big corporate parent

• BPA pitch aligned with DSM’s expansion strategy

• Process technology IP – XD, EBA

• DSM accepted long lease terms

Partnering outcome – DSM Biologics Patheon

Snapshot 2016

• DSMB Patheon Brisbane – 100+ staff and growing• Clients from preclinical to phase 3; mostly N American origin• AU$1.8M in post-handover BPA support grants awarded• 3 US biotech companies incorporated in Queensland• Over AU$100M total economic return in less that 3 years

post-handover• National scene – synergistic biologics sector impact with CSL

and Pfizer plants• Major new government funding for commercial translation –

priming local pipeline• BPA mission complete; scaling-down activities

Key lessons

• Secure deal funding before partnering• Keep academia and CMO separate• CMO drives design and commercial strategy• Keep government out of CMO’s operation • Devise sustainable dividend model • Keep it simple; landlord model is a good one• Make sure CMO partner plans enough resources for

design and handover

Thank you