Novartis, others face higher manufacturing costs with CAR-T cell treatments

When Novartis ($NVS) picked up a plant from Dendreon three years ago, the Swiss drugmaker said it intended to use it for production of its novel cancer therapies, which will be customized to each patient's own immune system T cells. While promising as another cancer fighter, what Novartis and others in the so-called CAR-T field must figure out is how to cost-effectively manufacture such personalized treatments, one of the obstacles that led Dendreon to bankruptcy court.

As Reuters points out, CAR T cells are made by extracting immune system T cells from an individual patient and altering the DNA to equip them with targeting mechanisms called chimeric antigen receptors (CARs). The CARS seek out and bind to proteins expressed by cancer cells and then the altered cells are infused back into the same patient. The process takes about two weeks. 

Because they are expected to be one-time treatments, they are also anticipated to be expensive, running up to $450,000 if they are effective. Novartis has called its drug, which in early trials left 92% of patients cancer-free in a leukemia, "potentially curative." But because they are individualized, the manufacturing will cost much more than with other kinds of meds, which can rely on mass-production methods.

Novartis is expected to file for FDA approval of its first CAR-T treatment next year, well in advance of the much smaller Kite Pharma ($KITE) and Juno Therapeutics ($JUNO), which also are working in the field and are looking for 2017 apps. Novartis is using the former Dendreon plant to produce its clinical trial supplies and believes it can use it to meet the initial demand if its drug is approved.

Novartis' Usman Azam

"We feel confident we can scale up to thousands of patients a year with a true global facility," Usman Azam, who heads Novartis' cell and gene therapies area, told Reuters. He said that would handle demand for several years while it determines whether another plant is required.

Kite and Juno have turned to contract manufacturers for their clinical supplies, but both are working to outfit their own facilities. Kite leased two manufacturing facilities this year near its Southern California base to manufacture its pipeline therapies. One is devoted to commercial production. The Santa Monica, CA, company said it would get access to European clinical manufacturing facilities as part of its $21 million acquisition of T-Cell Factory B.V., a private Dutch company that is working on T cell receptor technology.

Seattle-based Juno plans to begin operations early next year at a plant it is leasing in Bothell, WA, the company has said. The facility will provide clinical supplies for now and commercial-scale production later.

Dendreon's experience provides a road map for the drugmakers to follow, or perhaps avoid. At one time, Dendreon had three manufacturing facilities to produce its once-promising prostate cancer vaccine Provenge. It sold its 173,000-square-foot plant in Morris Plains, NJ, to Novartis in 2012 for $43 million to pick up some fast cash. It also had a 180,000-square-foot facility in Seal Beach, CA, near Los Angeles, and a 160,000-square-foot operation in Union City, GA, near Atlanta.

In Dendreon's case, the company strategically located facilities because Provenge required a turnaround time of three days between when white blood cells were drawn, sent to one of the plants to identify the specific immune cells for use and processing and returned and infused into an appropriate patient with castration-resistant prostate cancer. The logistics were tracked by a team in Seattle. The process, which cost patients or payers $93,000, had to be done three times.

But Dendreon's promising future was done in in large part by the very complex and expensive manufacturing costs of producing and delivering the personalized immune stimulator for prostate cancer. Its cost of goods at one point was 77%. Before filing for reorganization, the company cut staff to save money and invested in removing some of the manual steps in the initial process. That did reduce its cost of goods but not enough to survive. It was acquired this year by Valeant Pharmaceuticals ($VRX) for $415 million. Valeant, which has its own challenges, did not say much about Provenge in last week's Q3 report, other than that the drug's lower profit margin contributed to a 16% rise in the company's cost of goods for the quarter.

- here's the Reuters story

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