Demand grows for outsourced cell therapy manufacturing

A $380 million deal between Bristol Myers Squibb and the start-up Cellares is a sign of growing demand for cell and gene therapy manufacturing services.

Cellares raised $255 million in a series C funding round in August 2023. BMS was one of the investors. Cellares will now produce chimeric antigen receptor (CAR) T-cell therapies for BMS.

Under the agreement, BMS will reserve spots in Cellares’ automated cell therapy manufacturing units, machines called Cell Shuttle. Cellares operates the units in San Francisco and New Jersey and plans to use the funds from the BMS deal to set up others, in the US, Europe, and Japan.

“Cell Shuttle can simultaneously handle the cell therapy manufacturing process for 16 patients. It has a 16-times-higher throughput than any other technology in the market,” says Fabian Gerlinghaus, Cellares’s CEO and cofounder.

The cell and gene therapy space has rapidly evolved since the first gene therapy was approved by the US FDA in 2017. According to Tufts Medical Center, 18 gene and cell therapy products are available in the US for 25 indications. A record-breaking seven approvals of different gene and cell therapies came in 2023; more are expected this year.

Investment in cell and gene therapies has also jumped in recent years. An Alliance for Regenerative Medicine report notes that investors poured $11.7 billion into developing the therapies last year, compared with $7.5 million in 2017.

With numerous approvals and rising investment have come a growing need to manufacture the therapies at preclinical, clinical, and commercial stages. Gerlinghaus says biotech and pharma companies are queuing up at Cellares because they cannot keep up with production in-house. “There is a bit of competition. The situation is a bit like, Who gets to reserve the capacity first?” he says.

Audrey Greenberg, founder of the Center for Breakthrough Medicines, a cell and gene therapy service firm that was acquired last year by contract development and manufacturing organization (CDMO) SK Pharmteco, says the BMS-Cellares deal exemplifies the rising demand for cell and gene therapy production services. “I think pharmaceuticals companies and upcomingdrug makers are realizing that their capital is best spent on pipeline expansion and drug advancement rather than building manufacturing facilities,” she says.

Over 90% of SK Pharmteco’s clients seeking cell and gene therapy manufacturing services are in the preclinical or clinical stage of drug development. “We are seeing a paradigm shift to outsourcing,” Greenberg says.

But Alvin Jogasuria, a veteran of several biotech firms, points out that in the current market, where investors are becoming cautious, drug innovators are still deciding whether to hire CDMOs. “I think there are enough CDMO services in the cell and gene therapy space, but they aren’t receiving the kind of business [that] they did back in 2021, when investors overpoured money into the biotech market.”

Some drug companies have chosen to build in-house facilities to exercise more control over quality, Jogasuria says. A report by Industry Standards Research on the cell and gene therapy market says 44% of biopharma companies outsourced most or all of their cell and gene therapy production in 2021, but that number is expected to drop by half over the next 5 years as firms build their own facilities.

Earlier this year, for example, AstraZeneca said it would invest $300 million in a new facility in Rockville, Maryland, to launch its cell therapy platforms in the US. “There are pros and cons to outsourcing and investing in in-house capacities,” Jogasuria says.