Outsourcing: Pitfalls and Best Practices IQPC Contract Manufacturing Forum Paul Woitach

1. Outsourcing: Pitfalls and Best Practices IQPC Contract Manufacturing Forum Paul Woitach Pharmaceutical Advisors, LLC 316 Wall Street, Second Floor Princeton, NJ 08540 609.688.1330 pwoitach@PharmAdvisors.com www.PharmAdvisors.com May 24, 2006

2. Key Principles for Success • Plan Backwards from Launch • Integrated View • Think Tech Transfer Early • Think Quality Agreements Early • Structure and Manage Vendor Relationships • Staff appropriately for Outsourcing That’s all motherhood and apple pie! What’s actionable????

3. Can You Hear The Train Coming? • “We don’t need to think about that because we’re going to license out in Phase II…” • “Our licensing partner will worry about that…” • “Let’s just get GMP material for everything…” • “We’ll get a consultant to write the CMC section when the time comes…” • “We’re starting to work on our Quality Manual…” • “It’s too early to be thinking about a Quality Agreement – it’s just development work…”

4. Nomination PhI PhII PhIII NDA/MAA Approval Management View of the Timeline Preclinical Phase I License? Phase II Phase II Phase III Launch API Drug Product DP Activities API Activities

5. Launch Planning RM API DP PAIn Planning RM API DP DP Stability ICH DP Stability Planning RM API DP ICH Stability A Truer Picture Nomination PhI PhII PhIII NDA/MAA Approval Evolving API Demand & Drug Product API/DP Launch Enabling Technology & Supply Manufacturer API/DP Technology/Supplies RM API DP PhIII Supplies DP Technology API Technology API Activities Raw Materials Demand Enabling DP Activities

6. As You Plan CMO Relationships… You should be considering: • Final Form • Synthesis technology Interim and preferred bond forming route • Analytical Technology • Raws • Intermediates and in process controls • Process Development & Optimization • Process safety & reaction engineering • Preferred Salt, polymorph, solvate – what & when • cGMP needs & timing • Clinical and safety demands • Dosage form development demands • Demonstration of manufacturing including robustness & scalability • Trade off between speed and process learning • Reproducibility of bulk form & quality • Documents – Regulatory & Tech Transfer • Sourcing strategies & ability to manage distance • Vendor management & staffing Most enter contract manufacturing relationships without adequate consideration

7. Advisors Functional Focus Integrating Research, Development, Engineering and Commercialization Expertise Practical Quality Systems & Regulatory Portfolio Decisions, Due Diligence & Valuation Rapid, Interactive Expert Panels Integrated Development View Linking CMC, Tox, Clinical Operational Input to Capital Plans Resolve Issues Build Skills Chemistry, Formulation Drug Delivery Safety & Efficacy ADME Scale-up & Sourcing Decisions Supporting Development, Operations, Strategy and Portfolio Management

8. Inverting the Consulting Model… Industry Experts Experienced Consultant Managers Unique Client Situation • Proven Delivery • Insight-Driven • Customized Resourcing • Integrated, Experienced Functional Perspective • Hands-On Problem-Solvers • Cost-effective, Flexible, Independent

9. Objective & Approach • Meeting Objectives • Provide useful tips & tools to help you anticipate and succeed • Capitalize on our experience • Approach • Best & Worst practices fall into two groupings • Planning & Requirements Definition • Staffing, Execution & Managing the Relationship • Checklist approach • Examples

10. Planning & Requirements Definition • Registration strategy • Integration of DS & DP plans • Timing and Quality of tech transfer package • Early definition of information needs • Integrated understanding of scale-up AND Tech Transfer capability • Unrealistic flexibility expectations • Contingency planning

11. Execution & Managing the Relationship • Adequate resources • Managing & metrics • Expecting vendors to be critical and help you avoid mistakes • Quality Agreement timing & specificity • Process data & understanding

12. Tech Transfer Package • Package Elements • Technology • Raw Material specs & vendors • Unit Operations as practiced • Mass Balance as complete as possible • General safety and environmental • Analytical Requirements • Proposed specs for API • Useful for make vs. buy decisions • Gives vendor an adequate view • Help them understand their risk • Typically big ROI – can avoid cost/risk premiums • Reduces “ifs” and “thens” in their proposed scope • Avoids excessive go-no-go steps Enable Efficient & Credible Interaction and Decisions

13. Early Definition of Info Needs • Buying chemistry AND information • To PAI, Registration • Establish a documentation system for all contractors • Specify what you want and how you want it documented • Beyond just batch tickets • Will the resources be available to get all the analytical work done that you will need? • Build a Development Report as you go • Demonstrate professionalism and competence to contractors and your regulatory team Lower Costs and Avoid Rework / Wasted Effort

14. Scale-up & Tech Transfer Capability • Can scale up on time but… • Will the way they scale-up processes be easily transferable to another facility? • Or are they best at scaling up for their equipment? • Does their scale-up plan favor use of their technology • To what stage can development vendor support your needs? • Do you know when you need to lock the process for ICH? • If needed, do you know when you need to confirm and qualify a commercial CMO? • Less Tech transfers can be better but know the trade-offs Very Few One Stop Shops Work Back from Launch and know what you need, when

15. Registration Strategy • Selection of Registered Starting Material • True requirements for strict optimization, process validation and rigorous analytical control • Flexibility in commercial scale decisions • Impact on out licensing value • Future filing and sourcing flexibility • Impact on cost & time for sponsor • What stability position should you plan for? Earlier Decisions Provide Critical Enabling Direction

16. Process Data & Understanding • Affects ability to manage in an outsourced environment • Enables informed decisions on key trade-offs • Speed of Phase I supply • Costlier, slower scale-up & process development • Early investment in analytics & technology • Slower initial supply • Do you know enough to bet on all doing DP work under GMP to speed time into man? • Technology info • Supply & demand info • Scale and Quantity definition for your vendor so they can help you • When to seek multiple runs at given scale • When to race to scale-up • How to apply simulation technologies • How to determine ROI • Inputs needed to make these decisions • Do you know when you need to lock the process for ICH? • FMEA • Ability to learn from failures All affect vendor selection, vendor ability to deliver and the robustness of your process and data package

17. Unrealistic Flexibility Expectations • The best vendors don’t have much flexibility • Be wary of too much! • Contracting and scheduling lead times • Hedge rules of thumb & big pharma perspectives • 3- 6 months for contractor identification and selection • Build in scheduling lead-times for when problems occur • Build in iterations for to-be-demonstrated technology • Only certainty is that things will go wrong • Understand where there’s leverage and where vendor’s situation can affect you Realistic Timelines and Risks

18. Adequate Resources • On-site involvement early in relationship • More time on-site up front, less time fixing things later • Proactive vs. Reactive • In-person builds relationship & personal commitment • Over / under importance of geography & distance • Central Project management and information flow • Be easy to do business with • Do not impede scientist-to-scientist interaction when needed It Takes Resources BUT…It Enables Alignment Efficiency

19. Integration of DS & DP Plans • Early • Analytical methods - DS, DP or other activity • Salt Selection – DP activity • Chemistry supply – DS Activity • Avoid delay because DS or DP vendor has to wait • Will raws be available to make what you need when you need it • Understand Bioavability early • DP Timeline • Quantity of API • Later • Feedback between DS & DP Development • Avoid scope changes & unrealistic demand to make up for lost time • Delays • Erosion of vendor relationship • Timing of Polymorph study vs. risk • Will raws be available to make what you need when you need it Don’t Rely on Vendors to Integrate For You

20. Managing & Metrics • Don’t assume vendor is motivated to deliver You are one of many clients • Understand how they get their bonus • Are they motivates to help you achieve your goals? • Keep it simple • Don’t confuse “speed” with “on-time” • Understand how your demands change as you progress • Put in the effort to be a good client Inspect What You Expect

21. Expecting Vendors to be Critical • CMOs are a service business • Focus on doing what customers ask them to do • Don’t expect them to stop you from making mistakes • How many vendors get a bad reputation for telling their clients what the client needs? • Will they stop you from making process changes that affect impurity profiles? It’s Your Development Plan

22. Quality Agreements I Inadequate Specificity • Raw Materials • Change in impurity provide because vendor switched RM supplier • Communications of Deviations & Investigations • Delayed investigation of unexplained variation cost $750K to fix • Metabolic conditions ( low DO2) and RM changes altered fermentation • Vendor was operating within its agreement • Documentation to support filings • Inadequate documentation resulted in re-work • Vendor was meeting specs agreed to • Company had not thought through filing requirements • Site specific and product specific post-run data check lists • Get what you need • Avoid cost and delay of back and forth • Taxes your scarce resources and busts timeline Not Spelling Things Out Can Create Big Risks Later

23. Quality Agreements II Too much specificity • Define WHAT you need but allow the vendor to propose HOW • Avoid unnecessary rigor and scope • Allow for vendors systems • Consider how Quality Agreements differ for development work and for supply • Careful about applying consultant templates • QA audit Team • Operational AND Quality considerations • Consider ability to manage ongoing • What some can manage, others can not One of the Key Elements You Should Control

24. Pre-Selection Quality Audit Long-List to Short List Request For Proposal (RFP) Supplier Preferences Negotiation & Contracting Contracting Finalization • Technical Assessment • Preliminary Quality review and criteria for Quality Audit • Preliminary negotiation • Price • T&C’s • Quality Agreement • Capacity • Performance • Identify potential issues related to Quality Agreement • Before or in parallel with Contracting • Finalize workscope document • Finalize price • QA OK – Internal • Draft workscope • Share desired Terms & Conditions (T&C’s) and Quality Agreement (QA) • Establish selection criteria • Tech Transfer package • Summarize Ratings against criteria • Narrow down to 2-3 potential suppliers • Review with internal stakeholders • Recommendation and approval of at least 2 • Final negotiations and initial contracting • Contingency Plan • QA Sign-off • Quality Agreement • PO/Final sign off • Kick-off • Execute CDA • Request for Information (RFI) on capability areas of interest • Remote / Paper Quality Audit • Initial site / technical visit • Begin business evaluation • Establish selection criteria • External Input • Capacity • Performance Eliminating a Bottleneck Taking action earlier to support tight timelines

25. Summary • Plan Backwards from Launch • Integrated View • Think Tech Transfer Early • Think Quality Agreements Early • Structure and Manage Vendor Relationships • Staff appropriately for Outsourcing Thank you! Questions? Paul Woitach, Pharmaceutical Advisors, LLC 609.688.1330 pwoitach@PharmAdvisors.com www.PharmAdvisors.com