Beginning of the end of the pandemic – what now?

The pandemic was a catalyst that accelerated adoption of emerging technologies and business models. We summarize the major pharma process technology related trends and developments we see resulting from the pandemic.

Key areas where transformations have accelerated include synthetic biology, outsourced drug development and manufacturing business models, and clinical trial processes.

The pandemic’s lingering impact among long-haul COVID-19 patients will likely result in future business opportunities.

The genie is out of the bottle for several major trends

As vaccination efforts begin to turn the tide against COVID-19 (at least in high-income countries), we summarize some major pharma process technology related trends and developments we see resulting from the pandemic. A number of these trends and developments had their beginnings well prior to COVID-19 but to that point showed minimal adoption due to regulatory and commercial inertia. But the need to respond to COVID-19 quickly and effectively at scale smashed many of those barriers. The pandemic was a catalyst that accelerated adoption of emerging technologies and business models. With the genie out of the bottle, we don’t expect much rollback.

We highlight the following trends and developments:

• Synthetic biology has become a research and commercial technology pillar.
• Contract development and manufacturing organization (CDMO) assets and technology are being priced at a premium as strategic acquirers snap up assets and the relatively few remaining independent CDMO owners seek to sell before capital gains tax increases take effect. At the same time, the value of traditional “body-shop-only” contract research organizations (CROs) and “steel-only” contract manufacturing organizations (CMOs) is fading.
• Clinical trials are increasingly decentralized as the pandemic forced essentially all major drug firms to adopt remote trial technology in order to advance their drug pipelines.
• COVID-19 “long-haulers,” and perhaps more modestly affected patients, may represent an emerging wave of chronic conditions that need to be monitored and treated in the lungs, brain and other systems.

Synthetic biology and vaccines shine

In our opinion, the clear winners in the war against COVID-19 are the synthetic biology vaccine programs headlined by Moderna (MRNA) and Pfizer (PFE)-BioNTech. These companies’ ability to synthesize mRNA (the easy part) and deliver it to the appropriate human cells (the hard part) in order to produce the immunologically active protein fragments that create a COVID-19 immune response turned the traditional timelines and scale-up issues for vaccine development on their heads.

Moderna’s first clinical-grade batch of mRNA vaccine was ready only 42 days after Chinese authorities provided the genetic sequence of the new coronavirus. By contrast, traditional vaccine programs require a complex development process and entail growing large amounts of a virus and then weakening the virus or extracting a critical piece, all of which take a long time.

Now that the mRNA genie is out of the development and regulatory bottle, we expect similar approaches and technologies to flourish. And while the COVID-19 mRNA achievement is a landmark in itself, we believe we are only at the beginning of what will be a long and fruitful advance of the basic concept.

In addition, we see the COVID-19 mRNA success as a shot in the arm for synthetic approaches more broadly. Gingko Bioworks is a prototype. Gingko makes cell programming easier. Its scalable engineering and data platform integrates a spectrum of life sciences tools and has amassed a large, flexible and diverse biological codebase to enable innovation across a wide breadth of applications.

For example, Gingko’s tools enable vaccine developers to bioengineer bacteria to produce the DNA and enzymes needed to create mRNA for COVID-19 vaccines. (Gingko will become a publicly traded company following its pending acquisition by special purpose acquisition company Soaring Eagle Acquisition and ultimately trade under the ticker DNA.)

CDMO – what a difference a D makes

The transition to CDMOs from the more traditional outsourced manufacturing model of CMOs was well underway prior to the pandemic. However, the pandemic solidified the need for speed enabled by having development and manufacturing, along with internal processing expertise, under one roof, and further diminished the value of the CMO model.

In addition, the rush to beat capital gains tax increases, at least in the United States, has prompted more CDMO and CMO owners to put their assets up for sale. Much has been written about this highly active market as strategic acquirers place their bets. Nonetheless, our current read is there are relatively few premier assets left and multiple buyers still searching for targets.

My kingdom for a reasonably priced eClinical or decentralized trial company

First Analysis’s Joe Munda writes extensively on the market for technology that enables faster and more effective clinical trials – eClinical software. The clinical trial process is tangential to pharma process technology but represents a rate-limiting function for the pace and volume of drug development and commercialization activity.

While the entire eClinical space remains hot, platforms that enable decentralized trials, where the patient doesn’t have to travel to a clinical site for every visit, are smoking. The COVID-19 pandemic basically forced both the FDA’s and the pharmaceutical industry’s hand in adopting decentralized trials: They had to figure out how to run trials without patients being physically present at central trial sites or fold up their clinical programs.

At this point, we believe all major pharma and biotech players have adopted decentralized or hybrid decentralized-traditional clinical trial models and plans. Furthermore, feedback indicates pharma companies are pleased with the resulting efficiencies and patient reach improvements. The eClinical space is still relatively new and fragmented, with numerous players each providing one or a narrow subset of the capabilities involved in the clinical trial process. The major players are feverishly trying to build out their product offerings, and private investments continue strong.

Unfortunately, long-haulers and others likely a growth market

It’s estimated that approximately 25% of those infected with COVID-19 experience the so-called long-haul syndrome, with the most commonly reported conditions being fatigue and respiratory problems and a variety of other, less prevalent conditions such as brain fog. The full picture of COVID-19’s systemic impact remains unknown. Early studies show inflammatory and microvascular damage in the lungs and elsewhere. Advanced imaging studies have also revealed lung damage that may develop into more advanced chronic diseases such as interstitial lung disease.

In discussing a Cleveland Clinic study that linked COVID-19 microvascular damage and neuroinflammation to dementia-like symptoms with Alzheimer-like biologic similarities, Dr. Feixiong Cheng stated, “Identifying how COVID-19 and neurological problems are linked will be critical for developing effective preventive and therapeutic strategies to address the surge in neurocognitive impairments that we expect to see in the future.” Similarly, COVID-19’s impacts on the lungs and heart could present challenges and thus opportunities for diagnosis, monitoring, and therapy for long-haul patients.

From trails to roads

The urgent need to conquer the pandemic and deal with its aftermath pushed society to venture quickly and in large numbers down scientific, medical and economic trails that were relatively little traveled before the pandemic. With several of these trails, such as those we discuss here, now having turned into well-traveled roads, we expect to see further development and the possibility of step-function improvements in healthcare that extend far beyond the scope of COVID-19.