Philadelphia Inquirer
Mike Armstrong, August 17, 2012
Many American companies long ago outsourced the manufacture of their products either to overseas suppliers or U.S.-based contract manufacturers.
Small to medium-sized drug companies, in particular, outsource as much as they can to keep their cash burn rates manageable until they reach the later stages of drug development.
That’s why it was striking to be standing earlier this week inside a 60,000-square-foot pilot plant built by Morphotek Inc. and set to begin production this fall in a Uwchlan Township corporate park.
Here was a building in which raw materials will arrive in one door, workers will monitor the production of monoclonal antibodies in various sizes of bioreactors, and the resulting medicines will leave in bulk through another door, destined for use in Morphotek-sponsored early-stage clinical trials that will generate data needed to prove the safety and effectiveness of the treatments.
What this $80 million building will replace is a lot of the costly contract manufacturers that Morphotek has relied on to produce the proteins and antibodies it has under development. Currently, Morphotek personnel do a lot of traveling to Europe and other places to ensure the quality of the monoclonal antibodies being produced by contractors, CEO Nicholas Nicolaides said. “It’s taxing on a small organization such as our own,” he said.
What the new building won’t be doing is commercial manufacturing. If and when Morphotek receives its first product approval from the Food and Drug Administration, that large-scale production would still have to be contracted out, according to Philip M. Sass, the company’s chief operating officer.
In fact, if Morphotek had built a commercial manufacturing plant, it would have cost two to three times the amount of the pilot plant, Sass said.
The highly automated plant across from the biopharmaceutical company’s corporate headquarters currently employs 23 people and has the capacity for 90. Sass said a similar pilot plant 10 to 20 years ago would have needed a couple hundred workers to operate it. Today’s equipment is smaller and more efficient than when Centocor Inc., the granddaddy of biotech in the Philadelphia area, was brewing its medicines in the Great Valley Corporate Center.
Also significant is that the project was paid for entirely by Morphotek’s Japanese parent company, Eisai Co. Ltd. No job training subsidies, no tax credits from the state or federal governments. Call it an $80 million vote of confidence by Eisai president and CEO Haruo Naito in the leadership of Morphotek and promise of its product pipeline, which includes experimental treatments for ovarian cancer, mesothelioma, and other cancers.
Publicly traded Eisai bought the venture capital-backed Morphotek for $325 million in April 2007. During Tuesday’s ceremony to dedicate the pilot plant, Naito praised the talent and expertise assembled by Morphotek founders Nicolaides, Sass, and Luigi Grasso. Some of that human capital has come from Centocor, GlaxoSmithKline, Pfizer, and other companies that have reduced their local workforces recently.
Naito also challenged the employees who were gathered under a big white tent in the parking lot to find ways to shorten the development time for Morphotek’s biologics and lessen the final cost to patients who will need those treatments.
With 180 employees in its Exton operations, Morphotek has come a long way from the business started by three Ph.D.’s in a small laboratory at the University City Science Center in West Philadelphia in 2000. And it may not be done growing.
“If you need another $100 million, please let me know,” Naito told the crowd.
