In conversation with Thomas Wellner

As CEO of closely held Therapure Biopharma, Thomas Wellner is lifting the contract development and manufacturing organization (CDMO) out of the ashes of Hemosol, which fell into receivership in 2005 and was acquired in 2007 by privately owned Catalyst Fund Limited Partnership, a private equity fund in Toronto.  With a global focus on business development and value systems after a 20-year career with Eli Lilly (NYSE:LLY), where he worked on every continent but one, Canadian-born Mr. Wellner came to Therapure with a strong background in drug development, sales and marketing, and management, including a stint as CEO of Lilly’s big subsidiary in German, where he managed an organization of 1,200 people.  In this exclusive interview with biotuesdays.com, Mr. Wellner sets out Therapure’s unique capabilities as a CDMO and the components of its business strategy.

Let’s begin with a brief historical sketch of Therapure.

The principal assets were Hemosol’s state-of-the-art manufacturing plant that was designed for the commercial launch of its Hemolink synthetic blood product, some intellectual property around hemoglobin and hemoglobin as a targeted drug delivery system.  There were also 13 people here at the time, and we were able to retain several key Hemosol executives, Dirk Alkema and David Bell. Brainpower is a big asset.  We are now up to about 91 people, and of those, 55 have M.Sc. and Ph.D. degrees.  I was recruited at the end of 2007 and intrigued at the opportunity to build a business out of a collection of assets. I signed on in April of 2008.

Are there any plans to revive Hemolink?

Not currently.  But we have it in the background.  For now, we’re actively looking for partners in less regulated markets.  I don’t think the FDA will change its opinion about these products. And if it did, we would restart clinicals with a second-generation product.  But there is ample opportunity in places like South Africa and Russia.  A lot of these countries have approved products in this area, but Hemolink is a far superior technology.

So how would you describe your mandate?

It’s to rebrand Therapure and refocus the business on contract development and manufacturing services to utilize the assets of the plant, the skills of the people and tap into the opportunities of biologics, which are growing two to three times faster than small molecule compounds.  And also to tap into the outsourcing trend, because the days of biotech companies spending $50 million to $100 million to build a facility to manufacture a lead asset are over.

How do you differentiate Therapure from other CMOs?

We do work in three areas that I would call our sweet spot. One, we differentiate ourselves by having a huge depth of knowledge and comfort working with plasma proteins. Second, the therapeutic area we feel very comfortable in is recombinant proteins from mammalian sources.  And the third area is our capability to work with primary tissue sources like bones, ligaments and growing cells in Petri dishes. Our services extend from the lab bench to commercial manufacturing, filling and finishing, and distribution.  We have very few competitors that offer that full range of services.

The other thing that sets us apart is the special sauce.  We can do more than just replicate a client’s recipe.  The really valuable work is to enhance and improve a manufacturing recipe.  What the development in CDMO means is that we take the recipe, we break it down to a lab scale and we assess it, at which point our development scientists can apply our special sauce and recommend improvements to the process before we do the contract manufacturing.

Does that require regulatory approval?

It does if it’s a commercial process or a compound in Phase 3.  Earlier than that, it wouldn’t.  We only make recommendations to the client.  At the end of the day, it’s the client’s choice.  A lot of times, the changes in development will increase the yield, for example, and the client will look at it and assess the risk, value and investment.  That’s why we think the development component is very important.

So how would you describe your value proposition?

In the scheme of things, there are far fewer new commercial CMO contracts than there are for Phase 1, Phase 2 and Phase 3 materials.  So just the sheer volume of opportunities is far greater, the earlier in the development process you go.  We are a company that has labs, pilot suites, which can do clinical scale work, and we have a facility that is more than capable of handling commercial processes on a very large scale.  So we can contemplate relationships with clients that can be as early as something under a lab hood to something that requires a GMP process.

For most clients, we can start when they’re in the earliest stages of development and stay with them as they progress through to commercial production.  So that they don’t have to start a relationship with the one CMO, who can only take them to a certain scale, and then they have to find somebody else or maybe have to build their own facility down the road.  We offer a continuum to a client so that they don’t have to manage multiple contractors.

Some contract manufacturers only do the bulk product, and then the client has to go someplace else to put it into a vial or a syringe or a powder or whatever form it gets finished in.  We also have a Health Canada commercial license for the aseptic handling and filling of biologics.  We’re only one of two places in Canada where you can get that done.

What are you doing with your own drug discovery?

We keep our product pipeline in the background, because we are, first and foremost, a service provider.  That’s our focus, and that’s what our clients come to us for.  But we’re doing innovative drug development, the theme of which is haemoglobin.  We have four assets that we’re moving along, with two of them using hemoglobin as a drug carrier.  The concept is that purified hemoglobin naturally travels to the liver and spleen, where the drug is released.  We have one compound being developed against Hepatitis C and liver transplant and another compound for the treatment of liver cancer.  Our third compound is a monoclonal antibody, which mimics the natural ability of hemoglobin to stimulate stem cells to produce red blood cells and is being targeted for hemolytic anemia.  We also have a proprietary protein modification technology designed to improve the performance of existing protein-based therapeutics through an increase in their half-life.

Are there other elements of your business strategy?

In some cases, we have done joint ventures with a client, where we each bring a certain set of skills to a mutually agreed upon drug development project.  With one of our current clients, we’ve taken an equity position in the company, because we thought the technology was very good.  We have also provided clients with debt financing.  And instead of taking cash for our services, we can also take back warrants, for example, to allow clients to maximize the use of their cash.  So, it’s all about additional services that go beyond what other competitors can offer.

Any long-term clients you can tell us about?

Earlier this year, we signed a multi-year manufacturing agreement with LFB Biomedicaments, the French blood network.  It’s a 10-year take-or-pay contract to produce two blood proteins for them on a commercial basis, with LFB responsible for global regulatory approvals and marketing.  We’ll be doing a retrofit of our manufacturing plant to accommodate the installation of LFB’s proprietary technology for completion in 2011.  Regulatory batches are scheduled for validation in 2012 in order to begin the regulatory approval process, with commercial production scheduled in 2014.

Do you have any plans to go public?

I can’t comment on an IPO specifically.  In theory, Catalyst operates as most funds do.  At some point, they’ll be looking for an exit strategy.  So an IPO would be possible. Our business has two components: a services business; and a drug discovery business.  Now they reside in the same organism.  One or both of those parts could make a good IPO. So the short answer is yes, it’s possible.

8888

Thomas G. Wellner Title: President & Chief Executive Officer, Therapure Biopharma Inc. Born: March 4, 1965 in Charlottetown, PEI Education: Bachelor of Science Honours, Life Sciences, Queen’s University, Kingston, ON, 1987; Harvard Business School, Executive Program, Boston, MA, 2005 Career Highlights: Sales for Lilly Canada, 1987; designed and set up the re-entry for Lilly into the Chinese market in the early 1990s and marketing manager Lilly China; Chief Marketing and Sales Officer for Lilly European Operations, 2000-2004; CEO and General Manager of Lilly Deutschland GmbH, 2004; returned to Canada, 2007; President and CEO Therapure Biopharma, 2008

1