Jim Miller

Contract manufacturing organizations (CMOs) are always looking for a competitive edge—something that can distinguish them from rivals and add incremental margin to their bottom lines. One of the tactics that CMOs are trying is to offer proprietary drug delivery technologies.

Drug delivery technologies are viewed by CMOs as offering several potential business advantages:

• They constitute unique value-adding solutions to clients that competitors cannot easily imitate;
• They generate royalty revenues over and above the usual fees for manufacturing the product;
• They yield better manufacturing margins by locking the client into using the CMO that controls the technology.

Examples of CMOs offering proprietary delivery technologies include Cardinal Health (Somerset, NJ, http://www.cardinal.com/), which has its "Zydis" fast-dissolve, solid-dose technology and "DelPouch" and "Microsponge" topical delivery systems; Baxter Biopharma Solutions (Round Lake, IL, http://www.baxterbiopharmasolutions.com/), whose portfolio includes the "Nanoedge" technology for drug solubilization and "Promaxx" microsphere technology; and Vetter (Ravensburg, Germany, http://www.vetter-pharma.com/), which has a proprietary dual-chamber prefilled syringe for lyophilized injectable drugs.

The latest CMO to add the drug delivery technology arrow to its quiver is Patheon, Inc. (Mississauga, ON, Canada, http://www.patheon.com/). Patheon recently announced an alliance with Depomed, Inc. (Menlo Park, CA, http://www.depomedinc.com/) to promote Depomed's "AcuForm" technology to its clients. AcuForm is a controlled-release tablet technology that delivers drugs to the stomach and upper segments of the small intestine. It incorporates proprietary excipients and formulation approaches, but can be manufactured on conventional tabletting equipment.

Depomed has two commercially approved products incorporating AcuForm: "ProQuin XR" tablets for the treatment of uncomplicated urinary tract infections and "Glumetza" for type 2 diabetes. A third product, "Gabapentin GR," is in Phase III clinical trials for the treatment of postherpetic neuralgia. Patheon is the current contract manufacturer for both approved products.

Under their agreement, Patheon will provide development and scale-up services for products incorporating the technology. Both companies will jointly review compounds before initiating work to avoid conflicts with Depomed's internal pipeline and to set development terms and license arrangements with third-party clients. Depomed and Patheon will share license fees, milestone payments, and royalties generated in deals involving the Depomed technology. The agreement further stipulates that any formulated products developed will be manufactured at a Patheon site.

The fact that Acuform is used in several marketed products removes a risk factor that Patheon has had experience with in the past. Some years back, Patheon announced an alliance with a UK company, Weston Medical Group, for a needle-free injection device, for which Patheon was to provide the manufacturing services. Patheon went so far as to build the filling line at its Swindon, UK facility. That technology has gone nowhere, because Weston ran into financial problems and the successor owner, Aradigm (Hayward, CA, http://www.aradigm.com), made only limited progress with it. Aradigm recently sold the technology to a start-up company.