Buyer Beware: Compliance Risks at Emerging Cellular and Gene Therapy Companies

Chris Fanelli explains how emerging cellular and gene therapy companies present unique challenges and unique opportunities from a compliance perspective. He explores some of the tools that buyers can use to assess GxP compliance at the due diligence and post-acquisition stages.


Cellular and gene therapies offer truly ground breaking new opportunities for the treatment of serious diseases. For many, these and other advanced therapies are critical to making continued progress in treating serious, often life-threatening diseases. This is evidenced by the dramatic increase in the number of INDs and marketing applications being filed each year with health authorities around the world.

While it’s hard not to get caught up in the promise of these innovative products, potential buyers of cellular and gene therapy start-ups should approach diligence with an appropriate level of skepticism and a long list of questions. These should be aimed at assessing both GxP compliance and the likelihood of successfully scaling up to support later-stage clinical development and, ultimately, commercial manufacturing.

It is often the case that for advanced therapeutics such as cellular and gene therapies, the patient population is extremely sick. In many instances, the therapy is the last hope for treatment. This draws extremely talented medical and biotech professionals to these innovative products. It also creates pressure which can be compounded by the very tight timelines, especially compared to traditional pharmaceuticals.

For example, for CAR T products, the timeline from apheresis to manufacturing, testing, release, and infusion is measured in days or weeks, and there is little to no room for error. Further, because the patients are often so sick, failing and starting over isn’t an option. Nobody is perfect 100% of the time, and seemingly small changes can have major impacts downstream, especially when, in many cases, the primary starting material is the cells from very sick patients.

This can be a very different situation from the large scale manufacturing of a traditional small molecule, where there will be an input, a process, and an output which can be strictly quality controlled, and where if any deviation occurs an entire batch will be rejected. Cellular and gene therapy companies may be focused on manufacturing from an R&D perspective and on getting a product to patients as quickly and efficiently as possible. This can create different challenges for quality and compliance than those experienced by traditional manufacturers.

The urgency of getting products to very ill patients can also create tensions when complying with regulators’ GxP requirements, many of which do not clearly fit these innovative products. In the U.S., we have seen that this tension can result in compliance gaps with FDA’s requirements. These compliance gaps can delay development, delay approval, and lead to enforcement action by health authorities. And after the close of a transaction, the seller’s compliance gaps become the buyer’s compliance gaps from a regulatory perspective.

It is therefore critical for a potential buyer of a cellular and gene therapy company to truly familiarize itself with the product, the process, and the target company’s quality mindset. At the due diligence stage, this means understanding how the target approaches and investigates failures, especially in the clinical development setting, and whether the target has invested in quality. One should also look at what the target is doing to prepare for the potential of a rapid transition from clinical to commercial, as many advanced therapies benefit from expedited approval pathways such as fast track, accelerated approval, and priority review. Beyond the due diligence stage, realizing the value of the investment often includes the development and deployment of a day-one plan to ensure that any compliance gaps identified during due diligence are fully addressed.

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