From The Editor | November 15, 2020

What's A "Biopharma CDMO"?


By Louis Garguilo, Chief Editor, Outsourced Pharma

Businessman with suitcase looking at startup icons

-- Part 2 of my exclusive interview with Phlow Corporation co-founder and CEO Eric Edwards --

The typical biopharma start-up – along with the search for funding – understands that to survive, it must intensely focus resources on the program(s) it’s looking to bring forward.  

Now consider this start-up:

  • Coincident with establishment, it enters a CDMO relationship to solve heretofor intractable common-generics shortages in the U.S., and quickly supply essential medicines impacted by the coronavirus pandemic.
  • Simultaneously, it purchases land and begins building API facilities co-located with that CDMO partner; the facilities will operate batch and continuous manufacturing (CM) platforms.
  • The company announces its supply chain – including key starting materials – will reside in the U.S.; if there are gaps, it will “stand up” domestic facilities.
  • Meanwhile, negotiations are underway to establish a network of national hospital organizations as customers.
  • It announces a strategic partnership with Civica Rx, a generics-supply business with its own revolutionary model for supporting hospitals.
  • And finally, it secures funding of hundreds of millions of dollars via a highly politicized, government-contract award, placing the organization in a critical spotlight.

And there you have Phlow Corporation.

Try that for focus.

In part one of my discussion with co-founder and CEO Dr. Eric Edwards, we spoke openly about the government-funding component that brought Phlow into public view.

Here we’ll turn attention to a topic near-and-dear to Outsourced Pharma readers –new business and partnership models.

A “Biopharma CDMO”?

AMPAC Fine Chemicals, a Richmond, Virginia-based custom manufacturer of pharmaceutical fine chemicals, is singled out as one of Phlow’s strategic partners in all its initial plans. (In July of 2018, South Korea’s SK Holdings, and AMPAC announced SK's acquisition of 100% of the ownership interests in AMPAC).

Moreover, says Edwards, “We’ve purchased over 40 acres of land adjacent to AMPAC.”

But before establishing its own facilities on that land, Phlow is contracting with AMPAC for key starting materials and active pharmaceutical ingredients (API), which will then become finished drug products utilizing Civica’s capabilities.

Specific customers for these products are the U.S. Government and national hospitals, another Phlow relationship we’ll discuss in more detail later.

Dr. Eric Edwards, President and CEO, Phlow
Once Phlow’s API facilities are up and running – Edwards believes the first will be operational before we end 2021 – Phlow itself will be a source of API supply.

Which begs the question: Is Phlow a hybrid-generics-broker / contract-manufacturing organization?

“First, it’s important to understand we are not a CDMO,” he says evenly. “And in future, we will also develop our own essential medicines.”

“We are committed to establishing as a public-benefit, social-impact-driven, essential-medicine pharma organization that brings people together to make these medicines nobody else is focused on manufacturing in the U.S.”

With that, we find ourselves documenting another new business model coming out of 2020. (see: Outsourcing Trend Of The Year: The CDMO Synergy Sprint)

And maybe we’ll call this one the “Biopharma CDMO” model.

In The Neighborhood

Labels aside, an intriguing component of the plan is the CDMO-adjacent, 40-plus acres purchased by Phlow.

Edwards discusses this by first reminding me of the background of his co-founder, a fairly legendary biopharma figure, Frank Gupton. (see: Six Degrees Of Frank Gupton (And Continuous Manufacturing))

A former executive of Boehringer Ingelheim, Gupton serves as department chair at the college of engineering at Virginia Commonwealth University, and has focused intently on developing that continuous-manufacturing platform Phlow will install in its API facilities.

While at Boehringer, Gupton headed global process development for a facility that was ultimately purchased by … AMPAC.  

“We go into that facility, and Frank hugs the security guard,” laughs Edwards. “They've known each other for 30 years.”

“AMPAC is right down the road from where we are in Richmond [Virginia], and there were many foundational relationships already established with them.

 “We’ll leverage their domestic contract-manufacturing capabilities, and we purchased that adjacent property to begin rebuilding an end-to-end, domestic advanced-manufacturing infrastructure on Phlow-owned land.”

Edwards adds:

“Another reason we partnered – and are saving taxpayer dollars – is to tap into AMPAC’s existing infrastructure.

“They already have a wastewater treatment facility, tank farms, a thermal oxidizer and all the utilities. We don’t have to redo any of that.”

 Are There Lessons Here?

This second part of my discussion with Edwards to explore Phlow’s relationships suggests some discernable lessons for consideration by all Outsourced Pharma readers. Let’s have a look.

1. Where else can you take your CDMO relationships?

Perhaps a first lesson comes simply via the depth to which strategic relationships with CDMOs can be taken.

Organizations and business plans will differ, but at the least, Phlow offers us food for more strategic thought, and perhaps a spur towards elevated discussions with your external partners.

2. CDMO As Strategic Marketing Partner

Phlow has no track record, facilities (yet), or reputational name-recognition.

Its CDMO does.

How many readers consider overtly promoting your CDMO relationships? Particularly, as a vital and positive aspect of your founding and business plan?

We’ve talked for years at Outsourced Pharma of the value bringing your CDMO relationships more front and central might create. With Phlow, we’ve captured a creative example of using CDMO relationships as marketing advantage.

3. Outsourcing, The Model Enabler

We’ve also clearly stated on numerous occasions:

New start-up models – particularly the “virtual” model – are expressly enabled by the capability to outsource practically all drug development and manufacturing activities.

No outsourcing, and these models disappear.

Phlow has taken that enabling to an interesting place. Think through how you might construct a higher utilization of external partners in order to create a unique organization that can best accomplish your drug development goals.  

4. Direct To Market (And Patient)

There’s also the concept here of “direct to market” and/or “direct to patient” planning. 

From discovery on, give more thought to actively positioning your future products closer to the market, and patients’ doorsteps.

Civica, and now Phlow, are modeled on contracting directly with their end-market, in their cases hospital systems. Among other advantages, this circumvents to a degree a healthcare and supply system layered with middle layers and bureaucracy.

With today’s gene and cell therapies, personalized medicine, etc., this beeline to the patient actually takes on a heightened urgency.

5. Domestic Supply Chains

If nothing else, Phlow is conceiving an organization with creative partnerships to manufacture – even low-margin essential medicines – on U.S. soil.

Some may remain skeptical, but all of us should be encouraged by the efforts, and hope for ultimate success.


Editor’s Note: Next up is the third and final segment of our discussion with Phlow co-founder and CEO Eric Edwards.