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Company strives to provide essential medicines that are in low supply
Founded by Eric Edwards, MD, PhD, previously co-founder of pharma company Kaléo, and Virginia Commonwealth University (VCU) Professor B. Frank Gupton, Phlow (Richmond, VA) is a public benefit corporation “committed to ending shortages of essential medicines in the United States.” The corporation creates active pharmaceutical ingredients (APIs) and finished pharmaceutical products using state-of-the-art flow technology and other advanced manufacturing processes. With its partners, Phlow uses continuous R&D to improve the quality and yield and reduce the cost and environmental impact of pharmaceutical ingredients with the aim of one day “end[ing] the shortage of essential medicines for good.”
Established just over two years ago, Phlow quickly generated headlines, some of them controversial, as the corporation secured a contract of up to $812 million from the Trump administration to produce essential medicines that were in short supply or had vulnerable supply chains during the COVID-19 pandemic. In November 2020, however, Outsourced Pharma editor Louis Garguilo wrote of Phlow that no biopharma startup “has been as misconstrued, hastily judged in strategy and capability, or even labeled ‘political.’”
To get the Phlow story straight from the horse’s mouth, as it were, Pharma Commerce spoke recently with Edwards. In the interview that follows, he describes Phlow’s establishment and rapid route to success, and outlines his laudable if eye-wateringly ambitious vision for the future of the corporation and the pharma supply chain in the US.
Can you tell us how Phlow got started?
We started because of the drug-shortage challenges in America. This was before COVID. I had been consulting on a project assessing why it is that in Virginia (where I am based) and indeed throughout the country, when you call 911 or emergency services, an ambulance will show up but there will be two or three life-saving drugs not available on that ambulance. How could such a thing happen in America? So, I started looking into the core issues leading to shortages and then focused on pediatric and rare disease drug shortages. My co-founder and I set up a company that was modeled similar to Civica Rx, a large nonprofit that has really tried to disrupt, in a positive way, how drugs got to hospital customers. I connected with Civica’s president and CEO, Martin VanTrieste, and shadowed him and his team. I also met with the Civica board and started learning their model, which we wanted to apply to the pediatric drug space.
We actually had children’s hospitals that were ready to invest in us when COVID hit. When that happened, we started looking at the drugs that were in shortage and the drugs that were going to be needed for patients hospitalized with COVID-19. There was a 65% overlap between these drugs. The pediatric hospitals were saying, “We need you to make these drugs for us.” We went back to Civica, we linked up with AMPAC Fine Chemicals, which had the old Boehringer Ingelheim (BI) facility in Petersburg, VA, and we linked up with VCU’s Medicines For All Institute. Our co-founder, Frank Gupton, used to be in charge of process development for the Petersburg BI facility. He failed miserably at retirement and ended up becoming the dean of chemical and life science engineering at VCU; his specialization was new route synthesis using continuous processes and flow chemistry. So, right in the beginning of COVID, January 2020, we all came together as teaming partners and said, “If we don’t do something about these critical, mostly injectable, generic, essential medicines, we are going to have a disaster on our hands if COVID becomes a global pandemic.”
How did you get the government’s attention on the drug shortage problem?
At that time, the government was focused on the things that you would expect—personal protective equipment (PPE), diagnostics, vaccines, making sure there were enough ventilators, etc. But they weren’t looking at the fact that we weren’t even going to have the drugs you may need to actually get a patient onto the ventilator, drugs used to intubate patients and sedate them. The supply chain in America is not set up to easily allow a hospital to take a drug out of the channel, put it on the pharmacy shelf, and then say, “Oh look, we have extra medications, redistribute to other hospitals in need.” Nor is the Strategic National Stockpile (SNS) set-up to manage the numerous list of essential medicines. There were little-to-no essential medicines in the SNS at the time. Phlow was one of the first to reach out to the government and say, “You need to look at these essential medicines. There’s over 100 on FDA’s drug shortage list. Many of these are the ones you’re going to need for COVID-hospitalized ICU patients. If someone doesn’t make these drugs, or at least get a supply of them quickly, we could be in trouble.”
We also alerted the government to the most vulnerable component of our essential medicine supply chain, which are the APIs. Over 80% of these come from outside the US, from India or China. We emphasized, “If one of these foreign nations decides to hold off on the exportation of these APIs, we’re also going to be in trouble.” As you might remember, India did exactly that. In March 2020, India shut down the exportation of 26 APIs.
The question we wanted to answer with the government’s help was, “Are there certain medicines, no matter what, that a country should have direct end-to-end control over, even though we all believe in a global supply chain?” There’s no question we need a global supply chain, of course. But are there certain medicines or medical countermeasures that we need to have within America, with a resilient supply chain to manufacture them end-to-end right here at home in case of war, natural disaster, or a future pandemic that could disrupt the supply of these particular generic drugs? We could see that there was bipartisan agreement on this need to repatriate our supply chain; there were few examples of bipartisanship. There was just straight agreement that we needed to have more domestic supply chain resiliency and that we needed to rethink the SNS.
Going back to the SNS challenges and the fact that there are over 100 essential generic medicines and their ingredients whose production was primarily outside the US, if you think about even one vial of any drug, it doesn’t come in just one formulation or one concentration. But the SNS in the US was never set up to store hundreds of millions of different concentrations and forms of these drugs. When the COVID-19 pandemic exposed these vulnerabilities in the US supply chain, we said, “There’s a better solution. We can look at the way we store these drugs and prepare for future pandemic preparedness.”
And so, we worked alongside the Office of the Assistant Secretary for Preparedness & Response (ASPR) and the Biomedical Advanced Research and Development Authority (BARDA) on a new concept called the Strategic Active Pharmaceutical Ingredients Reserve (SAPIR). This is a long-term, national stockpile of API, which presents a solution to the question of how we plan for future supply-chain resiliency and do it in a cost-effective manner.
The USG contract focused on two areas. Number one was the rapid-surge response. We quickly got the most vulnerable essential medicines into the SNS—delivering with the help of our partner, Civica Rx, over two million doses of essential medicines to the SNS when there were none in there to be distributed to hospitals if needed. The second area was to re-secure this entire industrial base, leveraging advanced chemistry and manufacturing end-to-end. We are building a lab that was looking only at new syntheses, leveraging continuous processes. If you know anything about continuous versus batch, continuous allows for higher yields, lower cost, lower environmental footprint and waste. The problem is that it is very expensive to implement. It is not realistic to try to compete against India and China in continuous manufacturing. But with the support of government helping to subsidize our infrastructure, initial programs and the team, it’s a different value proposition. The government said, “If we’re going to compete, we have to automate. Continuous manufacturing helps achieve that goal.”
But what happens when we make a batch? How do you compete? We proposed that when we make a batch of a drug, we’re not going to make it for just a certain number of hospital systems, we’re going to make a batch for the country, a batch large enough to secure the API into a strategic API reserve. Our operational cost is decreased by having such large batches, and the API in some cases has a shelf life of 10 years. A typical supply chain would be three or four months to get from API to finished drug product. We have pre-positioned partners, including Fresenius Kabi and Civica Rx, who will be able to convert the API into finished drug dosage forms much faster. Civica, for example, is next to Phlow, building a substantial vial and pre-filled syringe fill-finish facility, and we can move these APIs right into fill-finish and get them converted through a network of 503B and abbreviated new drug application (ANDA) holder partners within 30 to 45 days.
Reporting on Phlow back in May 2020, Pharma Commerce’s Nick Basta wondered “whether one company could make a meaningful difference?” There are limits to what you can do…
We’ve lost our industrial base in this country over 40 years. The government has doubled down on Phlow and is saying, “Let’s try this new model. Let’s see what this looks like.” And we are now working closely with the Biden administration, which has been extremely supportive of our efforts. But, of course, it’s going to take many more organizations than just us to solve for this broken supply chain. We’re hopeful that others are going to jump into this model. I think the government subsidizing infrastructure has to be something that occurs on an ongoing basis, given the fact that most of the medicines we are manufacturing are barely profitable. They have certainly shown the willingness, but China and India, as you have seen, are both doubling down and subsidizing their own bulk drug manufacturing plants in a major way. We’ve got to do the same thing by creating a US-based, resilient end-to-end supply chain. Phlow’s current focus is on small-molecule, injectable, essential medicines—over 60% of the drugs in shortage are injectable. By focusing there and really pushing the government to provide the incentives, we can gain further investment and hopefully be a trailblazer and pioneer who encourages others behind us to jump right in.
We’re almost two years on from your high-profile entry into the space. What tangible results have you seen from your initiatives and proactive work in that time?
We’ve done about five years of work in two years. Right at the beginning, it was all about the government helping us launch and providing rocket fuel to help catalyze Phlow’s ability to support the COVID response. But it’s up to us to have long-term commercial sustainability. Together with our partners, VCU’s Medicines for All Institute, AMPAC Fine Chemicals, and United States Pharmacopeia, we have been expanding Phlow’s R&D labs and now have one of the most well-equipped process development labs in the country staffed with exceptional chemists and pharmaceutical engineers. So, how do we leverage that commercially?
First and foremost, we went back to our original impetus and we launched the Children’s Hospital Coalition, which is a group of leading children’s hospitals who were tired of uncertainty around the availability, cost, and quality of certain drugs for the pediatric population. Then we partnered with Fresenius Kabi, one of the largest generic sterile injectable manufacturers in the world, in a supply agreement, which immediately helps us support the Children’s Hospital Coalition with private-labelled product. We also have a commercial agreement with Civica that contemplates Phlow supplying API to Civica’s fill-finish facility. We have been building our facilities very quickly and will be up and running this summer. We’ve been executing on the government contract very well. Out of over 3,500 eligible small businesses, Phlow received the Health and Human Services Small Business Contractor of the Year Award for 2020.
We have moved two of our programs from development into industrialization. Our first drugs for the children’s hospital will be launched soon. There’s been a lot of rapid progress. We raised an oversubscribed Series A and now we’re in the middle of additional financing. It’s all about trying to create long-term sustainability that isn’t solely dependent on the US government, while still remaining a thought leader and capitalizing on the infrastructure being built right here in the US.
What is your long-term vision for Phlow?
It is our hope that Phlow becomes a leading, advanced CDMO, where a pharmaceutical company—whether or not they are funded by the US government—doesn’t have to look outside the US for an end-to-end advanced development and manufacturing solution. They can come to Phlow and we can develop a high-yield, high-quality process and then help them industrialize that into a finished dosage form. We have made much progress in a short amount of time to support this goal.
The second thing is that this whole issue around storing finished medicines is not a resilient future that we should be banking on. The SNS is not equipped to handle a future pandemic or public health threat with hundreds of millions of doses of hundreds of essential medicines, so we want Phlow to play a significant role in helping to operationalize a new strategic API reserve that is able to quickly convert API into finished dosage forms. The vision is to have multiple SAPIRs positioned not so dissimilar from the Strategic Petroleum Reserve, but throughout the country, ready to meet the demands of a natural disaster, a trade dispute, a war, or a future public health threat.
In addition, there has not been a consolidated supply-and-demand signal in the pharma industry that helps determine when a shortage is about to occur. Only when hospitals are short of a particular drug do the wholesalers and manufacturers realize that an issue exists. By the time FDA or the American Society of Health-System Pharmacists (ASHP) list a drug in shortage, a hospital has known about it for months. Having a reliable, predictive infrastructure that leverages advanced data and analytics to help support surge capacity in the future is something else I believe Phlow can play a role in.
Our vision is a bold one. We believe that every human being should have access to the essential medicines necessary to sustain life. But how is it that in America, we don’t have access to every essential medicine? So, we’ve got to fix this. It’s not just about advanced manufacturing. It’s about the supply chain and distribution. It’s about robust government support. We really have to reimagine the supply chain end-to-end, which involves not only the development of these drugs, but how they actually get to the most important stakeholder—American patients.