Can you give an overview of Kindeva Drug Delivery (Kindeva) and the company’s main achievements in 2022?

Kindeva Drug Delivery has a rich 100+ year history. It was formerly 3M Drug Delivery Systems that were composed of three different entities — US manufacturing, UK manufacturing, and research and development. These three groups were put together to form Kindeva, which launched in May 2020 as an independent company on the heels of an Altaris Capital Partners buyout, which is our private equity sponsor. In 2021, Altaris purchased Meridian Medical Technologies from Pfizer. Our sponsors always thought that Kindeva and Meridian would be a strategic fit and there were a few events that aligned well which allowed us to bring together this vision. In December 2022, we closed on the combination of these two companies to create a leading CDMO focused on drug-device combination products.

What synergies did the combination of Kindeva and Meridian create?

The drug delivery market is a multibillion-dollar market made up of parenteral, inhalation, transdermal, and intradermal delivery. Meridian is the innovator of autoinjector technology and a market leader in manufacturing emergency autoinjectors, while simultaneously expanding aggressively in the pre-filled syringe and traditional sterile fill-finish space. This, combined with Kindeva’s core competency in inhalation devices, including metered dose inhalers (MDIs), as well as significant transdermal and intradermal capabilities, allows us to offer our customers comprehensive solutions relative to primary drug delivery platforms. Essentially, overnight, we became one of the top 15 global CDMOs, but more importantly, we are a top five CDMO concentrated in this drug delivery space.

Can you elaborate on the inhalation drug delivery space and the demand in 2022?

Looking at the core markets, they appear to be growing at similar rates of approximately 12% to 15% CAGR. When assessing the inhalation market by itself, there are several new opportunities that have evolved from the traditional MDI, such as the move toward dry powder inhalers that offer the ability to deliver larger molecules and biologics not previously available for delivery through inhalation devices.

Additionally, in 2022, Kindeva completed an agreement to acquire iPharma Labs. This merger combined iPharma’s deep expertise in inhalation formulation and development of liquid, dry powder, and propellant-based therapies with Kindeva’s global expertise in developing, commercializing, and manufacturing inhaled therapies. This acquisition gave us very early-stage development capabilities and the ability to do feasibility testing around getting certain molecules into a dry powder formulation. This also broadened Kindeva’s global footprint with two additional locations in Union City and Northridge, California.

What are the main drivers behind the growth of the drug delivery market?

The shift to biologics is driving some of the growth from a top line due to its greater efficiency and being a higher-value product. Self-administration of medicines is also something people are becoming increasingly comfortable with and therefore are looking for device platforms that enable independence of administration. General advances in drug delivery fit into both categories; the shift to biologics and more people self-administering drugs are primary tailwinds for this expected growth.

What will be the main opportunities for Kindeva in the coming years?

The growth for Kindeva will come from new CDMO partnerships across all of our drug delivery platforms, where we strive to position Kindeva as the premier CDMO in these areas. Historically, big pharmaceutical companies had substantial R&D development capabilities and had a cradle-to-grave approach. This model has changed over the years to where many large companies bought technology that they then would commercialize. Drug development has shifted from a marathon to a relay race, where companies will now get a drug to a certain level and then hand it off to the next and so forth. The shift in the drug development model coincided with the growth of contract manufacturing, as large-scale manufacturing in this model is not practical, especially at the early stages. Therefore, there has been a surge of pharma companies looking for manufacturers that can scale and complement this model. The evolution of smaller batches of high-value products also lends itself well to contract to manufacture as the facility investment versus outsourcing is not always practical at a smaller scale.