How did 2023 unfold for CMC Pharmaceuticals?

2023 was a great year for us. We continued to build on the momentum from 2022 and made significant progress in various areas. Early in the year, a lab expansion project was completed and we continued to add new customers and technologies to our portfolio. As a result, we are confident that 2024 will be our best year yet.

One of the key highlights in 2023 was our continued collaboration with the Department of Defense, particularly on Nerve Agent Defense programs. We successfully expanded our portfolio of pharmaceutical countermeasures for the US government, which was a significant accomplishment for us. Can you elaborate on the types of customers CMC assists in the commercial sector?

In the commercial sector, most of our customers are small to medium-sized pharmaceutical companies. We often collaborate with these companies to provide expertise in formulation development, analytical method development, stability evaluations, process scale-up, and other related services. While larger pharmaceutical companies typically have internal capabilities, small to medium-sized companies rely on us to supplement their expertise and resources. However, larger companies also lean on CMC Pharma for its deep expertise and ability to execute programs quickly.

As biotech companies secure funding and advance their drug development programs, the demand for our services is expected to increase. What will the DEA approval to handle Class II to V controlled substances mean for CMC going forward?

In Mid-2023, CMC Pharma hit another milestone when we received DEA approval to handle Class II through V controlled substances. It allows us to legally handle a broader range of pharmaceutical ingredients, including opioid pain medications and sleep aids. By providing the necessary controls and security measures, we can support our customers in developing innovative pharmaceutical formulations that were previously out of reach.

In addition to securing DEA approval, we have focused on enhancing our regulatory compliance and expanding our service offerings. We recently underwent inspections by the FDA and our State Board of Pharmacy, demonstrating our commitment to maintaining the highest standards of quality and safety. Looking ahead, we plan to further diversify our capabilities by exploring opportunities in manufacturing and additional development services. Are there any specific chemistry trends or areas of demand that CMC is noticing in the industry?

We have observed two notable trends in the industry: The repurposing of drugs for new indications, and the development of combination products. We have been actively involved in both areas and expect the demand for our services to continue growing as these trends gain momentum. On average, there have been 42 new drug approvals, which is slightly lower than the previous average of 55. This trend reflects a balance between introducing new formulations and repurposing existing ones. Typically, companies tend to favor reformulating existing drugs unless it is imperative to pursue a completely new approach for approval. Why is Ohio becoming an attractive space for life sciences firms like CMC?

Ohio offers several advantages for life sciences firms, including a lower cost of living and lower operating costs compared to the East and West Coasts. The availability of land and a stable labor force further enhances its appeal. Additionally, Ohio's strategic location and supportive ecosystem for life sciences companies make it an attractive destination for businesses seeking to expand or establish a presence in the Midwest. Overall, Ohio provides a conducive environment for growth and innovation, making it an ideal location for firms like CMC Pharmaceuticals. What are the key priorities for capitalizing on potential growth in 2024?

The collective sentiment within the company is one of unwavering confidence that 2024 will surpass all previous years in terms of success and achievements.

Our strategic discussions have outlined key priorities aimed at maximizing growth opportunities in 2024. In the immediate future, our focus lies on finalizing ongoing deals within our pipeline. Looking ahead, we are strategizing to expand our service portfolio beyond laboratory services. This entails venturing into manufacturing and development services, to position ourselves as a comprehensive contract development and manufacturing organization (CDMO) to better serve our customers and capitalize on market demand.