How will the US$16 million growth equity financing Nivagen received in 2020 help support the company’s future growth?

The reason we chose Telegraph Hill Partners was because of their deep experience partnering with CDMOs. At Nivagen, we want to bring manufacturing to the US, so our goal is to start our own manufacturing unit focused on sterile injectables. The capital provides us with more flexibility in acquiring or investing in 505(b)(2) or ANDA programs. It also allows us to invest with our partners in new molecules, and it will facilitate the growth of our sterile injectables manufacturing unit. The third advantage is that having a private equity partner of their reputation gives us credibility in the debt market. They also bring intangible values like governance, networking, wisdom, and experience, so, for us, they were the right fit.

What advantages will Nivagen have over competing manufacturers?

Currently many of the big multi-facility CDMOs do not understand the need for speed companies require, especially in generics. Second, a lot of CDMOs do not fully comprehend the cost of goods structure. A lot of these CDMOs have not really worked on their own with the FDA. We provide complete research, analytical formulation development, and importantly, we also provide regulatory support. Above all, we have experience in filing the application, so we know exactly what regulators expect and will request.

How has the pandemic impacted FDA inspections?

Until very recently, the FDA had essentially ceased conducting inspections in the US and abroad. Although some applicants had already completed their reviews, they were unable to receive FDA approval on their products. The only exceptions were those companies who had conducted pre-approval inspections, which is rarely the case. This means that many approvals were deferred and basically at a standstill. This was a big problem for a company like ours as we currently have three CGT applications whose reviews are complete, yet we could not get them approved because the facility inspections were still pending.

The great news is that the FDA just put out new guidance regarding the use of virtual inspections on April 14, 2021. The FDA and its employees have been working hard throughout the pandemic, and they have heard the voices coming from the industry. We are hopeful that with this new guidance we will have an inspection soon.

What is the current focus of Nivagen’s business strategy?

We remain focused on molecules with supply issues, where there are fundamental challenges with the API, manufacturing, or packaging. The second area we focus on is on improving existing therapies with the 505(b)(2) program. We continue to look for ways to provide convenience to doctors and pharmacists through better dosage forms. We also have our own distribution platform through which we continue to launch and market products.

Can you speak to the role generics play in lowering the cost of drugs in America?

For every dollar we spend on drugs in the US right now, 90 cents are spent on branded products. In terms of volume, 90% of drugs are generics. Therefore, generics bring extraordinary value to government programs and insurance companies. In terms of incentives, I believe that the market is working on its own. I would not incentivize generic substitution, because if there is a new therapy with an advantage, or a newer molecule, it should not be stifled in order to promote generics. That would kill innovation.

How can US-based companies compete with generics companies in other parts of the world given their cost advantages?

It is extremely difficult to compete with a company in China or India if you are manufacturing in California. However, nowadays cargo, shipping and trucking costs have risen significantly. If you were to add a potential government incentive that favors local manufacturing on top of that, then US-manufactured companies would become much more competitive.

The issue we have is that the consumer does not see the savings because there are so many middlemen – the wholesaler, PBM, and insurance company – each getting a percentage. That is what is inflating the price and that is putting pressure on manufacturers to manufacture in lower cost jurisdictions. If there were a way to either reduce the middleman's exposure, sell direct-to-consumer, or direct-to-pharmacy, then the cost of manufacturing would not be a significant factor.