Building Pharmaceutical Supply-Chain Resilience

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2:08Learn more at thehartford.com slash risk mitigation. Policies provided by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford, Connecticut. Bloomberg Audio Studios, podcasts, radio, news. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Thinking about leverage and trade negotiations between the U.S. and China, we often talk about China's large domestic market and its rare earths, but not that often, Carol, we talk about medicine. No, we don't, but we are going to talk about it now. We're going to. A Bloomberg piece from last week, actually, ahead of this week's meeting between the president and Chinese President Xi Jinping, notes that China's power rests on its grip over the global supply of active pharmaceutical ingredients, or APIs, which are core components of commercial drugs.

3:00Beijing's broad sway extends upstream to the raw chemicals, the solvents, the reagents known as key starting materials needed to make the APIs themselves. Dr. Christina Smolke thinks a lot about this. She's the co-founder and CEO of Anthia. It's a pharmaceutical ingredient producer. Their goal is to end to drug shortages. She joins us from Menlo Park, California. Dr. Smolke, great to have you on the program, a pharmaceutical ingredient producer. We think about this. I don't I don't often think about, you know, when I take a pill, what actually goes into the manufacture of these pills. What I do know is that oftentimes it comes from outside of the United States.

3:35Oftentimes, the supply chain spans the globe. Is that a national security risk? Yeah, thanks for that question. It is increasingly being viewed as a national security risk. And the reason is that is based upon the United States reliance on foreign sources for these materials and also the increasing frequency and duration of disruptions we are experiencing in critical life-saving medicines. So tell us a little bit about what you guys are doing specifically. I agree with Tim. I think we just like get our prescriptions, we take them and not until there's a problem. Do we like, wait, what's in this stuff?

4:15So talk to us about what you are doing or trying to do. Yes. Anthea has developed a new way to produce these critical life-saving pharmaceutical ingredients. And it's leveraging a technology that allows us to do so in a way that is more resilient, more predictable, and addresses a lot of the pain points we see in the current industry. In particular, what antheos technology allows us to do is to shift from producing these medicines overseas in very long, as I said, very basically vulnerable multi-step processes to a process that looks closer to brewing beer. So we're able to take yeast and we basically modify those yeast so that they can basically, instead of producing beer, can produce these critical lifesaving pharmaceutical ingredients.

5:09And one of the key advantages of that is that then allows us to move those production processes more locally into the United States. So at what point in the process does that happen? I mean, are you taking it from the perspective of, okay, you understand what goes into a given medication and you can create the ingredients from the yeast then? Or do you sort of reverse engineer it? You take the final product and you say, okay, this is what we need to produce and here's how we can do it. Like, how does that work scientifically? Great. Yes. Great question. So scientifically, it works as us saying, this is the molecule that we want to produce.

5:50This is the medicine that we want to produce. So we know the endpoint, we know the structure. And then we basically will modify, program the yeast and really teach them through making modifications to their genome to be able to then synthesize those pharmaceutical ingredients from sugar. So essentially what the process will look like at scales, we throw the yeast into a large vat, we feed them sugar. And they're basically working as miniature medicine factories to convert that sugar directly to the pharmaceutical ingredient that then ultimately will be formulated into the medicine that patients take.

6:31So how could this help me understand how is this being done already? Yes, it is being done already. So and they launched we launched our first product commercially now about a year ago. and basically seen tremendous response from the market and from our customers. Again, really responding to the solutions that this brings in terms of shoring up their supply chains and their ability to have very stable, very consistent supply of these medicines. So it's now a technology that's fully commercial. And one of the, I think, very powerful things about this technology is it is a true platform. We've built out while we've launched our first product commercially, we've built out a very large pipeline of pharmaceutical ingredients that we are applying this strategy to and now queued up to basically launch our second and third product shortly.

7:27How do you characterize the makeup of the medications or the ingredients that since they're produced from yeast, how are they classified? Like, are they synthetic? Are they naturally occurring? Like, are they based? Yeah, I don't understand that. Great question. So one of the things to really highlight here is that we already leverage fermentation to produce medicines in our pharmaceutical supply chain. Insulin is an example of that. You know, we used to extract insulin from animals and now it's all produced via fermentation process. So within the industry, we follow very standard procedures for how the molecules that we produce are characterized.

8:11We ensure that they basically are exactly the same as what is already being used in these medicines and meet all of the quality requirements that are needed to ensure patients not just have access to these life-saving medicines, but that they are safe and consistent for them as well. Christina, what's the FDA oversight of all of this? Yes, these are basically tracked and approved by the FDA. And so, again, because the idea of fermenting or using biosynthesis to produce medicines is not novel within the industry, there are regulatory, basically, steps in terms of how they are approved. And Anthea has already gone through those approval processes.

8:59Everything is produced within the quality that the FDA requires. So what so if a pharmaceutical company like what what is your relationship with a pharmaceutical company, a pharmaceutical company were to come to you and say, we want you to manufacture this. Is that how it works? Yeah, at this stage, the medicines that we're bringing to market are, again, we're focused on the medicines that play the most critical role in public health, but really transforming and rebuilding those supply chains so that drug shortages do not infect patients going forward. And so we're able to basically sell the ingredient to pharmaceutical companies globally, you know, and there are pharmaceutical customers basically will take that ingredient and then formulate it into the drug product that the patient actually takes.

9:53You know, I ran into an issue a couple of years ago. I've talked about this on air before, but it was with amoxicillin. Yeah, I remember this. Yeah, my son had this terrible ear infection, like just screaming. And the doctor couldn't find a pharmacy that had amoxicillin in stock. It was coming off the pandemic. And it was interesting because a few months before that, we had had a, I think it was a big take story that talked about the profit margins are so small on some of these generics that it's hard to find producers to actually make these drugs. Ultimately, we did find a pharmacy that had it.

10:26Thank God. And, you know, you take that medication and within hours that your infection is better. But is that the type of thing, doctor, that you're trying to solve? Or is it more advanced drugs, more complicated drugs than that? No, it's exactly the type of it. First and foremost, it's exactly the type of thing that you just highlighted. Right. And you're not alone. I've experienced the same thing, whether it's, you know, basic antibiotics, cold medicines, you know, things that are required for surgery. We don't expect these to be in shortage because they're not the most advanced kind of latest drugs, but they are.

10:58And that's the type of thing that we are bringing to market today, right now, and solving those issues. And one of the things I would just highlight, coming back to, by leveraging this technology, it solves not just being able to synthesize it domestically so that we have greater control and transparency over these supply chains. It does so at a fraction of the cost because it's really leveraging a novel technology to make sure that we can synthesize them in more efficient and cost effective ways. So it addresses some of that, you know, some of that issue that you just described. I mean, now the same technology can also be applied to new medicines, you know, and advanced medicines as well.

11:38And that's really a longer term trajectory that Nthaya is looking at. But right now, what we're bringing to market are the ones that are most critical for public health. So when you're doing biologics or biosynthesis, Christina, I mean, you're using a living organism. And engineered systems or living organisms raise a lot of questions when it comes to biosafety or unintended byproducts, how to regulate them. So I'm just curious, that makes it difficult, right? And also providing consistency. So that is one of the things that is a risk. It's a great question. And let me highlight a couple of things about the technology itself.

12:25At the end of the day, the product that we sell and the product that goes to patients, it is a chemical. We are not, it's, you know, the living organism is actually not going into the patients. Yes, we use a yeast cell to make the product, but ultimately we purify that chemical. down to greater than 99 % purity and meet all of the existing requirements. So it's very well characterized. So that carryover of sort of an uncontrolled living organism into a patient, that doesn't happen with this technology. The other thing I will just highlight and what we have been able to show with this platform is that we can program the synthesis so precisely that we actually are able to provide products that have fewer byproducts.

13:12than what we see through other manufacturing approaches. Hey, just lastly, 20 seconds. And I know you guys did a Series C about$56 million. When is it commercially viable? And forgive me, it's just 20 seconds here. No, absolutely. As I mentioned, Anthea is commercial at this stage. And now what we're doing is we're leveraging that funding, leveraging the support from the investors to really grow and ramp basically how we bring our products to market, what markets we can enter, and ensure that this is truly disruptive. Come back and keep us informed. Christina Smolke, co-founder, CEO of Anthea, joining us.

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