July 1, 2020 PAP-Q2-20-CL-025
Ampersand has invested at the intersection of the industrial and healthcare markets for over 25 years, with a focus on companies that produce components, active ingredients, and formulated products and/or provide discovery, development, analytical, and other services to the biopharmaceutical and medical device industries. These companies referred to as the “picks and shovels” in the healthcare market have been a long-term focus at Ampersand.
CDMOs are key players in this space. They generate significant efficiencies and offer specialized expertise and thus serve as an important engine for innovation and growth in the biopharmaceutical and medical device sector.
Ampersand believes that investing in CDMOs provides exposure to several exciting growth segments within healthcare. CDMOs are frequently used by innovative biopharmaceutical companies working with emerging production technologies and therapeutic areas because they provide a range of services to customers and are agnostic to technology platforms so that they can remain flexible to different client demands. The companies Ampersand is particularly interested in apply highly differentiated technical know-how to the manufacturing process of complex medical devices, pharmaceuticals, and biologic drug products.
CDMOs work on projects from emerging biotech to big pharma companies, including, for example, gene-related enzyme replacement therapies, viral vectors, and oncolytic viruses, using production technologies ranging from cell stacks to single-use bioreactors. They offer access to multiple technology platforms and, crucially, the expertise to optimize these complex systems and processes for each client application.
When evaluating CDMOs, it typically starts with the team. Ampersand starts by evaluating the scientific expertise of the technical team and the ability of management to effectively execute the business plan. These teams must have access to a facility that has been properly designed for the task at hand, and that also has the necessary equipment and capacity to enable growth.
The financial state of the business is important, but it is equally important to understand how these three aspects — the ability of the management team, the facility, and the finances — fit together. Ampersand partners with founders and management teams to accelerate growth within their businesses. As such, the team at Ampersand works side by side with the management team in an effort to help guide and develop a robust business plan that is designed to deploy capital in the most productive manner possible. A founder or management team that is open to this input and help is usually one that is ultimately successful.
Ampersand is a growth-oriented investor dedicated to helping companies achieve revenue and EBITDA growth. The firm provides expertise to help drive that growth by recruiting qualified talent, designing sales and marketing plans, achieving operational efficiencies for improved facility throughput and capacity utilization, expanding the market outreach and customer base, and executing add-on acquisitions.
Ampersand has invested in numerous types of CDMOs across the entire development cycle. They have experience with small molecule and biologic manufacturers, virus and blood product producers, medical device companies, and firms that provide services (laboratory, fill-finish, packaging, etc.) to other contract manufacturers. Over the past 25+ years, Ampersand has seen many recurring problems that CDMOs face, from quality and supply issues to customer mergers, to lack of available talent, and more. Ampersand’s team includes investment professionals, biopharmaceutical industry executives, and scientists with many years of hands-on operational experience to help address these recurring challenges.
Because of this depth and experience in the biopharmaceutical CDMO space, Ampersand does not require education on the technologies, the market dynamics, the value proposition, etc. Ampersand is ready from the start to collaborate closely with founders and management teams to accelerate growth.
Florida Biologix was an investment that started with a world-class scientific team within the University of Florida focused on viral vector process development and small-scale manufacturing. Ampersand addressed gaps on the business management side through a merger with Brammer Bio, which was led by experienced industry executive Mark Bamforth, within six months of the initial spinout from the University. Under this new leadership, the company expanded the manufacturing facility in Florida and developed large-scale production capabilities in Massachusetts. Brammer Bio rapidly became a leading viral vector CDMO and in May 2019 was acquired by Thermo Fisher Scientific.
Avista Pharma Solutions was established by carving out two captive biomanufacturing facilities from biopharma and combining them under an experienced management team possessing a deep track record in the small molecule development and manufacturing space. Ampersand made the necessary investments that transformed these underutilized assets into highly utilized specialized facilities. Avista was acquired by Cambrex Corporation in early January 2019.
Tripharm Services was also formed by carving out a parenteral manufacturing facility from a biopharmaceutical company. The prior owner had invested a significant amount of money in the plant but concluded that the site was no longer needed. Ampersand and the former Avista management team completed the build-out and validation of the world-class fill-finish facility and elicited client interest in this significantly underserved market. Tripharm was acquired by Alcami in January 2020 to gain needed sterile fill-finish manufacturing capacity. Ampersand remains an investor and is now partnering with the management team and majority owner at Alcami in the effort to take this business to the next level.
Finally, Medpharm is a leading contract provider of topical and transdermal product design and formulation development services. The company has a world-class scientific team in the UK and a fully certified GMP manufacturing facility. Ampersand has invested in expanding those capabilities while also increasing capacity at the firm’s facility in North Carolina. The company is now planning to broaden its services into later-stage development and commercial manufacturing.
David Anderson is a Partner at Ampersand Capital, Boston, MA. David joined Ampersand in 2010 and participates across many sectors in healthcare but with a special focus on CDMOs and biopharma services. David's current and past board seats include Accuratus, BioClinica, Brammer Bio, Elite One Source, Histo-Scientific Research Labs, and Key Biologics. David holds a B.Sc. from the University of Aberdeen, Scotland, a Ph.D. in Cancer Immunology from the University of Sheffield, England and an M.B.A. from Babson College, MA.