With the increasingly high costs, complexities and regulatory concerns associated with today's pharmaceutical manufacturing it isn't often that you see a company tackle all of these issues by itself without the deep pockets of a larger company, and prove it can be done.
Seqens, Inc. a contract manufacturing and research organization based in Newburyport, MA that develops and manufactures NCEs, generic APIs and fine chemicals has grown from a small start-up to a company that can now take a product all the way from development to commercial production in a smooth and seamless process for its clients.
How the company developed from its humble beginnings to where it is now reminds us that the entrepreneurial spirit is alive and well and is an interesting story to tell.
The story of Seqens is really the story of Ed Price, the company's president. A chemical engineer by education and training Price got his start in the chemical outsourcing business early in his career with a company called ChemDesign in Massachusetts. The company, which specialized in reprographics, lithographic and agricultural chemicals was, by Price's description, very entrepreneurial and had a very flat business structure. Within his first four years at that company Price learned every nuance of the business.
"During that period I got exposed to every facet of fine chemical engineering, from equipment to engineering to tech transfer, managing people, managing projects, raw materials, building management, regulatory affairs – you name it I did it," says Price. "I was involved in almost every single aspect of running a business except business development. Since I was a plant engineer there was this rule that engineers shouldn't talk to customers."
One Thing Leads to Another
In 1994 ChemDesign was bought by a large multinational chemical/pharmaceutical company and according to Price, "things changed dramatically."
"They of course, overpaid and dumped in a lot of capital," says Price. "They owned it for 7 years and drove it into the ground. They had a $250M investment and walked away from it for $10M, it was a huge disaster." But from out of this situation, Price saw an opportunity. "There were a variety of factors why the buyout didn't work," says Price, "but one that affected me personally – was the idea they had that unless a customer was going to bring in at least $2M in revenue they weren't interested."
He continues "At this point in time I actually had left day-to-day manufacturing and had gone into R&D. I was running their pilot plant and we had a number of small projects that had good value that we were manufacturing. Some customers were local, and some were existing customers – that had development projects that they needed help with. But clearly business development was not out looking for customers for the pilot plant because the $2M mandate from corporate was in effect."
"So I and another engineer said this was crazy. When you're not making a lot money, as we were, and someone wants to pay you a whole lot more, you feel like you've hit the lottery. So we decided to get some equipment, put it in a building and start our own company specializing in that niche."
Show Me the Money – And The Equipment
While the business idea was sound, in practice it was much more difficult with the primary culprit being they didn't have any money.
For the next two years Price and his partner accumulated equipment from any source available, including perfectly serviceable equipment from their current employer that, instead of being cleaned and readied for the next project, was just thrown away – especially when executives from the parent company were visiting.
They also found a facility, an abandoned processing facility in nearby Leominster, Massachusetts that had a small utility room and a mezzanine that was ideal for hanging reactors.
Price and his partners spent the next two years – nights and weekends – gutting and outfitting the building.
Eventually they had six reactors, a small tray dryer and a centrifuge, they also got the boilers working – found a compressor and got it up and running. "We had a functioning facility," says Price, "it wasn't pretty – but for the price it was working."
"Then my partner at the time and I said since we built it we had to quit our jobs and run it like a business. He would do the manufacturing and I would do the business development, which was a little ironic because in my past I did just the opposite and was thrust into it."
This all happened in 1998 and was the official start of manufacturing for Seqens.
"We were an attack pilot plant," says Price. "If someone needed 5 to 500 kilos of some intermediate that didn't need a lot of sophisticated chemistry we could crank it out in that little building and get it done." "We could make things for half what anyone else was making, and still make twice as much money. That was the good news, the bad news was the plant was built out of junk and we had to reinvest the profits. We also needed people and had to expand to hire chemists and analytical people to help."
Growth and Change
From 1998 to 2001 Seqens grew at a steady rate. But as Price recalls – it was about that time that the business began to change. "In 2001 things started to slip, projects dried up. Big pharma changed the way they outsourced – China and India were the rage. Quality didn't matter, speed didn't matter as much – it was a mandate to go to China – that was a problem for us."
It was around this time that Price discovered the growing biotech business in Boston and just needed to figure out a way to leverage it. It turns out he was about ten years too early – the companies developing biotech products at the time didn't need his company's services – but, of course, that would change later.
So Price still needed to find a way to leverage Seqens's capabilities and that came through generic actives. But with this new business track there came the need to implement GMPs and get FDA approvals – which of course they did – and went on develop three new products from 2001 to 2004.
"For the first time we had products that we would be manufacturing on an annual basis," says Price. "Rather than going from contract to contract, we could manufacture this year round."
By March of 2005 the company had grown large enough that it was becoming increasingly clear that their current facility was inadequate, and the search for a new facility began.
A Setback and A Step Forward
As Price began looking for a new facility for his company, the unthinkable happened – a fire shut down their plant.
As luck would have it Price found a facility that was for sale that had plenty of capacity – but the cost was out of reach.
The owners of the plant were eager to sell as they had invested a lot of money into the facility but never saw a return. Price negotiated a deal using the financial settlement from the fire as a down payment. Two years later, Seqens took a loan on the facility and bought out the original owners.
From 2006 through 2008 the company grew its capacity from 800 gallons to 18,000 gallons. But with that increase came the inevitable growing pains as the company had to transfer APIs to the new facility, and since the facility wasn't FDA approved they had to trigger an FDA inspection.
"We had to put a lot of systems and protocols in place," says Price, "we had to get out of the contracts that were money losers It took a solid three years to do that."
What Goes Around Comes Around
By 2010 Price was again looking at how to grow the business. He came back to his idea from almost 10 years ago – the biotech industry.
"Sure enough, many of our competitors were doing such business," says Price, "and here we were an incredible manufacturing asset right in the backyard of the one of the biggest biotech clusters – but we are not serviing them at all."
"Everyone else is coming from overseas and around the country to do business and here we are, and I thought that was ridiculous."
Price also realized that the company as it was had deficits. They had an infrastructure – the site and the facility. But they did not have the organization specifically in sophisticated chemistry and analytical and regulatory capabilities.
"2009, 10 and 11 were spent developing the organization; the systems and the capabilities to serve that market," says Price.
Today, Seqens operates in two main verticals.
The first vertical is their commercial business which manufactures approved new chemical entities and generic APIs. Seqens has six approved products it is currently manufacturing and another ten in its pipeline. Seqens's commercial APIs run from half a kilo a year to 10 metric tons which demonstrates the wide scale of manufacturing capacity the company offers, dependent on the type of product.
To help the company meet its goals they have upgraded their clinical suites to handle APIs for injectables.
"We have implemented new procedures and SOPs, and installed laminar flow hoods and air handlers. We have four injectable projects going on simultaneously," says Price.
The second vertical that Seqens operates in is process research and development on a contract basis. Many are small to mid-size emerging small-molecule pharmaceutical companies and many are local in Boston. "We are doing everything for them," says Price. "We are a solid outsourcing partner for them – some are coming to us post-discovery and we supply them with pre-clinical material, we do all the process optimization – then supply them with clinical materials and hopefully will be their commercial manufacturer down the road if and when they get approval."
Price says Seqens's capabilities can be summarized fairly easily.
First they have very strong chemistry resources at their disposal.
Second, they have a lot of resources devoted to project management and project control. In this business, Price says, it's very critical to get a project into the clinic, because that step triggers a lot of investment money.
"Some people in the business view what we do as a commodity. If you need to pick a partner – and your next round of money depends on getting your product to the clinic – it's really not a commodity," Price adds. Third, Price points to Seqens's scale.
"We have equipment up to 2000 gallons," he says, "we have clinical suites that operate in glassware – and we have everything in between. So whatever your phase, we have the equipment and it can be done under one roof."
Price continues, "It's been very typical in this industry to use a small lab-scale company, then to a clinical stage company, then to someone who can do the commercial scale manufacturing. We offer all under one roof – and we have the infrastructure to do it – you don't have to move your product and deal with the possible risk in that."
Looking ahead one of Price's primary goals is to get the word out about Seqens and its capabilities.
"From a tech standpoint and equipment standpoint we might not be a fit for everyone but everyone should know of us," he says. "That's my primary goal – we have tremendous capacity. We have installed new equipment and are getting ready to install more equipment. And when our next expansion is done we will have close to 23,000 gallons of capacity. We are unmatched – nobody in the greater Boston area can bring to bear the resources that we have in terms of chemistry and manufacturing."
"Over the next 5 years we want to create value – in order to do that we have to execute on the commercial pipeline and utilize the capacity that we have and develop ourselves as the leading small molecule manufacturer in the greater Boston area."