BioProgress nudges into profit with new market-driven profile

The company, which has repositioned itself as a "technology-enabled specialty pharmaceutical and healthcare business"​, was transformed from "a business operating with large amounts of committed capital expenditure and very high losses to having six commercialised systems (two of which are new developments) and 48 products distributed across its US and EU network",​ commented chief executive officer (CEO) Richard Trevillion. This was a far cry from two years ago, when the departure of former CEO Graham Hind was closely followed by a strategic review and cost-cutting programme in the face of disappointing sales and higher-than-expected overheads at BioProgress' US subsidiary BioTec Films. Revenues for 2006 more than doubled from £4.4m in the previous year to £9.5 m (€14m), although £7.7m of that total came from acquisitions. Operating profit before amortisation and depreciation, share-based payments and exceptional items was £89,000 compared with a £8.2m operating loss for the year to 31 December 2005. At the pre-tax level BioProgress recorded a £2.8m loss for 2006 against a £9.1m loss in the previous year. The company now has multiple revenue streams from product sales, milestone payments, third-party partner payments and contract revenues, with a product span from "bread and butter"​ generics sold on discounted prices to novel branded generics developed with BioProgess' proprietary drug-delivery technologies. With a new product development and formulation function created under the leadership of chief development officer Steve Martin, BioProgress has more than 30 patent-protected projects at various stages of fruition. Using existing molecules as a base and with the company's core XGEL cellulose film categorised as Generally Recognised as Safe (GRAS) by the US Food and Drug Administration, new products can be brought to market in as little as six months, it notes. All underlying technology development and manufacturing at BioPrgress has now been integrated into the market-led strategy, Trevillion said. In terms of the group's intellectual property (IP), the fundamental transition has been from broad industrial platforms to enabling drug delivery systems/solutions (DSSs). TabWrap revisited​ Hence the redevelopment of TabWrap, the company's coating process for compressed tablets or friable tablet cores, which involves wrapping the pills individually in an edible XGEL film sheet. This system, "although elegant, was historically limited in its functionality"​ as an alternative to gelatine coating, Trevillion pointed out. The new, more broadly applicable version of TabWrap extends to enteric coating (as EntWrap) and offers "a complete drug-delivery system enabling rapid or controlled dissolution and possessing added advantages of integral anti-counterfeiting and tracking capabilities",​ Tevillion explained. If tablet cores are already embossed with logos or symbols, the TabWrap coating will take up the embossing. In December the TabWrap system was placed with INyX Group, a specialty pharmaceutical company with niche drug-delivery technologies, at its manufacturing facility near Manchester, UK. BioProgress is working with "multiple partners​" on products using the TabWrap system and a number of these have been through pre-scale-up stability testing, with full production expected to start this year. Also attracting interest from the global pharmaceutical industry, as well as opening up new avenues for BioProgress' own product development initiatives, has been SoluPol, an enabling technology launched in October 2006. SoluPol uses soluble muco-adhesive polymer combinations and mixing technologies, similar to those applied to dried active ingredients in BioProgress' Soluleaves and WaferTab technologies, as a vehicle for low-volume buccal delivery of actives where dose titration is essential (e.g. in paediatric or geriatric patients). "Instead of pumping the liquid onto the film line, it is pumped into bottles,"​ the company noted. The soluble polymers in SoluPol, which is aimed at dysphagic patients who have difficulty swallowing not only make the drug available at the site of delivery but can enhance taste-masking and improve stability, BioProgress pointed out. It can also deliver higher amounts of active ingredient than oral thin-film products. The company expects to file products based on both the SoluPol and the revised TabWrap technologies for regulatory approval this year, in parallel with its continuing partnership programme. A more recent addition to BioProgress' portfolio of proprietary technologies has been Meltums, a melt-in-the-mouth delivery system comprising a lozenge encapsulated with XGEL film. Meltums is the first melt-in-the-mouth system capable of delivering established sustained-release technology, with applications ranging from vitamins through to potent prescription medicines, BioProgres said. "With the use of the company's SoluPol systems, Meltums is able to provide significantly higher drug loading, typically up to several hundred milligrammes,"​ it added. According to BioProgress, it is in discussions with several pharmaceutical companies about using Meltums to deliver large-molecule drugs. The system is also targeted at companies that need alternative single-unit dosage forms for dysphagic patients. Products based on the Meltums technology are expected to be launched in the nutritional and US over-the-counter (OTC) sectors during 2008. One complaint addressed in the strategic review of BioProgress'operations was that some of the partnerships forged under the leadership of Graham Hinds had been on less-than-favourable terms - specifically, "not aligned to the development of BioProgress' technology base or of enabling the earliest possible commercialisation of its XGEL solutions". ​ During 2006, the company continued the renegotiation of key contracts begun in 2005, including completion of a restructuring agreement with Magenta Oral Dose Design (part of FMC Corp) for the solid oral dose system NRobe. "Of particular note in these new arrangements is a significant decrease in capital expenditure requirements and with a significant increase in the amount of total and net income received over the remaining life of the patent,"​ BioProgress commented. The emphasis in partnerships has changed from licensing platforms to product arrangements, it noted. "This has a number of implications,"​ BioProgress explained. "First, the number of partner programmes has increased and, second, the Group receives not just royalties for use of film but royalties for material use, product sales and system applications. Importantly also, the group retains the rights to use its own DDS IP for its own products which it has the option to either partner or market in its own right."​ As the boost to its revenues indicates, acquisition was another salient theme in 2006 that has continued through to the current year, expanding BioProgress' product base and taking it into new markets. Indeed, the company's first acquisition, of Dexo SA in December 2005, was the catalyst behind the shift to an integrated market-driven focus across its activities. Dexo served as the framework for the pharmaceutical sales and marketing division, Dexo BioPharm, which now has operations in the UK, France, Italy and the US. The Dexo acquisition was followed in 2006 by Segix Farma, an Italian speciality pharmaceutical company with a focus on establised anti-infective, gastrointestinal and oncology drugs; and a range of products - mostly community prescription medicines with a niche market in the fast-growing Hispanic community - as well as associated distribution, sales, manufacturing and marketing capability from airPharma LLC of the US. Last month BioProgress acquired DMPL, a French specialist OTC sales and marketing business focused on nutraceuticals and parapharmaceuticals, for €376,000 in cash.