By Eric Peterson | Oct 08, 2020
503B contract manufacturing of liquid pharmaceuticals
Bagan's career path started in cable and telecom, the veered into bioscience. "I've been in life sciences for about 15 years now," says Bagan.
He had previously teamed with Mark Spiecker, STAQ president, to start Sharklet Technologies, an Aurora-based biotech firm that sold to a Chinese medical device manufacturer in 2017. The duo partnered with Chief Pharmacist and COO Jeff Hval to start STAQ the next year. Hval previously owned a pharmacy on the Front Range.
After two years of planning and construction, the company's 18,400-square-foot 503B manufacturing facility came online in June 2020 following FDA-mandated cGMP certification. Bagan says the investment was "significant."
"There's an actual physical requirement you have to build to, so we had to make sure our facility was designed to meet the cGMP standards, then we had to build it to cGMP standards, then you have to recruit your team and build your processes all around the cGMP standards."
The talent wasn't lacking, he adds. "Finding people wasn't as hard as I thought it would be."
As a 503B manufacturer, the company brings scale and automation to pharmaceutical production. "The 503B is a relatively new industry in the U.S.," says Bagan, noting that the legislation that allowed for human drug compound outsourcing facilities passed in 2013, but FDA didn't finalize rules until 2016.
"Our specialty is in sterile, aseptic processing," says Bagan. "The real skill set here is to be able to take either active pharmaceutical ingredients, which is like a powder, and mix it, put it through a sterile process, and maintain sterility all the way to a finished product."
That makes for rigorous operating procedures, he adds. "Our people are fully gowned. We have ISO 5 aseptic filling spaces where we actually do our work, and those are hard standards to meet."
STAQ's focus on packaged syringes, pain pumps, bags, and other liquid delivery platforms "was strategic, because there are very few of us who focus on the sterile preparations market in the United States. We need a lot more of us. COVID's put a nice exclamation point on our inability in the country to manufacture protective equipment, pharmaceuticals, and basic medical devices. We're seeing a lot of energy now making sure places like ours grow and get bigger in scale, so that when we have issues like we did with COVID, we're able to keep things moving."
"We made a big commitment to automation in this facility," says Bagan, highlighting robotic syringe fillers that will come online in the near term. "With that commitment to automation comes being able to scale up." At full buildout in Denver, STAQ will have the ability to fill 30,000 syringes daily.
Orders typically range from 100 to 5,000 doses, which Bagan calls "a sweet spot" for the company. The market consists of "hospitals, healthcare centers, ambulatory surgery centers -- anywhere you need a whole suite or operating room, emergency room, or ICU preparations."
The market for 503B outsourcing is national, but each state has different licensing procedures and requirements. STAQ is now operational in eight states, with an eye on all 50. "We're working every day to get licensed in more [states]," says Bagan.
STAQ investors include several hospitals, the CU Healthcare Innovation Fund, and Columbus, Ohio-based Rev1 Ventures, as well as angels.
Challenges: With FDA inspections in the rear-view mirror as of early September, the main challenge is state-by-state licensing. "Our plans are to grow significantly," says Bagan. "They're metered by state licensing."
Opportunities: Bagan points to the country's big population centers and medical and hospital systems and groups as drivers of future growth, noting that 503Bs represent a "growing and thriving industry segment." He points to a recent deal with Premier, a Charlotte-based group purchasing organization (GPO) for hospitals and other medical providers.
STAQ's business plan involves expansion to other regions. "I want to open another one of these facilities," says Bagan. "I think we need more of these on U.S. soil."
Needs: Employees. Bagan envisions the Denver staff more than doubling to about 75 by the end of 2021.
STAQ is also in the process of raising more capital to build additional facilities. "These take a while to build," says Bagan. "It's not like I can decide today that I want another facility and it'll be up and running in six months. It doesn't work that way. I have to be thinking, 'Where will I be two years from now and will I need another facility then?' I think I will."