Arriving for a visit to BioVectra, a Canadian contract development and manufacturing organization (CDMO), one is reminded that pharmaceutical services companies are an idiosyncratic lot.

Most are small- to medium-sized firms whose offerings vary as widely as do their cultures. CDMOs can be found in out-of-the-way places such as foothill villages in the Swiss Alps and the cornfields of Iowa. They pop up on the outskirts of major European travel destinations like Lisbon and Paris. They cluster around Milan and can be found in the hinterlands of China.

The idea of a CDMO on Prince Edward Island—the tiny Maritime Province best known as the setting for Lucy Maud Montgomery’s novel “Anne of Green Gables”—may seem one step beyond the pale. BioVectra, however, has grown in the 18 years since it began producing active pharmaceutical ingredients (APIs) to become a world-class player.

Most recently, BioVectra ventured across the Northumberland Strait to Nova Scotia, where, after a major setback, it is preparing to open a commercial-scale facility for microbe-derived biologic drugs.

The foray began in 2014 when a customer required microbial fermentation beyond what BioVectra could supply from its Charlottetown headquarters. BioVectra responded by acquiring a factory in Windsor, Nova Scotia, at which the drugmaker Sepracor once manufactured the API for its insomnia therapy Lunesta. But just as a major renovation got under way to convert the facility from small-molecule chemical to biologics production, BioVectra’s contract hit the shoals.

“Unfortunately, our partner’s market demand did not come through to reality,” recalls Heather Delage, BioVectra’s vice president of business development. “They did not end up needing the extra capacity, and our relationship became much less significant.” In essence, the deal was off. “We ended up with the facility and some very large bioreactors on order that we were obligated to purchase.”

Given little choice, BioVectra proceeded with its plan to become a commercial-scale biologics CDMO. Now, with the first phase of reactor installations complete and the Windsor site nearing final validation, BioVectra has three contracts nailed down. Small-scale fermentation is already under way for these projects at its headquarters in Charlottetown. Work will be transferred to Windsor when the site is fully operational by the end of this year.

BioVectra’s aggressive push into large-scale fermentation, despite the loss of a key contract, reflects a recurrent theme of opportunism for a company started in 1970 as Diagnostic Chemicals by J. Regis Duffy, a professor at the University of Prince Edward Island, to make clinical reagents with the intent of creating jobs on the island for chemistry graduates.

In the ensuing years, customer requests for fine chemicals, drug intermediates, products derived from microbial fermentation, APIs, and biologics have been met with partnerships, investments, and risky new ventures. The company now operates three facilities, including an R&D building offering analytical and process development down the road from headquarters.

Construction is also under way at the main plant in Charlottetown to accommodate a recent contract with Keryx Biopharmaceuticals to manufacture ferric citrate, the API in the kidney disease therapy Auryxia.

Matt Frizzle, director of business development, says contract development and manufacturing accounts for 70% of BioVectra’s business; long-term partnerships, some in generic drug development done at the R&D center, make up the remainder.

Synthetic chemistry accounts for 50% of revenue; the balance is a mix including R&D, reagent and peptide manufacturing, fermentation, and generics development. The company hopes to grow its fledgling biologics operation to between 25 and 30% of sales over five years. All commercial-scale biologics production will be done in Windsor, where the company has spent $60 million in the past three years building the plant.

BioVectra has funded its expansion over the years largely through risk-sharing arrangements with partners. The company’s pursuit of partnerships also led to its current corporate ownership. BioVectra was the key supplier of the API in Questcor’s H.P. Acthar Gel, a topical hormone treatment for autoimmune disease. Questcor wanted to secure ownership of the manufacturing process, so it bought BioVectra in 2013 for $50 million. Mallinckrodt acquired Questcor the following year. Life under big-company ownership has not significantly impacted BioVectra, employees say. The main change is a Mallinckrodt-appointed CEO, Oliver Technow, who started in 2015. Technow, a German, began his career in pharmaceuticals working for Fresenius Medical Care. Most recently he headed the Canadian business of the Japanese drugmaker Eisai.

Moving into the CDMO business, Technow says, was a refreshing change from the big-pharma world. And coming to BioVectra, where nearly half the 320 employees are lifelong residents of Prince Edward Island, made for a feeling, in the Maritime vernacular, of having “come from away.”

But BioVectra is far from insular in its pursuit of business, Technow maintains, which is impressive. “The whole idea of locating biosciences in an area like this takes guts,” he says. “Who would think of it? You think of potatoes, lobsters, mussels, and oysters. ‘Anne of Green Gables.’ Cruise ships.”

Technow notes, though, that BioVectra is not alone—the Prince Edward Island BioAlliance has nearly 60 members, most much smaller than BioVectra, making the island a mini biotech hub.

“I am actually at the point,” he says, “where when people ask me why I would operate a business on Prince Edward Island, I say, why not? Prince Edward Island is punching above its weight.”

Still, BioVectra has reached a turning point where its business model needs to evolve, Technow acknowledges. “The company has had a very typical CDMO model,” he says. “You have a client, they want something and you build something, and hopefully over time you become their manufacturer of choice.” But a CDMO can do everything right and the customer’s project can still fail, he points out. “We want to move away from this very fragile, dangerous, one-dimensional business model.”

As BioVectra matures as a contract services firm, CEO Oliver Technow says it needs to take a less opportunistic approach to business development.

Technow says the firm has a three-pronged strategy now: Maintain the CDMO business, develop a stronger fermentation offering, and invest more heavily in R&D. “We are diversifying and spreading the risk and by doing so creating a more stable business model.”

Part of the R&D prong is APIs for generic drugs. Marc Sauer, vice president of R&D, says BioVectra began working to develop generics in 2007.

“The focus was on difficult-to-make generics,” he says. “Something that presents a challenge. Given our size, we aren’t going to work on commodities, like generic pain medication. There are companies out there that can do that faster, better, and cheaper than we can.”

And BioVectra harbors some stretch goals, including moving into mammalian-cell biologics in Windsor and developing compounds that can be used as “warheads” in antibody-drug conjugates.

James Bruno, president of the consulting firm Chemical & Pharmaceutical Solutions, is impressed with how BioVectra has evolved. “They have some good ideas, blending a lot of technologies,” he says. The question is whether the firm will be able to capitalize on its growth in an increasingly competitive market.

The key, Bruno says, may be patience in pursuing contracts, making sure the firm is a suitable fit for prospective customers. One good sign, he adds, is that BioVectra recently demurred on a contract with one of his clients.

“They came up front and said, ‘We don’t think we can do a good job with this.’ They handled it correctly,” Bruno says. “I think they have good people in position now. I think they are more focused than they have ever been.”

One thing the company does not have to worry about, Bruno says, is location. It is much easier for U.S. and European clients to do business with a CDMO in eastern Canada than one in China, he points out. Prince Edward Island is hardly thought of as exotic by potential U.S. clients.

Nonetheless, BioVectra has carefully included a picture of Confederation Bridge, which connects Prince Edward Island with New Brunswick, on its logo, emphasizing accessibility to an island that until 20 years ago could be reached only by ferry and small aircraft. Charlottetown Airport, across the street from BioVectra’s headquarters, is smaller than many strip malls.

Technow sees a solid metaphor in the bridge. “It’s truly what we represent—innovation from North America to the world,” he says. “This is an organization awakening from a rather remote part of the world to be a truly global player. And we are ready for the challenge.”

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