Richmond pharmaceutical company Phlow Corp. recently completed a $36 million Series B round that it will use to grow its commercial and manufacturing businesses.
The company did not divulge the names of the participants in the round, but said it included new and existing investors.
“The Series B raise is a great testament to the progress we have made,” Phlow President Dan Hackman said. “It allows us to make great progress in the coming years.”
Phlow was founded in early 2020 by Eric Edwards and Frank Gupton and seeks to manufacture high-quality, essential generic drugs at a low cost. The public benefit corporation grew out of Gupton’s work at the Medicines for All Institute at Virginia Commonwealth University and is part of the effort to bring essential medicine manufacturing back to the U.S.
Hackman said the fundraise presented some challenges. Filings with the Securities and Exchange Commission show Phlow planned to raise $50 million and had secured $24.2 million by September. Hackman said the funding round was a nine-month effort that ended March 31.
“The environment is extraordinarily difficult right now, but we are thrilled with the raise in light of the environment,” Hackman said.
The company is looking to enhance contract manufacturing services to other drug companies. It works with them to improve the chemical and manufacturing process to reduce drug costs, and Hackman said Phlow sees huge opportunities in that area.
“We want to bring technical talent into that business unit,” Hackman said. “We will use the proceeds to scale the employee count as the business scales.”
The company closed a $20 million Series A round in 2021 from undisclosed investors. That funding was to go toward building up the company’s commercial business team, establish data and analytics platforms and advance its research and development, among other initiatives.
Phlow has 50 employees. Hackman did not specify the number of new employees and declined to give revenue numbers. The company operates a lab and headquarters in Richmond and is building out a manufacturing facility in Petersburg through a partnership effort.
Hackman said one of the challenges with pharmaceutical manufacturing is getting key starting materials. Many of the materials are produced overseas and the new tranche of funding will also be used to help the company enhance its abilities to produce more key starting materials on its own, Hackman said.
The manufacturing facility in Petersburg is a federal government-backed venture with Ampac Fine Chemicals LLC, Phlow, nonprofit drug maker Civica Inc. and the Medicines for All Institute. The project was announced in 2021, and Hackman said the facility is still being built out. When completed, it will manufacture key starting materials.
“As we get our manufacturing facility up and running in the next three to 12 months in Petersburg, we will then be making our own active pharmaceutical ingredients that we would then integrate into our own products,” Hackman said.
Phlow is a member of a local project called the Alliance for Building Better Medicine that aims to create a research and manufacturing hub in the region for essential medicines and their ingredients. The federal government through the Build Back Better Regional Challenge awarded the Richmond-Petersburg corridor a $52.9 million grant to help make the region a hotbed of pharmaceutical manufacturing. The goal is to reshore pharmaceutical manufacturing in the United States.
