CMC Icos Biologics was one of the bright spots in the Northwest innovation community during the dark days of September 2008. The financial crisis was all over the news, yet the Bothell, WA-based biotech drugmaker said it planned to double in size to 250 employees, and quintuple its manufacturing capacity.
Two weeks later, the company president still sounded bullish. But by December, the expansion plan was put on hold. A month later, CMC Icos cut 7.5 percent of its workforce, and looked to be bracing for a long winter.
More than a year later, business has improved. CMC Icos boosted its revenues by 90 percent in 2009 over the prior year, and reached its goal of breaking even, according to president Gustavo Mahler. The company’s facility in Bothell is now operating at 85 to 90 percent of capacity, serving a diversified base of between eight and 10 customers, depending on demand, Mahler says. The local operation, which makes protein drugs incubated in living cells, has been hiring people, boosting its headcount from about 130 in January 2009 to about 175 today, when including about 25 temp staff. The company is considering expansion again, Mahler says.
“We could grow over a 5-year period, by probably 5x our current capacity,” Mahler says, referring to manufacturing output. “Business has been good.”
CMC Biologics, based in Denmark, entered the Seattle market during a grim time on the local scene. Drug giant Eli Lilly had acquired Icos for $2.3 billion in January 2007 to obtain its hit impotence drug, tadalafil (Cialis). Lilly cut most of the local Icos workforce, but it had contractual obligations to a number of customers that relied on Icos to manufacture biotech drugs for use in clinical trials. That contract manufacturing unit, with its specialized equipment and employees, was kept intact until a buyer could be found. By December 2007, CMC agreed to buy the place.
Instead of developing proprietary molecules on its own, and shouldering all the risk and reward, CMC Icos Biologics specializes in the less visible work of making drugs for other companies under contract. There are larger competitors in this field, such as Germany-based Boehringer Ingelheim, Basel, Switzerland-based Lonza, and Morrisville, NC-based Diosynth Biotechnology. Lonza has been particularly aggressive, almost doubling its number of projects from 2007 to 2009, while adding new facilities in Singapore, Canada, and Massachusetts, according to a recent company presentation.
CMC Icos sees itself as a mid-size player in its field. Being mid-sized means it has diverse capabilities, like the bigger rivals, to make a wide variety of different biotech drugs—antibodies, genetically-engineered blood factors, or enzyme replacement therapies. But being smaller means that CMC Icos can respond nimbly to a customer.
While more than half of the people working at CMC Icos are veterans of the time when Icos was independent, but the place is a clearly different business now. During the period when Lilly owned the place, many of the contracts were essentially winding down, and the local operation wasn’t actively pursuing new contracts, Mahler says. Now, only one of the current customers is a holdover from Icos, he says.
If things continue at the current pace, Mahler said he can see a time when CMC Icos will manufacture biotech drugs for use in the marketplace, not just in clinical trials. The goal is to make that transition next year. The company could grow to 200 employees by the end of 2011, he says.
“We’re gaining market share, things are picking up,” Mahler says. “Over time, you win customers.”