The APS Approach

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1. Concentrate on high value/margin APIs for which API is a minorcomponent of FPP cost.
2. Act as a US supplier to rely upon in times of emergency where there are few if any US API sources available.
3. Selecting APIs chronically at risk for supply disruption.

1. Incorporate advanced technologies and major changes to DMFs to reduce costs and provide favorable EHS, Green Chemistry over time.
2. b. Partner with selected strategic partners who are making DMF APIs from overseas to speed up the manufacturing process.

1. Partner with a collaborator producing FDFs to assure a ready market to begin APS sales for our first 12 to 20 APIs.
2. Participate in creation of a US emergency stockpile of medicines.
3. Leverage internal network in US FPP community.
4. Experienced commercial development team.

          Drug Master Files are submitted to the US FDA to regulate the use of APIs in generic (i.e., multisource) pharmaceutical manufacturing. Finished product manufacturers reference DMFs as a critical part of their generic ANDA (Abbreviated New Drug Approval) submissions. An unlimited number of manufacturers may reference a single DMF to support their use of an API. APS will start the business by purchasing DMFs from qualified API producers. We will make these APIs in the United States and validate our production under Current Good Manufacturing Practice (CGMP). Accelerated and real-time stability data will justify a standard, 1-year retest

date for our APIs. Upon submission of a DMF, APS will be able to market our APIs without waiting for US FDA approvals, as DMFs are reviewed and approved when they are referenced by a finished product producer.

          APS will wholly manufacture its APIs in the United States. APS will plan to purchase about 95% of its raw materials from US sources. A few key intermediates that may not presently be available from US companies will be purchased from abroad. The recent (July 28, 2020) announcement that Kodak will produce key ingredients for pharmaceutical API production

illustrates how APS will partner with reinvigorated US manufacturing to utilize US sources for its raw materials.

         Several factors are influencing the demand for US-based API manufacturing.

• Increased national security illustrated by drug shortages and supply interruptions. US-based manufacturing accounts for only about 10% of total United States API demand. Increased demand for US-produced APIs will dramatically grow the size of this market.
• US-based capacity to meet increased demand is very inadequate.
• The Federal Government utilization of the US Defense Production Act to promote US-based API manufacturing shows the priority of this need.
• Either party controlling Congress or the White House after the 2020 elections will see this as a national security issue.
• The ranges of therapeutic areas (e.g., respiratory, cardiovascular, anti-infective, analgesic, anesthetic, hormone, oncology, central nervous system…) and required technologies (synthetic, biologic, natural product; injectable, sterile, inhaled…) are so broad that several US-based companies are required to meet the need.

          To begin, APS will select and manufacture 12 (APIs) that are in critical short supply in the US now. APS will use existing technologies for drug ingredients manufacturing while developing advanced technologies to create technical and cost advantages over alternative suppliers overseas. Our initial selection of APIs will be based upon the following criteria:

• Lack or inadequacy of current U.S. API production capacity.
• History of recurring or chronic supply shortages.
• The degree of risk (i.e., deaths) associated with a potential lack of supply.
• Association with lack of supply due to interruption of the supply chain.

           APS has carefully chosen to produce APIs to potentially enable many different US providers of finished medicines to source their active ingredients from APS. In fact, one of the founders of APS has manufactured 8 of the initial 12 selected APIs while in Big Pharma. This

knowhow and spread of APIs will increase the competitive advantage of APS both on the sales side and the manufacturing side. This advantage will serve as the catalyst for hardening a US based pharmaceutical supply chain. 

           Operationally, to ensure value creation, APS will make APIs using the best currently available technology approved by the US FDA (filed as Drug Master Files; DMFs). As the company responsibly invests in expanding capacity, however, APS will implement new and more efficient technologies to reduce its manufacturing footprint, capital investment, waste, environmental impact, and cost of goods sold. Many important advances in catalysis, biotechnology, processing, and analytical technologies are under-utilized in the API manufacturing process. This is at least partially due to such production being outsourced. APS has the internal knowledge and a world-class Scientific Advisory Board to implement these important technologies and to return the US to a pre-eminent position in API production.