Colorcon follows through on tablet-marking deal with APDN

Colorcon has teamed up with Applied DNA Sciences to use its DNA tags in pharmaceutical oral dosage formulations, firming up an option it took on the technology last year.

Under the terms of the deal, Colorcon has taken an exclusive license to use APDN’s DNA markers and authentication technologies in film coatings for tablets, as well as a non-exclusive license for their use in inks and colorants. Shares in APDN were up more than 10% after the deal was announced.

Financial terms of the deal are not being disclosed, but APDN is getting a signing fee and also stands to get a milestone payment if a pharma or nutraceutical product is approved that incorporates the tags in its formulation. APDN will also supply taggant and authentication materials to Colorcon in exchange for long-term royalties on the sale of Colorcon products that use the DNA markers.

The deal with Colorcon was waiting on the review of a Drug Master File (DMF) for the marker technology, which is expected to be filed shortly. Having a DMF on file at the FDA will allow pharma manufacturers who deploy APDN’s taggant in their products to reference the document in their market applications.

APDN CEO Dr James Hayward discussed the Colorcon collaboration on APDN’s first-quarter results call last month, saying that aside from the signing fee it “has the potential to be much more substantial and impactful” when it comes to long-term revenue.

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“By integrating our DNA molecular tag and with Colorcon's film coatings we will be able to offer a seamless solution to pharmaceutical customers who are already using Colorcon's film coatings,” he said at the time.

“Once the definitive agreement is signed, the next step is to partner with Colorcon to secure our first mutual customer, which will represent another source of recurring revenues.”

Last month, APDN also signed a memorandum of understanding with pharmaceutical capsule manufacturer ACG, providing another potential source of pharma revenue.

Colorcon has been casting around for ways to add an on-dose authentication technology to its portfolio that meets the requirements of the FDA’s physical-chemical identifier (PCID) guidance, which was published several years ago. It previously signed an agreement with Adhesive Research (AR) unit ARmark for microtag technology that seems to have fallen by the wayside.

In the interim attention the focus for brand protection and anti-counterfeit in pharma has shifted to the package containing medicines, and specifically to the use of serialized datamatrix codes to track packs through the supply chain.

Nevertheless, that approach doesn’t provide any protection for the dosage form itself, and APDN has been trying to establish a role for its marker technology in pharma along with other industries such as textiles, fertilizer and legal cannabis. Colorcon’s strong position in film coating and excipients could help give it the presence it needs to accelerate that process in pharma.

The deal provides an injection of new money shortly after cash reserves at APDN fell to around $5.5m as of the end of January, which the company said would be sufficient to fund operations for the next 12 months, based on revenue projections for this fiscal year of around $6.5m.

APDN has also been working on a project with legal cannabis firm TheraCann International that aims to use its DNA markers as a real-world ‘anchor’ that can be paired with digital supply chain security using blockchain.