A Michigan-minted, High-growth, Life-sciences Start-up Blazes a Trail of Success in the State’s Contract Pharmaceutical Manufacturing Industry

Grand River Aseptic Manufacturing has all the earmarks of a Michigan-minted, high-growth, life-sciences start-up super star. GRAM evolved from a joint venture spun out of Michigan’s Life Sciences Corridor and received initial funding from Michigan’s angel investment community. Its top management has deep-seated experience in Michigan’s pharmaceutical industry, and much of its highly paid, 55-member technical team is drawn from around the state. The company is now headquartered in Grand Rapids, where it is expanding its operations and customer base. By the end of 2015, GRAM expects to achieve significant growth and profitability.

“We’re very excited to be a new leader in the life-sciences industry in Michigan,” says President Tom Ross, who has more than 30 years of executive and operational management experience, including a top financial position at Perrigo Co. “We’ve benefited from our relationship with both the Van Andel Research Institute and Grand Valley State University, which helped us launch GRAM as a separate entity.” A predecessor company, Grand Rapids Aseptic Pharmaceutical Packaging, or GRAPP, was originally started as a joint venture by the institute and the university in 2004. GRAM acquired GRAPP’s assets in December 2010 and developed it into a start-up contract manufacturing organization.

Today, GRAM manufactures small to mid-size batches of sterile injectable products for the pharmaceutical market. It has more than a dozen customers, which include companies seeking clinical trial materials as well as those selling their FDA-approved products commercially. When GRAM started, its investor base was largely composed of angel investors in West Michigan, along with two private equity firms based in Indiana. The company’s management team also provided seed funding.

“I initially invested in GRAM as a private investor through Grand Angels,” Ross explains. “Two years ago, I was approached about providing advisory services. A year and a half ago, I was asked to become president of GRAM, and I’m honored to lead the company.”

GRAM’s fundraising efforts have been rewarded by enthusiastic early stage angel investors. In 2010, the company raised $5 million in Series A and B funding to purchase GRAPP’s assets and start up its own operations. In early 2013, it closed on another $2 million round to continue funding those operations. In early 2014, the company raised an additional $9.8 million to cover bridge financing, a term loan and a Series C round, which is being used for capital improvements, including the equipping of a recently opened 28,000 sq. ft. finishing facility.

GRAM was invited to appear at the 2014 Michigan Growth Capital Symposium, where it originally intended to pitch to angel and venture capital investors. “By the time June came, we had already closed on our Series C round of funding, so we didn’t need any additional money,” Ross says. “Instead, we used the opportunity to showcase our position as a new leader in Michigan’s burgeoning life-sciences space and to present our growth story to leading investors in the state. We were able provide updates on our progress to several of our current investors and to establish relationships with other potential investors who may provide expansion capital in the future.”

In 2014, GRAM reported revenues of under $5 million. Its revenue target for 2015 is double that amount: $10 million. “The challenge in raising capital as a start-up with an operating-loss history is to convince investors to focus on future growth and cash flow,” Ross explains. “This year, we expect to be profitable, attaining significant growth and positive cash flow. That will greatly increase our ability to attract new capital to fuel our future growth. We are very pleased to be considered a success story here in Michigan.”

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