How CMC Makes or Breaks a Biotech

Good morning, Armchair Army,

Welcome to today's edition of The Armchair Analyst, a 5-minute daily update on the ASX life-sciences sector.

Today I have something special for you.

Another guest post.

This time from Dr Lauren Giorgio, Chief Operating Officer at GPN Vaccines -  a clinical-stage company developing vaccines for bacterial pathogens.

In 2024, GPN raised US$12 million at an A$300M valuation:

Yesterday, I wrote about Neurotech’s (NTI) two-year journey to secure an IND.

Read: The Long Way Round: The Neurotech International Story (NTI) 

While it had a positive Phase 2 readout in 2024, it still needed to do all of the grunt work to get a drug ready for market.

Manufacturing. PK studies. Animal testing.

While you can run human studies in Australia first to demonstrate some efficacy (which does generally re-rate the share price)... should you?

It’s all about CMC.

Chemistry, Manufacturing and Controls (CMC).

The ‘silent killer’ of a lot of ASX-listed biotech trades.

… and I mean silent in the literal sense.

Because once a company has published its Phase 2 data, investors don’t want to hear about desktop studies; they want more results.

So… if the CMC hasn’t been resolved, the company goes silent.

The stock price drifts, and months or years later, with investors wondering… why things are taking so long.

They get bored and move on to the next trade.

(Such was the story of NTI until very recently, when they secured their IND earlier this week).

So, I’ve brought in Dr Lauren Giorgio to help answer some questions.

How should investors evaluate a company’s CMC strategy?

Is it better to do it BEFORE studies… or AFTER?

… and why does it take so long?

But first…

🚨 BREAKING NEWS: Bloomberg is reporting that Eli Lilly is nearing a deal for psychedelic drug maker AtaiBeckley:

The story is still unfolding… but I’ll have my full take on what this means for my Armchair Analyst Pick Emyria (ASX: EMD) in tomorrow’s newsletter.

Could be the largest deal in psychedelics history.

Emyria (ASX: EMD) outlines its schedule of investor and industry events over the next two months across NSW, Victoria, and New Zealand. (EMD, held)

🪑 After reading tens of thousands of ASX announcements over my lifetime, I have to admit this gave me a big smile to see my name and event actually make it into one.

If you want to join me and Emyria (as well as Tetratherix and Control Bioinics) at my Armchair After Market event in late August, register here.

Argenica Therapeutics (ASX: AGN) reports preclinical results for ARG-007, showing neuroprotection in concussion models with effects lasting up to 11 days post-injury. (AGN, held)

🪑 Nice preclinical work and sets the company up for its early-stage TBI trial.

Chimeric Therapeutics (ASX: CHM) reports interim results from its Phase 1/2 trial of CHM CDH17, with two patients at Dose Level 3 in stable disease at 4 and 6 months. (CHM, held)

🪑 Tumour shrinkage in individual lesions ranged from 17% to 40%; they need to achieve 30% shrinkage overall to declare a Partial Response - which would be very positive.

So directionally, results are positive… but not quite there yet. So close.

Epiminder (ASX: EPI) enrols its 50th patient in its US DETECT study to improve clinical decision-making for patients with epilepsy. (EPI, not held)

🪑 25% of the way there… 

4DMedical (ASX: 4DX) enters a trading halt amid implications of a US Bill.

🪑 The bill is H.R. 9666 (119th Congress, 2025–2026).

“To direct the Secretary of Veterans Affairs to establish a pilot program to use four-dimensional functional lung imaging software product to identify respiratory disorders and lung disease in veterans, and for other purposes."

Basically, a deal between the VA and 4D Medical hinges on this bill being passed.

Verrrry interesting.

Ex-Chemist Warehouse Investor Mark Azzi increased his holdings in Nyrada (ASX: NYR), with the stock trading up 35% on the day. (NYR, not held)

🪑 Are we going to get a repeat of what happened last year? 

Last year, Mark Assi bought roughly 16% of NYR - all on the market- only to sell half his stake in January this year (it was a pretty epic trade).

This relentless buying of NYR made it the best-performing stock of 2025.

Here’s what happened: The Trade That Made Nyrada’s Run Possible 

TrivarX Limited (ASX: TRI) secures product supply for the Phase 1 clinical feasibility trial of its Stabl-Im imaging platform. Phase 1 scheduled for CY2026. (TRI, not held)

🪑 Milestone ticked.

Clarity Pharmaceuticals (ASX: CU6) appoints Allison Rossiter as an independent Non-Executive Director. (CU6, not held)

🪑 I thought I recognised that name.

It’s the old Genetic Signatures CEO. 

Insilico Medicine, Bora Pharmaceuticals partner on AI drug discovery and commercialisation, deal worth US$2.5B. (Fierce Biotech)

🪑 I keep seeing Insilico securing these big licensing deals. They appear to be leading the biotech AI drug discovery race. Will look to do a deep dive on them soon.

Neurotech International (ASX: NTI) secures a $3.15 million R&D tax incentive loan to support Phase III Clinical Studies. (NTI, not held)

Early 4C report from Microba Life Sciences (ASX: MAP) with core testing revenue up 92% to $2.53M and volumes up 78% for FY26 on PcP. Cost reduction underway. (MAP, not held)

🪑 While revenues from core testing are up, total revenues are down, reflecting the phasing out of the low-margin legacy products.

Baseline is now set. Growth next. Cash flow breakeven next.

Memphasys Limited (ASX: MEM) reports quarterly revenue of $150,000 and $3 million in contracted revenue secured in FY26. (MEM, held - options only)

🪑 There is a nice table in the 4C report that details all of the active deals that MEM has signed.

The company secured CE-Mark earlier this year, and it will take some time for revenue to start flowing through.

However, the company appears on the right track and is funded for at least the next six months of execution.

Hi Armchair Amy,

It’s Dr Lauren Giorgio, Chief Operating Officer at GPN Vaccines. 

GPN Vaccines is a private, clinical-stage company developing vaccines for the world’s most preventable bacterial pathogens.

Today, I am going to take you behind the scenes of biologics development in Australia and share why some of the biggest drivers of long-term value are often invisible to investors. 

In biotechnology, the narrative is almost always dominated by clinical data. 

Yet behind every successful clinical endpoint sits a far less glamorous but equally important discipline: Chemistry, Manufacturing and Controls (CMC).

For many biotech companies, particularly those in the biologics space, CMC can be the difference between success and failure.

At its core, CMC encompasses the product composition, manufacturing process, and controls required to ensure its quality, consistency, and safety.

Good CMC means engineering for scalability from the outset. 

It requires robust documentation demonstrating that a company understands its product and maintains control at every stage of production.

This foundation becomes essential for productive relationships with regulators, where transparency and reproducibility are non-negotiable.

Despite this, regulators continue to issue complete response letters and warning letters arising from preventable CMC failures.

Right at the final hurdle when the drug is about to be approved.

Common deficiencies include inadequate potency assays, product instability, contamination risks, and batch-to-batch variability. 

All issues capable of delaying approvals, destroying shareholder value, or in extreme cases, bankrupting companies.

One underappreciated risk for companies and investors alike is Australia’s regulatory flexibility regarding clinical trials.

In the US and Europe, regulators provide opportunities for engagement throughout the entire drug development process, including offering feedback on preclinical data, trial design and CMC.

These interactions help ensure clinical data is generated using processes that are robust, scalable and aligned with eventual registration requirements.

In Australia, however, most trials are conducted under the Clinical Trial Notification (CTN) scheme. 

Under this framework, studies only require approval from a Human Research Ethics Committee and the participating trial sites. 

These reviews are focused heavily on participant safety and study conduct. Not CMC.

So, what happens?

The Therapeutic Goods Administration is notified of the study, but it does not routinely review the broader development strategy or CMC package before the study commences.

While this approach enables faster, cheaper trial initiation, it also poses a risk. 

Encouraging early efficacy signals may ultimately prove difficult to reproduce if the underlying manufacturing process or product characteristics cannot be scaled or replicated consistently.

As a result, data that appears promising in early-stage Australian trials may have limited value when programs advance to later-stage development or seek regulatory approval in larger jurisdictions.

This risk is particularly relevant for biologics, where manufacturing processes play a critical role in defining the final product.

Unlike small molecules whose chemical structures can be precisely defined and replicated, biologics are inherently complex products whose characteristics are heavily influenced by the environment in which they are created.

In biologics, we often say the product is the process. 

Even seemingly minor manufacturing changes can materially alter the final product.

Consequently, success with biologics depends not only on scientific innovation, but on the ability to build a reproducible and defensible manufacturing platform.

Late-stage manufacturing failures can be particularly costly because process changes may necessitate additional comparability or clinical studies, adding time, expense and execution risk.

At GPN Vaccines, this reality shaped our thinking from the beginning.

Although it was tempting to accelerate into human studies without fully establishing a scaled and reproducible process, we viewed this as a major commercial risk and chose to invest heavily in CMC upfront.

That path proved far from easy.

But it put us in a considerably stronger position over the long term.

As we scaled up, we discovered that our bacterial strain expressed proteins that triggered lysis at high densities, causing production yields to collapse. 

We were forced to revisit the biology and engineer those factors out. The resulting product not only achieved a high yield but also exhibited superior immunogenicity.

Finding suitable manufacturing partners also proved difficult. We have transferred our process three times across three cities over eight years.

To further complicate matters, investors rarely want to support process optimisation and scale-up. 

As a result, we had to approach CMC with extreme capital discipline, leveraging the R&D Tax Incentive and pursuing every available non-dilutive funding source.

Despite the inevitable challenges, choosing to solve these problems prior to entering the clinic was one of the most valuable decisions we made.

The process gave us a deep understanding of our product and the technical mastery to manufacture it reproducibly anywhere in the world.

The journey also generated entirely new intellectual property, strengthening our patent family and materially extending our market exclusivity.

For biotech investors, CMC is often one of the clearest indicators of whether promising science can become a commercially viable business.

This is my framework for what investors should pay attention to:

Investors should look for teams that treat manufacturing scale-up as a genuine value inflection point rather than a box-ticking exercise.

Be cautious of companies rushing into human studies without establishing a scalable process. Strong efficacy signals can quickly unravel if manufacturing cannot be expanded commercially.

Investors should ask whether management can consistently manufacture the same product every time.

Batch-to-batch variability, unstable potency assays, stability concerns, contamination risks, or comparability issues are not minor operational problems; they can severely undermine the value of clinical data.

The commercial product ultimately needs to remain materially identical to the one that generated the efficacy signal in the first place.

The best CMC programs do more than reduce risk. They create competitive advantage.

When companies solve difficult manufacturing problems, they often generate proprietary know-how, novel processes, and additional intellectual property that competitors struggle to replicate. Investors should be on the lookout for this.

Investors should also look beyond how quickly a company can enter the clinic and ask whether the resulting data will ultimately support global registration.

Australia offers meaningful advantages in terms of speed and capital efficiency, but these are only valuable if programs are designed with larger jurisdictions in mind.

Investors should look for evidence that management is engaging with overseas regulators early and is building manufacturing and clinical strategies aligned with eventual commercial requirements.

Biotech investors naturally gravitate towards clinical milestones. They are measurable, exciting, and often move share prices.

Yet in biologics, some of the most important value creation happens in the background.

The companies most likely to succeed are often not those with the most exciting early data, but those building scalable, reproducible and globally relevant development programs alongside the science.

For investors, this may require a shift in mindset. 

Process development rarely makes headlines, but thoughtful CMC investment can meaningfully derisk a program and avoid far more expensive failures later.

Ultimately, the willingness to support process development can be the difference between backing an interesting scientific concept and backing a commercially viable business. 

For more information, visit gpnvaccines.com and follow me on LinkedIn.

Firstly, thanks so much, Lauren, for putting this together.

A great insight.

As I read through the story, my thoughts turn almost immediately to the ASX-listed Mesoblast (ASX: MSB), another biologic that faced significant CMC challenges.

Mesoblast has a priority stem cell technology derived from donations and manufactured.

It has a product in market right now.

But it wasn’t without its challenges.

Consistently manufacturing the same product from different stem cell donors is an incredibly difficult challenge.

And that “potency assay” was the unwinding of Mesoblast when it first applied for FDA approval and was knocked back.

It almost killed the company.

But now its CMC is more robust than ever, and it has a very defensible moat around stem cell products.

While I don’t think public market investors will necessarily ever view CMC as a re-rating catalyst, it is certainly a de-risking event that meaningfully improves the company's underlying value.

… and without it, companies can be stuck in no man's land just after the momentum of a good readout.

The exact point in time when they should put their foot on the gas with a follow-up trial.

Again, thank you to Dr Lauren Giorgio.

See you all tomorrow,

The Armchair Analyst.

PS. Epic news with Eli Lilly getting into psychedelics. Full write-up tomorrow.