FDA clears path for Bubs baby formula expansion in the US

An emergency policy in the United States to allow fast-tracked imports of international infant formula from companies such as Bubs (ASX: BUB) is now on track to becoming a more permanent fixture, following the latest regulatory moves from the Food and Drug Administration (FDA).

The FDA update follows Tuesday’s announcement that the infant nutrition and dairy specialist intends to raise $63 million to help fund its US growth, including tripling current canning capabilities at its Deloraine manufacturing plant in Tasmania.

In May, the FDA announced it was exercising enforcement discretion to export additional infant formula into the US to help alleviate a product shortage in the North American market.

It is currently developing a new framework so international companies it has already assessed as being safe and nutritious will have continued expanded access to the US market.

Sydney-based Bubs has confirmed its interest in pursuing this pathway so it can continue to serve the US market permanently.

“We welcome Commissioner Califf’s announcement today and look forward to continuing to work with the FDA over the coming months to address any additional steps required to ensure we can supply the market Bubs’ safe and nutritious formulas without interruption beyond November and over the longer term,” Bubs founder and CEO Kristy Carr said.

“Bubs was one of the first international manufacturers to apply to the FDA to import infant formula under the initial enforcement discretion policy.

“Our long-standing commitment to the US market ensured our ability to provide rapid response at the speed of safety, and satisfy the very stringent quality and safety nutrition requirements of the FDA, having first launched our toddler products in the United States in 2021 with our retail partners.”

The FDA will issue further guidance in September as to how companies like Bubs, who have already received temporary enforcement discretion, can continue to supply infant formula beyond the current end date of the existing legislation.

“Following the recent equity raise, our business is well-resourced to continue to provide safe, reliable and clean nutrition to American families with a transparent supply chain,” Bubs executive chair Dennis Lin said.

“We welcome the statement from FDA Commissioner Dr Robert Califf today, which provides our business with further clarity to continue to expand our US team and ramp up production plans.

“With today’s announcement by the FDA, we will look to immediately allocate additional production volumes for the US and work with our retail and distribution partners to serve American families beyond November. We will also continue to work with the FDA under its guidance to ensure that Bubs can serve the American market permanently.”

Operation Fly Formula

President Biden announced yesterday that the US Department of Health and Human Services (HHS) would facilitate two additional flights to transport Bubs infant formula from Australia to Ontario, California and Columbus, Ohio, on 10 and 21 July, respectively.

As part of the latest Operation Fly Formula mission, approximately 180,000 cans of Bubs’ infant formula (roughly 4.7 million 8-ounce bottles) will be carried between both air shipments.

“We continue to work closely with the US Government, and we appreciate the latest support from the Biden Administration that ensures our products can be on retailer shelves at the first opportunity,” Carr said.

Bubs has secured multiple major supply agreements over the last six months with high-profile US retailers, including Walmart, Kroger, Target, Albertsons, H-E-B and Meijer.

Shares in Bubs (ASX: BUB) dropped by 8.2 per cent for the day however, they are up more than 19 per cent since the start of the year.