Avid Bioservices Inc (CDMO)

[djohn]

I found this in HGEN"s Form 10Q. I don't know if it has been posted but I think it puts more color on the situation

https://d18rn0p25nwr6d.cloudfront.net/CIK-0001293310/02d957db-207e-458f-ba00-748f863aa7a6.pdf

Page 12
Other CMO's had problems manufacturing lenzilumab?




Manufacturing Agreements
The Company has entered into agreements with several CMOs to manufacture bulk drug substance (“BDS”) and to provide fill/finish services or drug
product (“DP”) for lenzilumab for a potential launch of lenzilumab in anticipation of an EUA or CMA. The Company has also entered into agreements for
packaging of the drug. These agreements represent large commitments, including upfront amounts prior to commencement of manufacturing and progress
payments through the course of the manufacturing process and include payments for technology transfer. Since September 9, 2021, the Company has amended,
and in some cases canceled, certain of these agreements, some of which were contingent on EUA, in an effort to reduce its future spending on lenzilumab
production until and if authorization is received in the U.S., UK, or EU. These actions reduced the Company’s manufacturing costs beginning in the fourth
quarter of 2021 and will limit future production of lenzilumab. In addition, certain of the Company’s CMOs have been unsuccessful in their efforts to
manufacture some batches of lenzilumab to the Company’s specifications for various reasons. The Company is working with one of these CMOs to determine
if batches of lenzilumab manufactured by them will be usable in the future or, if not, whether other financial recompense will be offered to the Company.
Another CMO was unsuccessful in its attempts to produce BDS and has filed for arbitration of amounts owed. Mediation efforts were unsuccessful as the CMO
insisted on large cash payments despite its inability to produce any BDS. The Company is contemplating litigation in an effort to recover previous monies
provided to this CMO as prepayment for services and materials and to recover a significant amount of raw materials and components currently held by this
CMO that have been paid for by the Company. As of March 31, 2022, the Company estimates that its commitments remaining to be incurred under these
agreements are approximately $42.6 million for the remaining nine months of 2022, $11.8 million for 2023, and $4.6 million thereafter. Certain of these
commitments and amounts accrued at year-end are in dispute and the Company intends to defer these payments, negotiate lower amounts or seek other courses
of action for the amounts in question