NorthWest Biotherapeutics Inc (NWBO)

[Chiugray]

The current NWBO Advent relationship makes sense. NWBO could have went with a straight CDMO relationship but it would be more expensive. NWBO would be one customer out of many, have to buy its way into the queue, often paying rush fees, and be subject to the whims of CDMO terms. It would be expensive because every expenditure made by the DCMO would be marked up by a gross margin to pay for overhead and as profit for investors.

The other option for NWBO would have been to build and run an In-House manufacturing facility on its own. That would be expensive because NWBO would have to additionally build overhead infrastructure (equipment, staff, and executives). Also the costs associated with the “learning-curve” for In-House would be fully absorbed by NWBO (this can be significant), as opposed to being amortized across multiple drugs if it was working with a CDMO instead.

I see the current relationship as a hybrid model. There’s an efficiency and moderation of the costs. Renting a facility to Advent means NWBO collecting rent on otherwise idle space. Providing the facility to Advent, instead of Advent renting a separate facility on its own and then having to mark it up with a gross margin and charge it back to NWBO anyway, is an example of this model saving costs. This is just like any company deciding to directly buy a piece of manufacturing equipment to a CDMO so they don’t buy and charge it back to the company as a mark up on every per unit production, which could end up being multiples of the original cost of the equipment.

But most importantly I think the value is:

But NWBO owns the tech, the patents that control not just it, but DCVax-L patents will likely be renewed and new and go on for a long time because of that purchase. And Advent will get access to the technology as a contractor on the terms that NWBO sets and not in their factory but in an NWBO factory, which is where they developed it, with no blurring of IP ownership rights.