NightHawk Biosciences Announces Strategic Shift into a Pure-Play Large Molecule Biomanufacturing CDMO to Capitalize on Rapid Growth in Sales Pipeline along with Divestiture of Non-Core Assets
12 Diciembre 2023 - 7:30AM
NightHawk Biosciences (NYSE American:
NHWK) today (“NightHawk” or the “Company”) announced its
strategic shift into a pure-play biomanufacturing Contract
Development & Manufacturing Organization (CDMO), as well as the
divestiture of certain non-core assets, in order to focus on the
growing sales within its Scorpius BioManufacturing subsidiary
(“Scorpius”). The Company has booked contracts thus far in 2023,
Scorpius’ first full year of operation, that are expected to
generate over $20 million in revenue, a substantial portion of
which will be recognized in 2024. To facilitate this strategic
shift, the Company has divested its Elusys subsidiary and related
assets, and has eliminated most of its R&D and associated
expenses to focus its resources on growing and expanding Scorpius.
The assets will be acquired by a private company
established by Jeff Wolf, CEO of NightHawk, which will assume
Elusys’ contracted financial commitments, currently estimated at
over $40 million. Under the terms of the transaction, the private
company will also provide an upfront payment of $500,000, a note
for $2.25 million that is convertible into shares of NightHawk’s
common stock subject to receipt of stockholder approval, and
royalties of 3% on all of Elusys’ gross sales until June 30, 2031.
The royalties are subject to a mandatory minimum payment of $5
million during the first five years of the royalty term. The
divestiture of Elusys and R&D cuts are expected to reduce the
Company’s annual operating expenses by over $13 million and fully
eliminate the need for NightHawk to raise capital to support
Elusys’ programs.
Jeff Wolf, Chief Executive Officer of NightHawk and
Elusys following the closing, commented, “Given the strength of our
CDMO operations at Scorpius, we have made the strategic decision to
refocus our efforts around those activities that hold the potential
to generate meaningful cash flow while substantially reducing
non-core costs and associated overhead. Scorpius booked $3 million
in contracted sales in 2022, which has grown to over $20 million in
contracted sales thus far in 2023. As contracted sales are
generally recognized as revenue as work is performed, we expect to
recognize substantial revenue on these booked contracts in 2024. We
also have a very significant and growing sales pipeline, which
includes contracts from premier pharma and biotech companies, as
well as leading research institutes. We expect to close a number of
new contracts before year-end and believe the growth in our sales
pipeline is strong validation of the meaningful investments we have
made in our Scorpius subsidiary. As we continue to grow our revenue
and leverage our fixed costs, we expect our CDMO business to
generate high margins and long-term profitability.”
Mr. Wolf added, “There is a significant shortage
of clinical scale biologic manufacturing capacity within the
industry as a result of growing demand for large molecule CDMO
services. In turn, this has led to significant M&A activity
within the sector. We believe we are extremely well positioned to
capitalize on these trends given our state-of-the-art facility,
experienced and dedicated team, broad service offering, and robust
sales pipeline.”
John Prendergast, Ph.D., NightHawk’s lead
director stated, “The divestiture of our non-core assets enables
NightHawk to focus its resources on growing its Scorpius
subsidiary, and will result in the immediate elimination of
approximately $40 million of contractual obligations and reduction
of over $13 million in operating expenses per year. Moreover,
NightHawk will receive an upfront cash payment, as well as a $2.25
million convertible loan and at least $5 million in royalties on
future Elusys gross payment receipts for approximately 7.5 years.
This was vetted and approved by an independent committee of the
board to be in the best long-term interests of NightHawk and its
shareholders. As a pure-play CDMO, the board of NightHawk believes
that NightHawk now has the opportunity to create substantial
shareholder value in an underserved marketplace.”
Mr. Wolf further noted, “The senior management
team and board of directors are laser-focused on transforming our
company into a revenue-generating CDMO. We have shuttered most all
of our research, substantially cut costs and divested our non-core
assets to achieve this. Our goals are clear; provide the highest
quality manufacturing services to our CDMO customers and focus on
driving near and long-term revenue. We believe this strategic shift
and divestiture of non-core assets will not only enhance our
balance sheet and cashflow, but also drive meaningful returns to
our shareholders for years to come.”
NightHawk Biosciences,
Inc.NightHawk Biosciences, through its Scorpius
BioManufacturing subsidiary, is an integrated contract development
and manufacturing organization (CDMO) focused on rapidly advancing
biologic and cell therapy programs to the clinic and beyond.
Scorpius offers a broad array analytical testing, process
development, and manufacturing services to pharmaceutical and
biotech companies at its state-of-the art facilities in San
Antonio, TX. With an experienced team and new, purpose-built U.S.
facilities, Scorpius is dedicated to transparent collaboration and
flexible, high-quality biologics biomanufacturing. For more
information, please visit: www.nighthawkbio.com or
www.scorpiusbiologics.com, and also follow us on Twitter.
Forward Looking StatementThis
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. In some cases
forward-looking statements can be identified by terminology such as
"may," "should," "potential," "continue," "expects," "anticipates,"
"intends," "plans," "believes," "estimates," and similar
expressions, and include statements such as booking over $20
million in booked contracts in 2023 alone; the Elusys divestiture
and research and development cuts to eliminating over $40M of
commitments and reducing annual operating expenses by more than $13
million; recognizing substantial revenue on contracts next year;
closing a number of new contracts before year-end; the growth in
the Company’s sales pipeline being strong validation of the
meaningful investments it has made in its Scorpius subsidiary; the
CDMO business generating high margins and achieving long-term
profitability; being extremely well positioned to capitalize on
trends given the Company’s state-of-the-art facility, broad service
offering, and robust sales pipeline; the the reduction in personnel
and other expenses substantially reducing the Company’s operating
expenses; transforming the Company into a revenue-generating CDMO;
providing the highest quality manufacturing services to CDMO
customers and driving near and long-term revenue; and the strategic
shift into a pure-play, large molecule CDMO and divestiture of
non-core assets, enhancing the Company’s balance sheet and cashflow
and also helping to drive meaningful returns for shareholders for
years to come. Important factors that could cause actual results to
differ materially from current expectations include, among others,
the Company’s ability to generate over $20 million in future
revenue from manufacturing contracts booked in 2023; the Company’s
ability to close on a number of new CDMO contracts before year-end;
the Company’s ability to continue to grow revenue, leverage fixed
costs and achieve long-term profitability; the Company’s ability to
create substantial shareholder value as a pure-play CDMO in an
underserved marketplace; the Company’s financing needs, its cash
balance being sufficient to sustain operations and its ability to
raise capital when needed, the Company’s ability to successfully
operate as a CDMO, he continued maintenance and growth of the
Company’s and its subsidiaries’ patent estates the ability to
obtain regulatory approval or to comply with ongoing regulatory
requirements, regulatory limitations relating to the Company’s
ability to successfully promote its services and compete as a pure-
play CDMO, and other factors described in the Company’s annual
report on Form 10-K for the year ended December 31, 2022,
subsequent quarterly reports on Form 10-Qs and any other filings
the Company makes with the SEC. The information in this
presentation is provided only as of the date presented, and the
Company undertakes no obligation to update any forward-looking
statements contained in this presentation on account of new
information, future events, or otherwise, except as required by
law.
Media and Investor Relations
ContactDavid Waldman+1 919 289
4017investorrelations@nighthawkbio.com
Nighthawk Biosciences (AMEX:NHWK)
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