NightHawk Biosciences Shifts into a Pure-Play Large-Molecule CDMO

US-based NightHawk Biosciences (NightHawk) announced in December 2023 that it will pivot to focus solely on being a contract development and manufacturing organization (CDMO), specializing in large-molecule biomanufacturing and development. The changeover follows the divestiture of certain non-core assets, as well as the separating out of its Elusys subsidiary, which the newly named entity will retain.

NightHawk will instead focus on its growing business, Scorpius BioManufacturing, with the changeover. On its first full year of operation Scorpus is expected to generate over $20 million in revenue. With this shift into a pure-play CDMO, NightHawk has eliminated most of its R&D and associated expenses to focus resources on growing and expanding Scorpius.

The divested assets will be acquired by a private company established by NightHawk’s CEO, Jeff Wolf, which will assume Elusys’ contracted financial commitments, currently estimated at over $40 million. Under the transaction, the private company will provide an upfront payment of $500,000, a note for $2.25 million (convertible into shares of NightHawk’s common stock), and royalties of 3% on all of Elusys’ gross sales until June 30, 2031, according to a Dec. 12, 2023 company press release.

“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 [merger and acquisition] activity within the sector. We believe we are extremely well positioned to capitalize on these trends … ” said Jeff Wolf, CEO of NightHawk and Elusys, in the press release.

“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,” said John Prendergast, NightHawk’s lead director, in the press release. “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.”

Source: NightHawk Biosciences