Cambrex announces significant new supply agreement

Tuesday, August 21, 2012 02:27 PM

Cambrex, a life sciences company based in East Rutherford, N.J., has entered into an non-exclusive agreement to supply an active pharmaceutical ingredient for a customer's phase III program during 2013 and 2014. 

The agreement is expected to contribute over $20 million to 2013 revenues and potentially more in 2014 depending on regulatory developments, the timing of completion of Cambrex's capacity expansion related to this opportunity and meeting key product delivery milestones. The agreement does not impact sales or profits in 2012 and does not include any commitments beyond 2014. While there are certain protections built into the agreement related to early termination, the extent of this project's contribution to Cambrex is contingent upon its customer's phase III program not being terminated or meaningfully reduced for any reason.

"We are privileged to partner with this important new customer on such a significant project and are excited about successfully executing our capacity expansion so we can help our customer get this product candidate to market as quickly as possible,” said Shawn Cavanagh, COO of Cambrex. “Our customers routinely cite our excellent quality systems, regulatory record and experienced personnel as reasons for awarding us business, and each of these factors played a role in Cambrex being chosen for this project.”

In order to meet the demand under the new agreement, Cambrex will invest significant capital over the remainder of 2012 and in early 2013 to expand our multipurpose large scale cGMP assets. Capital expenditures related to this expansion, which includes concurrent investment in local manufacturing capacity to support other important growth initiatives, are expected to total approximately $19 million, with the majority occurring in 2012 and the balance occurring in early 2013.  The agreement provides for a $9.5 million reservation fee to be paid to Cambrex within the next month as an advance against revenues to be earned in 2013. 

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