It’s been an up-and-down several years at a state-funded, $200 million drug manufacturing plant in Dunkirk, a facility that – to date – still has not actually manufactured a drug.
But could that soon change?
ImmunityBio Inc., which leases the 400,000-square-foot plant originally built for the now-defunct Athenex, publicly said Tuesday for the first time that the Dunkirk plant will play a key role in the manufacturing of the drug product for Anktiva, a bladder cancer therapy that was approved by the U.S. Food and Drug Administration about two weeks ago.
The catch: The Dunkirk plant remains 12 to 18 months away from completion due to delays and an ongoing lawsuit with the general contractor.
But ImmunityBio said the “fill-finish equipment” – which is used to fill vials and finish packaging – has been purchased and is being installed at the Dunkirk plant. When the plant is completed, ImmunityBio said the facility will have the capacity to produce 1 million vials annually.
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“Dunkirk is very much part of Anktiva,” ImmunityBio President and CEO Rich Adcock told The Buffalo News. “It’s very much part of the future success.”
For public officials such as Mark Geise, the news Tuesday represents some hope for the 3805 Lake Shore Drive East plant that is envisioned as a crucial project in Western New York’s efforts to gain a piece of the drug development and manufacturing market.
Geise, CEO of the Chautauqua County Industrial Development Agency, has been encouraged to see trucks delivering equipment to the plant.
“I am cautiously optimistic,” Geise said. “I would say with this FDA approval, certainly I am far more optimistic than I’ve ever been about the future of that plant.”
But ImmunityBio still has a long way to go to meet the investment and hiring obligations with the state that it inherited from Athenex.
And there have been plenty of bumps along the way.
A rough road
In 2016, then-Gov. Andrew Cuomo announced the state would construct the plant for Athenex, hoping it would provide the boost necessary to turn the Buffalo company into a biopharmaceutical powerhouse that could help build Western New York’s reputation within drug development and manufacturing.
That didn’t happen.
Athenex was dealt a stunning blow in early 2021 when federal regulators raised questions about a late-stage clinical trial for a breast cancer drug it was developing. Athenex would never recover and, by late 2021, it was desperate for cash and looking to unload assets – like the lease on its massive taxpayer-funded plant in Dunkirk.
Athenex found a willing buyer in ImmunityBio, a California immunotherapy company that is backed by billionaire biotech entrepreneur Dr. Patrick Soon-Shiong.
In mid-February 2022, ImmunityBio completed its $40 million acquisition of the leasehold interest in the Dunkirk plant.
Early that year, Soon-Shiong said that ImmunityBio had “great ambitions to make this plant our star plant.” The company’s goal at the time was to start producing its Covid-19 vaccine drug substance by the end of 2022.
That never happened.
In fall 2022, ImmunityBio laid off 38 workers at the Dunkirk plant after it determined the new facility had “construction needs that may require approximately 12 to 18 months to complete in order for it to be used as intended.”
And in May 2023, the FDA informed ImmunityBio that it could not approve the license for Anktiva at that time. Less than a year later, on April 22, ImmunityBio received the long-awaited FDA approval.
“A year ago, we thought we were going to get approved and didn’t, and we had to really double down and focus harder to get this approved,” Adcock said.
Though ImmunityBio’s announcement Tuesday makes clear the Dunkirk plant is not complete, it represents at least the most recent hope for the state, and taxpayers, to see a return on its big investment.
ImmunityBio has big numbers to hit, given it assumed all of the investment and hiring obligations for the plant that Athenex previously negotiated with the state.
That includes spending $1.52 billion on operational expenses during the initial 10-year lease term, which began Oct. 1, 2021, and expires in 2031. ImmunityBio is paying $2 per year during the 10-year lease.
And if ImmunityBio elects to renew the lease for another 10 years, it must spend an additional $1.5 billion on operational expenses during that term.
ImmunityBio also must hire 450 employees at the Dunkirk facility within the first five years of operations, including 300 workers within the first 2½ years.
If ImmunityBio fails to hit those targets, the state could potentially terminate the lease agreement and try to recoup a percentage of the funding received for the construction of the Dunkirk plant, the company informed investors in a regulatory filing.
While the delayed FDA approval was a setback, Adcock said ImmunityBio is now in a “very strong position” with an FDA-approved drug – which will be made in Dunkirk once the plant is complete.
“As CEO, I’m committed to Dunkirk,” Adcock said.
A construction dispute
Behind the scenes, ImmunityBio has been involved in a legal battle with the general contractor of the Dunkirk facility.
Exyte U.S. Inc. filed a lawsuit against Athenex and ImmunityBio in October 2022, claiming it is owed about $8.4 million related to the project.
That includes, according to Exyte’s lawsuit, $7.4 million that it is entitled to because it completed the plant at $18.5 million below the project’s guaranteed maximum price of $212.5 million.
The design-build agreement, which Exyte entered into with Athenex in December 2017, called for Exyte to be compensated for a portion of the savings it generated by completing the project at below cost, according to the lawsuit. More specifically, Exyte would get 40% of the difference between the final cost and the maximum project value, the lawsuit claims.
ImmunityBio, meanwhile, has argued that liabilities of Athenex that predated the closing of the lease purchase agreement in February 2022 are not assumed by ImmunityBio and remain obligations retained by Athenex.
Further, ImmunityBio has claimed there are “multiple deficiencies” in the Dunkirk plant, which Exyte – as the design-builder – is responsible to correct.
Attorneys for Exyte did not respond to an email seeking comment.
The Exyte lawsuit was stayed while Athenex’s bankruptcy proceedings played out in court. On March 20, the liquidating trustee of Athenex requested the case be moved from State Supreme Court in Erie County to federal court.
Adcock said the lawsuit, as well as the delayed FDA approval, did slow down ImmunityBio’s plans in Dunkirk. In the meantime, he said ImmunityBio has been purchasing and installing multimillion-dollar pieces of equipment at the plant.
“We’re planning for the future,” he said. “Dunkirk is very much going to be part of that. We know that’s going to mean growth and jobs and all of those, and we’re really happy to be able to do and deliver on the promises that people made quite some time ago.”
Jon Harris can be reached at 716-849-3482 or jharris@buffnews.com. Follow him on Twitter at @ByJonHarris.