Lifecore Biomedical (LFCR) Signs Term Sheet with Existing Long-Term Customer to Expand CDMO Relationship
Lifecore Biomedical, Inc. (LFCR), a fully integrated contract development and manufacturing organization (“CDMO”), today announced that it has entered into a term sheet (“Term Sheet”) to seek to expand its existing CDMO relationship with one of its long-term commercial Hyaluronic Acid and CDMO customers, including obtaining certain up-front cash payments and capital reimbursement obligations from the customer and entering into a non-binding agreement to amend the current contract manufacturing agreement (“CMA”) with the customer to extend and expand the existing relationships.
James G. Hall, President and Chief Executive Officer of Lifecore Biomedical, stated, “We’re pleased to be given the opportunity to help impact the lives of more patients worldwide with the potential opportunity to deepen and expand our valuable relationship with a longstanding commercial partner. We believe this Term Sheet and the amendment, if finalized, will lead to increased capital efficiency for Lifecore and enhance our ability to better support this customer’s portfolio of products in the future. This positive development and opportunity speaks to our deep expertise working with complex products for customers who are global leaders in their respective industries.”
With the signing of the Term Sheet, the customer agreed to a one-time, non-refundable $10 million cash commitment to Lifecore, payable in installments over the next seven months, to prepare infrastructure and manufacturing capacity. The customer also agreed to reimburse Lifecore, subject to certain conditions, for up to approximately $15 million in capital expenditures to purchase equipment related to the expansion of our relationship with this customer, which equipment would be installed at Lifecore’s facility and owned by the customer. The upfront cash and reimbursement commitments are binding obligations under the term sheet, subject to certain limitations. The Term Sheet also contemplates, on a non-binding basis, the negotiation of a long-term extension to the existing CMA. The Company expects to proceed with negotiating and drafting the amendment to the CMA over the next several months.