Samsung Biologics has terminated its contract manufacturing organization (CMO) agreement with U.S. biotech CytoDyn early due to the latter's failure to develop new drugs and make an upfront payment, according to industry sources.

In a corrected public filing on Monday last week, Samsung Biologics said that its CMO contract with CytoDyn was terminated on Jan. 5. The initial contract end date was Dec. 31, 2027, but it was advanced by nearly four years.

Samsung Biologics said early termination was due to "the completion of contracted services.” In its disclosure, the Korean company explained that it is terminating the contract early because it has fulfilled its customer service obligations for the previously disclosed contract amount, and no further progress is to be made.

The CMO agreement dates back to April 2019, when the companies signed a CMO agreement for leronlimab, a drug candidate for treating HIV infection.

The contract amount, valued at about 41.1 billion won ($31.27 million), accounted for 6.63 percent of Samsung Biologics' 2018 revenue.

At the time of signing, Samsung Biologics believed that if CytoDyn successfully developed leronlimab, the minimum guaranteed payment would increase to $246.1 million in 2027, with additional minimum guaranteed payments subject to negotiation if the client's demand increased.

In 2020, the two companies amended their contract terms to increase the fixed contract amount to $50.02 million, an increase of $18.95 million from the previous $31.27 million. Its share of the 2018 revenue also increased to 10.65 percent.

However, the partnership was short-lived. CytoDyn ran into financial difficulties and could not make an upfront payment to Samsung Biologics. In addition, the U.S. company has yet to receive the FDA approval for leronlimab for Covid-19 and HIV.

As a result of the early termination of the agreement, Samsung Biologics will lose the expected long-term revenue of 320 billion won. Whether Samsung Biologics received any previously overdue down payment from CytoDyn was not disclosed.

"It is difficult to disclose information related to our client companies aside from public disclosure," a Samsung Biologics official said in response to Korea Biomedical Review’s inquiry.