On July 6, 2020, Regeneron Pharmaceuticals, Inc. ("Regeneron" or the "Company") reported that entered into a Base Agreement (the "Base Agreement") and associated Project Agreement (the "Project Agreement") with Advanced Technology International, Inc. ("ATI"), an entity acting on behalf of the Medical CBRN Defense Consortium ("MCDC"), under the authority of the Other Transaction Agreement No. W15QKN-16-9-1002 between ATI, on behalf of MCDC, and the U.S. Department of Defense (the Base Agreement, together with the Project Agreement, the "MCDC Agreement"), to manufacture and deliver to the U.S. Government the Company’s novel investigational dual antibody "cocktail" treatment, consisting of the two antibodies REGN10987 and REGN10933 (also known as REGN-COV2), or other fully human monoclonal antibodies (as monotherapies or a cocktail) as agreed to in writing between Regeneron and the U.S. Government, designed to prevent or treat COVID-19 (Filing, 8-K, Regeneron, JUL 6, 2020, View Source [SID1234561715]). The MCDC Agreement could result in payments to Regeneron of up to $450.2 million in the aggregate.
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The MCDC Agreement requires Regeneron to produce and deliver to the U.S. Government drug product, with a specified minimum and maximum commitment for the total amount of filled and finished drug product delivered. Of the aggregate $450.2 million maximum amount payable to Regeneron under the MCDC Agreement, $445.0 million is payable for achievement of quarterly drug product manufacturing milestones and $5.2 million is payable for drug product storage. The MCDC Agreement provides for bulk manufacturing of the drug substance beginning in the summer of 2020 through the fall of 2020 and also provides for fill/finish and storage activities by Regeneron starting in the third quarter of 2020.
The MCDC Agreement contains terms and conditions that are customary for U.S. Government agreements of this nature, including provisions giving the U.S. Government the right to terminate the Base Agreement and/or the Project Agreement based on a reasonable determination that the project funded under the MCDC Agreement will not produce beneficial results commensurate with the expenditure of resources and that termination would be in the U.S. Government’s interest. If the Project Agreement is terminated prior to completion, Regeneron is entitled to be paid certain termination costs, including the price of any drug product manufactured under the MCDC Agreement and not yet paid, a prorated portion of the price for drug substance or drug product that is in-process (based on the stage of production), certain third-party reservation and cancellation fees, and certain raw material costs incurred by Regeneron. The performance period under the Project Agreement extends from June 30, 2020 through June 30, 2021.
The foregoing description of the MCDC Agreement is qualified in its entirety by reference to the full text of the MCDC Agreement. A copy of each of the Base Agreement and the Project Agreement will be filed with the U.S. Securities and Exchange Commission as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarterly period ending September 30, 2020.