ImmunityBio received $1.1 million in state reimbursement for construction costs in the third quarter of 2022 at its Dunkirk facility.

And that may not be the end of the state’s assistance to the company.

“Although we believe that governmental funding will assist in funding a portion of the further build-out of the Dunkirk Facility, which we estimate to be approximately $8 million to $10 million of governmental funding remaining available as of September 30, 2022, there can be no assurance as to the final acceptance and timing of the requests for governmental funding that we submit, and we will need to plan and fund most of the additional build-out of, and purchase additional equipment for, the Dunkirk facility in connection with our planned full operations,” the company stated in its third quarter Securities and Exchange Commission filing.

Company officials acknowledge that a lack of further state assistance or additional construction delays on the project could put a dent on ImmunityBio’s operations in the future even as the company stated it expects to spend $1.52 billion on operations at the Dunkirk facility over its 10-year lease with New York state and an additional $1.5 billion if the company elects to renew its lease.

Also discussed in the filing was the September layoffs at the Dunkirk plant. ImmunityBio officials reiterated to the SEC what they said to the OBSERVER and Post-Journal earlier this fall, saying construction at the facility expected to take between 12 to 18 months led to the layoffs. The layoffs led to a $1 million cost for severance and retention benefits for the laid off workers as well as a $700,000 write-off for unamortized organized workforce intangible assets. The workers the company laid off were not required to work through their December termination date to receive benefits. ImmunityBio officials noted their commitment to meet state-hiring benchmarks of 450 employees at the Dunkirk facility within the first five years of operation, 300 of which would come in the first 2.5 years. The company also stands to benefit from sales tax exemptions and property tax benefits over the course of 20 years.

The filing notes a lawsuit filed by Exyte U.S. Inc. stemming from a construction agreement Exyte signed with Athenex when it was building the Dunkirk building. ImmunityBio officials said they believe they are entitled to defense costs and legal protections.

“Consequently, during the third quarter of 2022, we determined to conduct a reduction-in-force of a significant portion of the then-current employees at the Dunkirk Facility effective in late December 2022,” company officials said in the filing. “The construction period and reduction-in-force may adversely affect our ability to satisfy certain operational obligations described above. In addition, while we believe we are in compliance with all applicable laws and agreements implicated by the reduction-in-force, we could become subject to litigation in connection with these measures. Failure to satisfy the obligations over the lease term, including the milestones we have committed to achieve, may give rise to certain rights and remedies of the lessor and other governmental authorities including, for example, termination of the lease agreement and other related agreements andpotential recoupment of a percentage of the grant funding received by the seller for construction of the Dunkirk facility and other benefits received, subject to the terms and conditions of the applicable agreements. If we lose access to the Dunkirk facility and related leased equipment, it could disrupt our operations and manufacturing activities, cause us to divert resources to finding alternative facilities, which would not have any subsidies, and could have a significant impact on our operations and financial performance.”

ImmunityBio recorded third quarter losses of $110.9 million, 27% more than third quarter losses in 2021 of $88,429,000. Losses through the first nine months of 2022 are $308,994,000, up from $258,295,000 for the first nine months of 2021.

ImmunityBio’s platforms include nine first-in-human therapeutic agents that are being studied in 27 clinical trials–17 of which are in Phase 2 or3 development–across 13 indications in liquid and solid tumors, including bladder, pancreatic and lung cancers. The company is also working on treatments for such pathogens as SARS-CoV-2 and HIV. SARS-CoV-2 currently lacks a vaccine that provides long-term protection against the virus, particularly its variants, while HIV affects tens of millions of people globally and currently has no known cure.

The journal NEJM Evidence recently published results from the QUILT 3.032 trial studying N-803, one of ImmunityBio’s products, plus BCG in adults with NMIBC CIS with or without Ta/T1 papillary disease. Company officials said study results showed promising treatment of bladder cancer with the combination of treatments.

“The peer review and publication of data in NEJM Evidence highlights the significance of the positive results of the QUILT 3.032 trial in patients with BCG-unresponsive NMIBC,” said Patrick Soon-Shiong, M.D., Executive Chairman and Global Chief Scientific and Medical Officer at ImmunityBio. “We’re targeting the 10th most commonly diagnosed cancer and the one with the highest lifetime treatment costs per patient as a result of the prolonged course of the disease and the need for repeated surgical and treatment intervention. These data further our understanding of N-803’s unique role in potentially boosting the proliferation of natural killer and T cells while synergistically enhancing BCG efficacy.”