MY question is bit different. Here is company Z produces C with A as starting material. The only difference is that B is connverted to C in-situ without being isolated (as in examples of patent 123). In such case would Z be infringing patent 123?
This sounds like a written description issue - did they claim all methods of converting A to C, but only disclose one. Read Ariad v. Eli Lilly. Also check out the USPTO training materials; although not law, the Federal Circuit has approvingly cited these before, especially in the biotech arena. Ultimately, this question boils down to whether the four corners of the patent make it clear that the patentee possessed the "in situ" method to one skilled in the art. Look to see if a person skilled in the art would know how to make in situ.
Alternatively, if it passes the W.D. requirement, you are probably looking at a claim construction issue. Check PAIR to see if they ever disclaimed in situ. Also see if the "in situ" method would make the patent anticipated. Otherwise, it's an argument, but probably not the best.