Avid Bioservices, Inc. (NASDAQ:CDMO) (NASDAQ:CDMOP), a
dedicated biologics contract development and manufacturing
organization (CDMO) working to improve patient lives by providing
high quality development and manufacturing services to
biotechnology and pharmaceutical companies, today announced
financial results for the fourth quarter and full year of fiscal
2019 ended April 30, 2019.
Highlights Since January 31,
2019
“Fiscal 2019 was a fundamentally transformative
year for Avid, as the team successfully achieved a number of
critical goals. Most notably, we converted the losses and
negative margins in fiscal 2018 into a sustainable position of
financial strength,” stated Rick Hancock, interim president and
chief executive officer. “Based on our current backlog as
well as forecasts from our customers, we believe the company will
achieve sustainable growth going forward. Avid is stronger
today than it has been at any point in the past.
“With respect to business development, the five
new clients signed in late fiscal 2018 contributed significantly to
revenue diversification in fiscal 2019. These projects
substantially increased capacity utilization, which drove a
meaningful improvement in margins during the year.
“Of particular note is the new business we
continue to win from existing customers. While some of this
business results from the expansion of current projects, many of
these projects are completely new, requiring development and/or
manufacture of a new molecule. These ‘repeat business’ wins
are particularly valuable to Avid as each offers the opportunity
for later stage and commercial production, they generally onboard
very efficiently and as a result are more profitable, and they
provide strong testimonials as to the quality of our work and
product.”
“Avid finished the year with a strong fourth
quarter, growing revenue to $17.1 million while increasing gross
margins to 21 percent,” said Dan Hart, chief financial officer.
“During the fourth quarter we generated $5.6 million in
operating cash flow increasing our net cash and cash equivalents by
$4.6 million to $32.4 million. Looking ahead, we are
encouraged by the forecasted increase in demand which we expect to
strengthen the company’s overall financial standing and position us
for profitability.”
Financial Highlights and
Guidance
- The company is providing revenue guidance for the full fiscal
year 2020 of $64 million - $67 million (ASC
606).
- Revenue was $17.1 million for the fourth quarter of
fiscal 2019, a 146% increase compared to $6.9 million for the
fourth quarter of last fiscal year. This increase is
primarily due to growing demand from a more diversified client
base. Revenue for the full fiscal year 2019 met guidance
at $53.6 million, and was flat compared to full fiscal year
2018.
- As of April 30, 2019, revenue backlog was
approximately $46 million, the majority of which is expected to be
recognized in fiscal year 2020.
- Gross margin for the fourth quarter of fiscal 2019 was 21%, and
gross margin for full fiscal year 2019 was 13%, both representing
significant improvements compared to gross margins of negative 28%
during the fourth quarter of fiscal 2018 and negative 5% for full
fiscal year 2018. The improvements in gross margins for both
fiscal 2019 periods were primarily attributed to our product mix,
increased capacity utilization and a reduction in direct
manufacturing costs.
- Selling, general and administrative expenses (“SG&A”) for
the fourth quarter of fiscal 2019 were $3.6 million, or 21% of
revenue, compared to $4.2 million, or 60% of revenue, for
the fourth quarter of last year. For full fiscal year 2019,
total SG&A expenses were $12.8 million, or 24% of revenue
compared to $16.5 million last fiscal year, or 31% of
revenue. The decrease in SG&A was primarily due to a
reduction in payroll and related costs, legal fees and other
professional consulting fees, and facility costs, which were
partially offset by increases in bonuses related to certain
achievement levels of corporate goals and stock-based
compensation.
- During the fourth quarter of fiscal 2019 we generated income
from continuing operations of $0.2 million compared to a net loss
from continuing operations of $6.1 million for the fourth quarter
of fiscal 2018. Fiscal year 2019 loss from continuing
operations was $5.1 million compared to a prior year loss from
continuing operations of $20.6 million. The decrease during
the full fiscal year was primarily due to reductions in both cost
of revenues and SG&A resulting in higher profitability
margins.
- For the fourth quarter of fiscal 2019, the company recorded
consolidated net loss attributable to common stockholders
of $1.1 million or $0.02 per share, compared to
a consolidated net income attributable to common stockholders
of $1.6 million or $0.03 per share, for the
fourth quarter of fiscal 2018. For full fiscal year 2019, the
company recorded a consolidated net loss attributable to common
stockholders of $8.9 million or $0.16 per
share, compared to a consolidated net loss attributable to common
stockholders of $26.5 million or $0.56 per
share, for full fiscal year 2018. For both the fourth quarter
and full fiscal year 2018, net income and loss were favorably
impacted by the sale of the company’s legacy R&D assets to
Oncologie, Inc. for $8.0 million and the associated discontinued
operations.
- Avid reported $32.4 million in cash and cash
equivalents as of April 30, 2019, compared to $42.3
million on April 30, 2018.
More detailed financial information and analysis
may be found in Avid Bioservices’ Annual Report on Form 10-K, which
will be filed with the Securities and Exchange Commission
today.
Recent Developments
- Signed project expansion orders and new manufacturing projects
related to new molecules with current clients during the fourth
quarter of fiscal 2019 representing future revenue in the amount of
$19.7 million.
- Completed a second process validation campaign during fiscal
2019. Completion of a process validation campaign is a
critical step in the regulatory product approval process, and is
likely to result in future commercial production at Avid.
- The first process validation campaign of fiscal 2020 is in
progress.
Conference Call
Avid will host a conference call and webcast
this afternoon, June 27, 2019, at 4:30 PM EDT (1:30 PM PDT).
To listen to the conference call, please dial
(877) 312-5443 or (253) 237-1126 and request the Avid Bioservices
conference call. To listen to the live webcast, or access the
archived webcast, please visit:
http://ir.avidbio.com/events.cfm.
About Avid Bioservices,
Inc.Avid Bioservices is a dedicated contract
development and manufacturing organization (CDMO) focused on
development and CGMP manufacturing of biopharmaceutical products
derived from mammalian cell culture. The company provides a
comprehensive range of process development, high quality CGMP
clinical and commercial manufacturing services for the
biotechnology and biopharmaceutical industries. With 25 years of
experience producing monoclonal antibodies and recombinant proteins
in batch, fed-batch and perfusion modes, Avid's services include
CGMP clinical and commercial product manufacturing, purification,
bulk packaging, stability testing and regulatory strategy,
submission and support. The company also provides a variety of
process development activities, including cell line development and
optimization, cell culture and feed optimization, analytical
methods development and product
characterization. www.avidbio.com
Forward-Looking
StatementsStatements in this press release, which are not
purely historical, including statements regarding Avid
Bioservices' intentions, hopes, beliefs, expectations,
representations, projections, plans or predictions of the future,
are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The forward-looking
statements involve risks and uncertainties including, but not
limited to, the risk the company may not achieve cash flow or
EBITDA positive, the risk the company may experience delays in
engaging new clients, the risk that the company may not be
successful in executing client projects, the risk that clients for
whom the company has completed process validation campaigns may not
receive regulatory approval to market their products, the risk that
the company may experience technical difficulties in completing
client projects which could delay delivery of products to
customers, revenue recognition and receipt of payment or the loss
of the customer, the risk that one or more existing customers
terminates its contract prior to completion or reduces or delays
its demand for development or manufacturing services, and the risk
that the company may need to use the majority of its cash to fund
operations, thereby delaying the in-process upgrades to its process
development capabilities and contemplated expansion plans. Our
business could be affected by a number of other factors, including
the risk factors listed from time to time in our reports filed with
the Securities and Exchange Commission including, but not
limited to, our annual report on Form 10-K for the fiscal year
ended April 30, 2019, as well as any updates to these risk
factors filed from time to time in our other filings with
the Securities and Exchange Commission. We caution investors
not to place undue reliance on the forward-looking statements
contained in this press release, and we disclaim any obligation,
and do not undertake, to update or revise any forward-looking
statements in this press release except as may be required by
law.
AVID BIOSERVICES,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, expect
share and per share information)
|
Three Months Ended April 30, |
|
Twelve Months Ended April
30, |
|
2019 (1) |
|
|
2018 |
|
|
2019 (1) |
|
|
2018 |
|
|
|
|
|
|
|
|
|
Revenues |
$ |
17,055 |
|
|
$ |
6,943 |
|
|
$ |
53,603 |
|
|
$ |
53,621 |
|
Cost of revenues |
|
13,407 |
|
|
|
8,904 |
|
|
|
46,379 |
|
|
|
56,545 |
|
Gross profit (loss)
|
|
3,648 |
|
|
|
(1,961 |
) |
|
|
7,224 |
|
|
|
(2,924 |
) |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and
administrative |
|
3,573 |
|
|
|
4,183 |
|
|
|
12,846 |
|
|
|
16,456 |
|
Restructuring charges |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,258 |
|
Total operating expenses |
|
3,573 |
|
|
|
4,183 |
|
|
|
12,846 |
|
|
|
17,714 |
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
75 |
|
|
|
(6,144 |
) |
|
|
(5,622 |
) |
|
|
(20,638 |
) |
|
|
|
|
|
|
|
|
Interest and other income,
net |
|
92 |
|
|
|
10 |
|
|
|
282 |
|
|
|
75 |
|
Income (loss) from continuing
operations before income taxes |
$ |
167 |
|
|
$ |
(6,134 |
) |
|
$ |
(5,340 |
) |
|
$ |
(20,563 |
) |
Income tax benefit |
|
67 |
|
|
|
— |
|
|
|
284 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations |
|
234 |
|
|
|
(6,134 |
) |
|
|
(5,056 |
) |
|
|
(20,563 |
) |
Income (loss) from discontinued
operations, net of tax |
|
102 |
|
|
|
9,154 |
|
|
|
841 |
|
|
|
(1,250 |
) |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
336 |
|
|
$ |
3,020 |
|
|
$ |
(4,215 |
) |
|
$ |
(21,813 |
) |
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
$ |
336 |
|
|
$ |
3,020 |
|
|
$ |
(4,215 |
) |
|
$ |
(21,813 |
) |
|
|
|
|
|
|
|
|
Series E preferred stock
accumulated dividends |
|
(1,442 |
) |
|
|
(1,442 |
) |
|
|
(4,686 |
) |
|
|
(4,686 |
) |
|
|
|
|
|
|
|
|
Net (loss) income attributable
to common stockholders |
$ |
(1,106 |
) |
|
$ |
1,578 |
|
|
$ |
(8,901 |
) |
|
$ |
(26,499 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net (loss)
income per common share attributable to common stockholders: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.02 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.53 |
) |
Discontinued
operations |
$ |
— |
|
|
$ |
0.17 |
|
|
$ |
0.01 |
|
|
$ |
(0.03 |
) |
Net (loss) income per share attributable to common
stockholders |
$ |
(0.02 |
) |
|
$ |
0.03 |
|
|
$ |
(0.16 |
) |
|
$ |
(0.56 |
) |
|
|
|
|
|
|
|
|
Weighted average basic and
diluted shares outstanding: |
|
56,079,970 |
|
|
|
53,360,424 |
|
|
|
55,981,060 |
|
|
|
47,063,020 |
|
|
|
|
|
|
|
|
|
(1) On May 1, 2018, the Company adopted
Accounting Standards Codification (ASC) Topic 606, Revenue from
Contracts with Customers (ASC 606), using the modified
retrospective method applied to all contracts not completed as of
May 1, 2018. Under the modified retrospective method, results
for the reporting periods beginning on or after May 1, 2018 are
presented in accordance with ASC 606, while prior period amounts
are not adjusted and continue to be reported under the accounting
standards that were in effect prior to May 1, 2018.
AVID BIOSERVICES,
INC.CONSOLIDATED BALANCE
SHEETS(in thousands, expect share
information)
|
April
30,2019 |
|
April
30,2018 |
|
|
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
32,351 |
|
|
$ |
42,265 |
|
Accounts receivable |
|
7,374 |
|
|
|
3,754 |
|
Contract assets |
|
4,327 |
|
|
|
— |
|
Inventories |
|
6,557 |
|
|
|
16,129 |
|
Prepaid expenses |
|
709 |
|
|
|
679 |
|
Assets of discontinued operations |
|
— |
|
|
|
5,000 |
|
Total current assets |
|
51,318 |
|
|
|
67,827 |
|
Property and equipment, net |
|
25,625 |
|
|
|
26,479 |
|
Restricted cash |
|
1,150 |
|
|
|
1,150 |
|
Other assets |
|
302 |
|
|
|
304 |
|
Total assets |
$ |
78,395 |
|
|
$ |
95,760 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
4,352 |
|
|
$ |
1,909 |
|
Accrued payroll and related costs |
|
3,540 |
|
|
|
2,564 |
|
Contract liabilities |
|
14,651 |
|
|
|
27,935 |
|
Other current liabilities |
|
619 |
|
|
|
905 |
|
Liabilities of discontinued operations |
|
— |
|
|
|
4,550 |
|
Total current liabilities |
|
23,162 |
|
|
|
37,863 |
|
|
|
|
|
Deferred rent, less current
portion |
|
2,072 |
|
|
|
2,159 |
|
Capital lease, less current
portion |
|
93 |
|
|
|
— |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.001 par value; 5,000,000 shares authorized;
1,647,760 shares issued and outstanding at respective
dates |
|
2 |
|
|
|
2 |
|
Common stock, $0.001 par value; 150,000,000 shares authorized;
56,135,697 and 55,689,222 shares issued and outstanding at
respective dates |
|
56 |
|
|
|
55 |
|
Additional paid-in-capital |
|
613,615 |
|
|
|
614,810 |
|
Accumulated deficit |
|
(560,605 |
) |
|
|
(559,129 |
) |
Total stockholders’ equity |
|
53,068 |
|
|
|
55,738 |
|
Total liabilities and stockholders’ equity |
$ |
78,395 |
|
|
$ |
95,760 |
|
Contacts:
Stephanie Diaz (Investors)
Vida Strategic Partners
415-675-7401
sdiaz@vidasp.com
Tim Brons (Media)
Vida Strategic Partners
415-675-7402
tbrons@vidasp.com
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