Avid Bioservices Reports Financial Results for First Quarter Ended July 31, 2020 and Recent Developments
September 01 2020 - 4:05PM
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 first quarter of fiscal 2021, ended July
31, 2020.
Highlights Since April 30,
2020
“Fiscal 2021 is off to a strong start as a
result of the accomplishments of the first quarter,” stated
Nicholas Green, president and chief executive officer of Avid
Bioservices. “During the quarter, the company achieved
revenues of $25.4 million and net income of $4.7 million. And
though revenue for the quarter was supplemented as a result of our
completion of runs deferred from the third and fourth quarters of
fiscal 2020, we are optimistic that future demand will support our
growth trajectory. During the period, our business
development team signed three new customers as well as project
expansion orders with several existing customers. The
visibility we currently have into the industry, as well as our
customer projections point to continued growth in production demand
throughout the year, and it is our priority to be well-positioned
to support that demand.
“In recent weeks, the company also made progress
with several important operational projects. As reported
previously, the company experienced an equipment issue that
interrupted several production runs during the third and fourth
quarters of fiscal 2020. I am pleased to report that the
remediation activities conducted were validated during the first
quarter of fiscal 2021 by completing multiple successful
revenue-generating production campaigns using this equipment.
Avid also recently initiated its planned annual preventative
facility maintenance program. This effort is proceeding
well, with work largely completed in the Franklin facility and work
on our Myford facility well underway. Lastly, during the
first quarter, we made further progress with our expansion
plans. As we continue to see growth in customer demand, this
anticipated expansion will be important to sustaining strong future
growth. We continue to dedicate significant time and
resources to design, review and pre-engineering activities and look
forward to updating you on our plans in the near future.
“I was very pleased to officially join the
company in late July, and my first month has only strengthened my
belief that Avid is a state-of-the art business with significant
opportunity for growth. This is especially true given our
focus on biologics, which is one of the fastest growing sectors of
the industry. As I return to the United States from my time
abroad, I can’t help but feel that Avid is well positioned to
benefit from some of the industry trends we have seen developing
recently. Given the broad and deep talent of our employees,
our quality facilities and systems, and the expertise and
commitment to excellence that fuels our work here at Avid, I am
confident that the company will continue to thrive. As I
begin what I believe will be an exciting and successful time at
Avid, I wish to thank my predecessor, Rick Hancock, for his
contributions over the last year. Under Rick’s leadership,
Avid has evolved into the growth organization it is today, and I
thank him and the board for entrusting me with the future of the
company.”
Financial Highlights and
Guidance
- The company is confirming revenue guidance for the full fiscal
year 2021 of $76 million to $81 million.
- Revenues for the first quarter of fiscal 2021 were $25.4
million, a 66% increase compared to revenues of $15.3 million
recorded during the first quarter of fiscal 2020. The
increase in revenue was primarily attributable to growth in the
number and scale of in-process and/or completed manufacturing runs
during the quarter, including $4.3 million from the completion of
all batches that had been deferred from the third and fourth
quarters of fiscal 2020 due to a previously reported equipment
issue, and $3.1 million in fees received from a customer that
reached its inventory requirements with fewer than expected runs,
therefore not utilizing all their reserved capacity that had been
scheduled for third quarter of fiscal 2021. Avid expects
demand for high quality biologics capacity to continue, and it
remains on track to achieve the stated revenue guidance for fiscal
2021. However, the company cautions against using its first
quarter revenues as a new benchmark, as the deferred batches from
the third and fourth quarters of fiscal 2020 and the fees
associated with a customer’s unused capacity contributed to the top
line during the period.
- As of July 31, 2020, revenue backlog was $60 million,
compared to $65 million at the end of the fourth quarter of fiscal
2020. The company expects to recognize the majority of this
backlog during fiscal 2021.
- Gross margin for the first quarter of fiscal 2021 was 34%,
a significant increase compared to a gross margin of 7% for
the first quarter of fiscal 2020. The increase in gross
margin for the fiscal 2021 quarter was primarily attributable to
increased manufacturing revenue from the growth in the number and
scale of manufacturing runs and the aforementioned fees associated
with a customer’s unused capacity.
- Selling, general and administrative expenses (“SG&A”) for
the first quarter of fiscal 2021 were $3.8 million versus $4.5
million recorded for the first quarter of fiscal 2020. The
decrease in SG&A was primarily attributed to a decrease in
separation related expenses and other general SG&A expenses,
partially offset by a net increase in payroll and benefits
costs.
- For the first quarter of fiscal 2021, the company recorded a
consolidated net income attributable to common stockholders of $3.3
million or $0.06 per basic and diluted share, as compared to a
consolidated net loss attributable to common stockholders of $4.6
million or $0.08 per basic and diluted share, for the first quarter
of fiscal 2020.
- Avid reported $28.2 million in cash and cash
equivalents as of July 31, 2020, compared to $36.3 million as of
the prior fiscal year ended April 30, 2020.
More detailed financial information and analysis
may be found in Avid Bioservices’ Quarterly Report on Form 10-Q,
which will be filed with the Securities and Exchange
Commission today.
Recent Corporate
Developments
- Expanded the company’s customer base with the addition of three
new customers and executed multiple project expansion orders with
existing customers representing additional net revenue backlog of
$20 million during the first quarter. The company’s new
customers include Iovance Biotherapeutics, Inc., Oragenics, Inc.,
and Mapp Biopharmaceutical, Inc. These new customers will
take advantage of the range of capabilities at Avid including
technical transfer, process development and scale-up, all with a
view to future GMP manufacture.
- Entered into a co-marketing agreement with Argonaut
Manufacturing Services to support drug product manufacturing.
This partnership is designed to offer customers Avid’s upstream and
downstream process development and drug substance manufacturing
services in tandem with Argonaut’s parenteral drug product
fill-finish services, to support the efficient delivery of CGMP
parenteral drug products for use in clinical studies. Through
the collaborations signed with Aragen Bioscience during Q4 fiscal
2020, and with Argonaut in Q1 fiscal 2021, Avid has strategically
established an end-to-end option for customers seeking support from
early cell line development through drug product
manufacturing.
- Continued the pre-engineering, design and permitting work
required to allow the company to break ground on a facility
expansion at the appropriate time. While a specific kick-off date
has not yet been established for this expansion, the company
believes that continued strong customer demand will require
additional capacity and Avid is proactively working to prepare for
this growth.
Conference Call
Avid will host a conference call and webcast
this afternoon, September 1, 2020, 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/investor-events.
About Avid
Bioservices, Inc.
Avid Bioservices is a dedicated contract
development and manufacturing organization (CDMO) focused on
development and CGMP manufacturing of biopharmaceutical drug
substances derived from mammalian cell culture. The company
provides a comprehensive range of process development, CGMP
clinical and commercial manufacturing services for the
biotechnology and biopharmaceutical industries. With 27 years of
experience producing monoclonal antibodies and recombinant
proteins, Avid's services include CGMP clinical and commercial drug
substance manufacturing, bulk packaging, release and stability
testing and regulatory submissions support. For early-stage
programs the company provides a variety of process development
activities, including upstream and downstream development and
optimization, analytical methods development, testing and
characterization. The scope of our services ranges from
standalone process development projects to full development and
manufacturing programs through commercialization.
www.avidbio.com
Forward-Looking Statements
Statements 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 experience delays in engaging
new customers, the risk that the company may not be successful in
executing customer projects, the risk that the company may
experience technical difficulties in completing customer projects
due to unanticipated equipment and/or manufacturing facility issues
which could result in projects being terminated or delay delivery
of products to customers, revenue recognition and receipt of
payment or result in 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, the risk that the company may need to raise additional
capital to fund its contemplated expansion plans, and the risk that
the commencement of such expansion plans may be delayed. 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, 2020, 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.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS) (Unaudited) (In thousands, except per share
information) |
|
|
|
Three Months Ended July
31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
25,392 |
|
|
$ |
15,254 |
|
Cost of
revenues |
|
|
16,848 |
|
|
|
14,168 |
|
Gross profit |
|
|
8,544 |
|
|
|
1,086 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
3,825 |
|
|
|
4,459 |
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
4,719 |
|
|
|
(3,373 |
) |
Interest
and other income, net |
|
|
11 |
|
|
|
209 |
|
Net income (loss) |
|
$ |
4,730 |
|
|
$ |
(3,164 |
) |
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss) |
|
$ |
4,730 |
|
|
$ |
(3,164 |
) |
|
|
|
|
|
|
|
|
|
Series E preferred stock
accumulated dividends |
|
|
(1,442 |
) |
|
|
(1,442 |
) |
|
|
|
|
|
|
|
|
|
Net income (loss) attributable
to common stockholders |
|
$ |
3,288 |
|
|
$ |
(4,606 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.06 |
|
|
$ |
(0.08 |
) |
Diluted |
|
$ |
0.06 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
56,523 |
|
|
|
56,167 |
|
Diluted |
|
|
56,892 |
|
|
|
56,167 |
|
|
|
|
|
|
|
|
|
|
AVID BIOSERVICES, INC.CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited) (In thousands, except par value) |
|
|
July 31,2020 |
|
April 30,2020 |
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
28,211 |
|
|
$ |
36,262 |
|
Accounts receivable |
|
|
14,311 |
|
|
|
8,606 |
|
Contract assets |
|
|
4,317 |
|
|
|
3,300 |
|
Inventory |
|
|
9,610 |
|
|
|
10,883 |
|
Prepaid expenses |
|
|
569 |
|
|
|
712 |
|
Total current assets |
|
|
57,018 |
|
|
|
59,763 |
|
Property and equipment,
net |
|
|
28,134 |
|
|
|
27,105 |
|
Operating lease right-of-use
assets |
|
|
19,757 |
|
|
|
20,100 |
|
Restricted cash |
|
|
350 |
|
|
|
350 |
|
Other assets |
|
|
302 |
|
|
|
302 |
|
Total assets |
|
$ |
105,561 |
|
|
$ |
107,620 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
5,724 |
|
|
$ |
5,926 |
|
Accrued payroll and related costs |
|
|
3,405 |
|
|
|
3,019 |
|
Contract liabilities |
|
|
27,123 |
|
|
|
29,120 |
|
Operating lease liabilities |
|
|
1,268 |
|
|
|
1,228 |
|
Note payable |
|
|
— |
|
|
|
4,379 |
|
Other current liabilities |
|
|
591 |
|
|
|
808 |
|
Total current liabilities |
|
|
38,111 |
|
|
|
44,480 |
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities,
less current portion |
|
|
20,911 |
|
|
|
21,244 |
|
Total liabilities |
|
|
59,022 |
|
|
|
65,724 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par
value; 5,000 shares authorized; |
|
|
|
|
|
|
|
|
1,648 shares issued and outstanding at July 31, 2020 and April 30,
2020, respectively |
|
|
2 |
|
|
|
2 |
|
Common stock, $0.001 par
value; 150,000 shares authorized; |
|
|
|
|
|
|
|
|
56,601 and 56,483 shares issued and outstanding at July 31, 2020
and April 30, 2020, respectively |
|
|
56 |
|
|
|
56 |
|
Additional paid-in capital |
|
|
612,822 |
|
|
|
612,909 |
|
Accumulated deficit |
|
|
(566,341 |
) |
|
|
(571,071 |
) |
Total stockholders’ equity |
|
|
46,539 |
|
|
|
41,896 |
|
Total liabilities and stockholders’ equity |
|
$ |
105,561 |
|
|
$ |
107,620 |
|
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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