Avid Bioservices Reports Financial Results for Third Quarter of Fiscal Year 2018 and Recent Developments
March 12 2018 - 4:05PM
Company Remains on Target for Full
Year Revenue of $50.0 - $55.0 Million
Intensified Business Development Effort Results
in New Customer Contract and Strengthened Backlog
Avid Bioservices, Inc. (NASDAQ:CDMO) (NASDAQ:CDMOP), a dedicated
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 third quarter
of fiscal year (FY) 2018 ended January 31, 2018, and provided an
update on its contract manufacturing operations, and other
corporate highlights.
Highlights Since October 31,
2017
“During and subsequent to our third quarter of
fiscal year 2018, Avid completed two primary objectives. We
successfully divested the company’s lead immuno-oncology assets to
an organization with the financial resources and expertise to
advance them, and we established a new operational structure that
will allow our business to take full advantage of the substantial
and growing demand for biologics manufacturing,” said Roger Lias,
Ph.D., president and chief executive officer of Avid
Bioservices. “With the divestiture of our lead R&D
assets, our transition to a dedicated CDMO business is complete,
and our team is entirely focused on expanding and diversifying our
customer base, as well as strengthening our process development
capabilities. At present, we are in late-stage negotiations
with several potential new customers and expect to announce the
executed agreements before the end of the fiscal year. In recent
weeks, we also completed a financing raising $23.2 million in gross
proceeds. These funds are essential as they will support our
operations, including upgrading our process development
capabilities to ensure that we are fully capable of servicing our
customers with the highest quality standards and equipment.
We made rapid progress during the third quarter that we believe
will allow us to build backlog and achieve sustainable growth in
the future.”
Recent CDMO Developments
- Advanced eight current clients, some with multiple projects,
through various stages of development.
- Selected by Acumen Pharmaceuticals, Inc. to provide process
development and clinical manufacturing services in support of
ACU193, which is being developed for the treatment of Alzheimer’s
disease. ° Avid and Acumen will
immediately commence process development work with the goal of
creating a robust, cost-effective and scalable process to support
cGMP manufacture of ACU193.
Recent Corporate Developments and
Financial Highlights
- Changed company name from Peregrine Pharmaceuticals, Inc. to
Avid Bioservices, Inc. ° As the Avid name
is recognized in the industry for CDMO excellence and biologics
manufacturing expertise, the brand is an important asset in the
company’s transition to a dedicated CDMO business. The company also
adopted the new NASDAQ ticker symbol, "CDMO"
(NASDAQ:CDMO).
- Reconstituted board of directors including six independent
directors, all with significant CDMO experience.
- Entered into an Asset Assignment and Purchase Agreement with
Oncologie, Inc. for Avid's phosphatidylserine (PS)-targeting
program including bavituximab. ° Avid
expects to receive an aggregate of $8.0 million in
upfront payments over a period of six months and will be eligible
to receive up to $95.0 million in development, regulatory
and commercialization milestones. °
Oncologie, Inc. will be responsible for all future research,
development and commercialization of bavituximab, and related
intellectual property costs. ° Avid will receive
royalties on net sales that are upward tiering into the
mid-teens. ° Oncologie will enter into an
agreement with Avid for future contract development and
manufacturing activities in support of bavituximab.
- Completed a public offering of 10,294,445 shares of common
stock raising gross proceeds of approximately $23.2 million.
° Avid intends to use the net proceeds from the
offering to support the growth of its contract manufacturing
business and general corporate purposes.
- The company maintains its manufacturing revenue guidance for
the full FY 2018 of $50.0 million - $55.0 million.
- The current manufacturing revenue backlog has increased
to $39 million.
- Contract manufacturing revenue from Avid's clinical and
commercial biomanufacturing services was $6.8 million for the third
quarter of FY 2018 compared to $10.7 million for the third
quarter of FY 2017. The decline was primarily due to lower
demand from one of our largest customers.
- Cost of contract manufacturing increased to $11.0 million in
the third quarter of FY 2018 compared to $8.0 million for the third
quarter of FY 2017. The current period increase in cost of
manufacturing is primarily attributed to idle capacity costs of
$5.3 million due to lower facility and personnel utilization
compared to no idle capacity costs reported in the same prior year
quarter.
- Selling, general and administrative expenses for the third
quarter of FY 2018 were $4.8 million, compared to $4.4 million for
the third quarter of FY 2017. The current period increase in
costs was primarily due to legal and other related fees associated
with the settlement agreement with certain investors regarding the
composition of the company’s board of directors and legal and
advisory fees associated with the Asset Assignment and Purchase
Agreement with Oncologie, Inc.
- As of January 31, 2018, the company's research and development
segment met all the conditions to be classified as a discontinued
operation. Accordingly, the operating results of our research
and development segment are reported as a loss from discontinued
operations for all periods presented.
- Avid's consolidated net loss attributable to common
stockholders was $12.4 million or $0.28 per share, for the third
quarter of FY 2018, compared to a net loss attributable to common
stockholders of $9.2 million, or $0.25 per share, for the same
prior year quarter.
- Avid reported $17.9 million in cash and cash equivalents as of
January 31, 2018, compared to $46.8 million at fiscal year ended
April 30, 2017. Following the completion of a public offering
during February 2018, the company had cash and cash equivalents of
$41.7 million as of February 28, 2018.
More detailed financial information and analysis
may be found in Avid’s Quarterly Report on Form 10-Q, which will be
filed with the Securities and Exchange Commission today.
Conference Call
Avid will host a conference call and webcast
this afternoon, March 12, 2018, 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 nearly 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. For more
information, please visit 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 experience delays in engaging
new clients, the risk that the company may experience technical
difficulties in processing customer orders 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, the risk that the company may need to use the majority of
its cash to fund operations, thereby delaying the contemplated
upgrade to its process development capabilities and expansion
plans, and the risk that the company may not receive the full $8
million up front payment from Oncologie. 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, 2017 and subsequent quarterly reports on Form
10-Q, 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
LOSS (UNAUDITED)
|
Three Months Ended January
31, |
|
Nine Months Ended January
31, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Contract manufacturing
revenue |
$ |
6,819,000 |
|
|
$ |
10,747,000 |
|
|
$ |
46,678,000 |
|
|
$ |
39,726,000 |
|
Cost of contract
manufacturing |
|
10,951,000 |
|
|
|
7,974,000 |
|
|
|
47,641,000 |
|
|
|
26,477,000 |
|
Gross profit
(loss) |
|
(4,132,000 |
) |
|
|
2,773,000 |
|
|
|
(963,000 |
) |
|
|
13,249,000 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling, general
and administrative |
|
4,824,000 |
|
|
|
4,365,000 |
|
|
|
12,273,000 |
|
|
|
13,602,000 |
|
Restructuring
charges |
|
— |
|
|
|
— |
|
|
|
1,258,000 |
|
|
|
— |
|
Total operating
expenses |
|
4,824,000 |
|
|
|
4,365,000 |
|
|
|
13,531,000 |
|
|
|
13,602,000 |
|
|
|
|
|
|
|
|
|
Operating loss |
|
(8,956,000 |
) |
|
|
(1,592,000 |
) |
|
|
(14,494,000 |
) |
|
|
(353,000 |
) |
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
Interest and
other income |
|
42,000 |
|
|
|
25,000 |
|
|
|
83,000 |
|
|
|
71,000 |
|
Interest and
other expense |
|
(14,000 |
) |
|
|
(2,000 |
) |
|
|
(18,000 |
) |
|
|
(2,000 |
) |
|
|
|
|
|
|
|
|
Loss from continuing
operations |
$ |
(8,928,000 |
) |
|
$ |
(1,569,000 |
) |
|
$ |
(14,429,000 |
) |
|
$ |
(284,000 |
) |
Loss from discontinued
operations |
|
(2,076,000 |
) |
|
|
(6,205,000 |
) |
|
|
(10,404,000 |
) |
|
|
(22,603,000 |
) |
|
|
|
|
|
|
|
|
Net loss |
$ |
(11,004,000 |
) |
|
$ |
(7,774,000 |
) |
|
$ |
(24,833,000 |
) |
|
$ |
(22,887,000 |
) |
|
|
|
|
|
|
|
|
Comprehensive loss |
$ |
(11,004,000 |
) |
|
$ |
(7,774,000 |
) |
|
$ |
(24,833,000 |
) |
|
$ |
(22,887,000 |
) |
|
|
|
|
|
|
|
|
Series E preferred
stock accumulated dividends |
|
(1,442,000 |
) |
|
|
(1,442,000 |
) |
|
|
(3,604,000 |
) |
|
|
(3,558,000 |
) |
|
|
|
|
|
|
|
|
Net loss attributable
to common stockholders |
$ |
(12,446,000 |
) |
|
$ |
(9,216,000 |
) |
|
$ |
(28,437,000 |
) |
|
$ |
(26,445,000 |
) |
|
|
|
|
|
|
|
|
Basic and diluted
weighted average common shares outstanding(1): |
|
45,225,804 |
|
|
|
37,258,794 |
|
|
|
45,032,335 |
|
|
|
35,486,782 |
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per common share attributable to common stockholders (1): |
|
|
|
|
|
|
|
Continuing
operations |
$ |
(0.23 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.40 |
) |
|
$ |
(0.11 |
) |
Discontinued
operations |
$ |
(0.05 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.64 |
) |
Net loss
per share attributable to common stockholders |
$ |
(0.28 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.63 |
) |
|
$ |
(0.75 |
) |
|
|
|
|
|
|
|
|
(1)
All share and per share amounts of our common stock for all prior
fiscal year periods presented have been retroactively adjusted to
reflect the one-for-seven reverse stock split of our issued and
outstanding common stock, which took effect on July 10, 2017.
|
- continued -
AVID BIOSERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
January 31,2018 |
|
April 30,2017 |
|
Unaudited |
|
|
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
17,938,000 |
|
|
$ |
46,799,000 |
|
Trade and other receivables |
|
7,967,000 |
|
|
|
7,742,000 |
|
Inventories |
|
14,218,000 |
|
|
|
33,099,000 |
|
Prepaid expenses |
|
906,000 |
|
|
|
1,460,000 |
|
Total current assets |
|
41,029,000 |
|
|
|
89,100,000 |
|
Property
and equipment, net |
|
26,325,000 |
|
|
|
26,515,000 |
|
Restricted
cash |
|
1,150,000 |
|
|
|
1,150,000 |
|
Other
assets |
|
1,353,000 |
|
|
|
1,347,000 |
|
Total assets |
$ |
69,857,000 |
|
|
$ |
118,112,000 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
1,911,000 |
|
|
$ |
5,779,000 |
|
Accrued clinical trial and related fees |
|
5,503,000 |
|
|
|
4,558,000 |
|
Accrued payroll and related costs |
|
3,876,000 |
|
|
|
6,084,000 |
|
Deferred revenue |
|
6,633,000 |
|
|
|
28,500,000 |
|
Customer deposits |
|
17,602,000 |
|
|
|
17,017,000 |
|
Other current liabilities |
|
749,000 |
|
|
|
993,000 |
|
Total current liabilities |
|
36,274,000 |
|
|
|
62,931,000 |
|
|
|
|
|
Deferred
rent, less current portion |
|
2,064,000 |
|
|
|
1,599,000 |
|
|
|
|
|
Commitments
and contingencies |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock—$0.001 par value; authorized 5,000,000 shares;
1,647,760 issued and outstanding at January 31, 2018 and April 30,
2017, respectively |
|
2,000 |
|
|
|
2,000 |
|
Common stock—$0.001 par value; authorized 500,000,000 shares;
45,257,180 and 44,014,040 issued and outstanding at January 31,
2018 and April 30, 2017, respectively |
|
45,000 |
|
|
|
44,000 |
|
Additional paid-in capital |
|
593,621,000 |
|
|
|
590,971,000 |
|
Accumulated deficit |
|
(562,149,000 |
) |
|
|
(537,435,000 |
) |
Total stockholders’ equity |
|
31,519,000 |
|
|
|
53,582,000 |
|
Total liabilities and stockholders’ equity |
$ |
69,857,000 |
|
|
$ |
118,112,000 |
|
|
|
|
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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