Avid Bioservices Reports Financial Results for First Quarter Fiscal 2019 and Recent Developments
September 10 2018 - 4:05PM
-- Fiscal 2019 Projected Revenue of $51 to $55
Million Reaffirmed --
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 year (FY) 2019 ended July 31, 2018, and
provided an update on its contract manufacturing operations, and
other corporate highlights.
Highlights Since April 30,
2018
“During the first quarter of FY 2019, Avid
continued to successfully execute the plan we outlined during
our year-end earnings call in July. As a result, we are
reaffirming our revenue guidance for FY 2019 of $51 to $55
million. Our confidence in achieving this target is driven by
the expected recognition of a significant portion of our confirmed
backlog of $39 million during the remainder of FY 2019, and high
visibility on customer orders for the balance of the year.
This includes the anticipated expansion of multiple projects
underway with existing clients and additional revenue from numerous
issued new client proposals. To support this effort, we have
built an exceptional business development team with a
cumulative 60+ years of CDMO industry experience. We are
aggressively pursuing new customers and building visibility
for the business within the industry. We are
actively and successfully on-boarding recently
awarded projects and significantly enhancing our process
development capabilities to best service the growing demands of our
customers. The Master Service Agreements that we’ve executed
in calendar 2018 are all now contributing to process development
revenue. We believe the advances made during
the first quarter through our business development
efforts and process development enhancements have placed us on
track to achieve each of our primary goals: to
grow and stabilize revenues through an expanded
customer base; to improve margins through increased
capacity utilization; and to position the company to
achieve positive cash flow,” said Roger Lias, Ph.D.,
Avid’s president and chief executive officer.
Recent CDMO Developments
- Initiated operations in the first of our new process
development laboratories during the quarter.
- Continued progress with ongoing expansion and optimization of
our process development capabilities and laboratory space,
including:
- Expanding the total available process development laboratory
space to more than 6,000 square feet;
- Upgrading the infrastructure and equipment within the existing
process development laboratories;
- Implementing new state-of-the-art technologies and equipment
designed to facilitate efficient, high-throughput development of
upstream and downstream manufacturing processes.
- Signed project extensions with existing clients in the amount
of $4.1 million during the quarter. This $4.1 million is
included in our current backlog.
Recent Corporate
Developments
- Received final payment of $2.0 million in September 2018 for a
total of $8.0 million in upfront payments associated with the Asset
Assignment and Purchase Agreement signed with Oncologie, Inc. in
February 2018 for Avid's legacy phosphatidylserine (PS)-targeting
program including bavituximab.
Financial Highlights and Guidance
- The company is reaffirming revenue guidance for the full FY
2019 of $51 million - $55 million (ASC
606).
- The current revenue backlog as of July 31, 2018 was
$39 million, the majority of which we expect to recognize in
FY 2019. Excluding the impact of adopting ASC 606, backlog was $60
million, an increase of 3.6% as compared to $58 million at the
end of the fourth quarter of FY 2018.
- Contract manufacturing revenue was $12.6 million for the first
quarter of FY 2019 compared to $27.1 million for the first
quarter of FY 2018. The decline as compared to the same prior year
period is primarily attributed to a previously disclosed shipping
delay which resulted in $9.9 million in revenue recognized in the
first quarter of FY 2018 for manufacturing runs completed, but not
shipped, from the fourth quarter of FY 2017. Another factor
contributing to the decline is the decreased demand from our two
lead customers as previously disclosed, offset by the adoption of
ASC 606, which accelerated revenue recognition for a portion
of Avid’s projects.
- Gross margin for the first quarter of FY 2019
was 9%, a 15% decrease compared to the same
prior year period. The decrease in gross margin was
primarily attributed to the shipping delay discussed previously,
fewer manufacturing runs during the period that contributed to an
increase in idle capacity during the quarter, combined with the
variability of manufacturing costs from product to
product.
- Selling, general and administrative expenses for the
first quarter of FY 2019 were
$3.2 million, a 17% decrease compared to
$3.9 million for the first quarter of FY
2018. The decrease in the quarter was driven
primarily by the company’s previous efforts to align the
cost structure to match the needs of Avid’s current CDMO operations
by reducing expenses and streamlining Avid’s
operations.
- For the first quarter of FY 2019, the company
recorded consolidated net loss attributable to common
stockholders of $3.4 million, or $0.06 per share,
compared to a consolidated net loss attributable to common
stockholders of $2.6 million, or $0.06 per share,
for the same prior year quarter.
- Avid reported $37.5 million in cash and cash equivalents as of
July 31, 2018, compared to $42.3 million on April 30, 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, September 10, 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 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 cashflow 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 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
contemplated upgrade to its process development capabilities and
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, 2018, 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) |
(in thousands, except share and per share
information) |
|
Three Months Ended July 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
Contract manufacturing
revenue |
$ |
12,589 |
|
|
$ |
27,077 |
|
|
Cost of contract
manufacturing |
|
11,397 |
|
|
|
20,448 |
|
|
Gross
profit |
|
1,192 |
|
|
|
6,629 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
Selling, general
and administrative expenses |
|
3,215 |
|
|
|
3,853 |
|
|
Operating (loss)
income |
|
(2,023 |
) |
|
|
2,776 |
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
Interest and
other income |
|
73 |
|
|
|
27 |
|
|
Interest and
other expense |
|
(11 |
) |
|
|
(3 |
) |
|
(Loss) income from
continuing operations |
$ |
(1,961 |
) |
|
$ |
2,800 |
|
|
Loss from discontinued
operations |
|
— |
|
|
|
(4,005 |
) |
|
Net loss |
$ |
(1,961 |
) |
|
$ |
(1,205 |
) |
|
Comprehensive loss |
$ |
(1,961 |
) |
|
$ |
(1,205 |
) |
|
Series E preferred
stock accumulated dividends |
|
(1,442 |
) |
|
|
(1,442 |
) |
|
Net loss attributable
to common stockholders |
$ |
(3,403 |
) |
|
$ |
(2,647 |
) |
|
Weighted average common
shares outstanding: |
|
|
|
|
Basic |
|
55,770,108 |
|
|
|
44,773,727 |
|
|
Diluted |
|
55,770,108 |
|
|
|
44,877,985 |
|
|
|
|
|
|
|
Net (loss) income per
common share attributable to common stockholders, basic: |
|
|
|
|
Continuing
operations |
$ |
(0.06 |
) |
|
$ |
0.03 |
|
|
Discontinued
operations |
$ |
— |
|
|
$ |
(0.09 |
) |
|
Total |
$ |
(0.06 |
) |
|
$ |
(0.06 |
) |
|
|
|
|
|
|
Net (loss) income per
common share attributable to common stockholders, diluted: |
|
|
|
|
Continuing
operations |
$ |
(0.06 |
) |
|
$ |
0.03 |
|
|
Discontinued
operations |
$ |
— |
|
|
$ |
(0.09 |
) |
|
Total |
$ |
(0.06 |
) |
|
$ |
(0.06 |
) |
|
- continued -
AVID BIOSERVICES, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(in thousands, except share information) |
|
|
July 31,2018 |
|
April 30,2018 |
|
Unaudited |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
37,484 |
|
|
$ |
42,265 |
|
Trade and
other receivables |
|
2,951 |
|
|
|
3,754 |
|
Contract
assets |
|
4,775 |
|
|
|
— |
|
Inventories |
|
9,168 |
|
|
|
16,129 |
|
Prepaid
expenses |
|
528 |
|
|
|
679 |
|
Assets of
discontinued operations |
|
2,014 |
|
|
|
5,000 |
|
Total
current assets |
|
56,920 |
|
|
|
67,827 |
|
Property and equipment,
net |
|
26,336 |
|
|
|
26,479 |
|
Restricted cash |
|
1,150 |
|
|
|
1,150 |
|
Other assets |
|
302 |
|
|
|
304 |
|
Total
assets |
$ |
84,708 |
|
|
$ |
95,760 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
3,122 |
|
|
$ |
1,909 |
|
Accrued
payroll and related costs |
|
2,030 |
|
|
|
2,564 |
|
Contract
liabilities |
|
17,994 |
|
|
|
27,935 |
|
Other
current liabilities |
|
609 |
|
|
|
905 |
|
Liabilities of discontinued operations |
|
1,969 |
|
|
|
4,550 |
|
Total
current liabilities |
|
25,724 |
|
|
|
37,863 |
|
|
|
|
|
Deferred rent, less
current portion |
|
2,145 |
|
|
|
2,159 |
|
Capital lease, less
current portion |
|
93 |
|
|
|
— |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
Preferred
stock—$0.001 par value; authorized 5,000,000 shares; 1,647,760
shares issued and outstanding at July 31, 2018 and April 30, 2018,
respectively |
|
2 |
|
|
|
2 |
|
Common
stock—$0.001 par value; authorized 500,000,000 shares; 55,990,274
and 55,689,222 shares issued and outstanding at July 31, 2018 and
April 30, 2018, respectively |
|
55 |
|
|
|
55 |
|
Additional paid-in capital |
|
615,040 |
|
|
|
614,810 |
|
Accumulated deficit |
|
(558,351 |
) |
|
|
(559,129 |
) |
Total
stockholders’ equity |
|
56,746 |
|
|
|
55,738 |
|
Total
liabilities and stockholders’ equity |
$ |
84,708 |
|
|
$ |
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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