Avid Bioservices Reports Financial Results for Second Quarter Fiscal 2019 and Recent Developments
December 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
second quarter of fiscal year (FY) 2019 ended October 31, 2018, and
provided an update on its contract manufacturing operations, and
other corporate highlights.
Highlights Since July 31,
2018
“During the second quarter we have made very
significant progress in both the commercial arena and in our
operations as we continue to execute to plan. Re-launching the
company as a dedicated biologics contract development and
manufacturing organization is a challenging endeavor and I am
exceptionally pleased with our progress,” said Roger Lias, Ph.D.,
Avid’s president and chief executive officer.
“On the commercial front we continue to see
strong demand and we are making substantial progress in advancing
both new and existing projects and improving our profitability. We
are engaged in negotiations on new programs that will contribute
revenue both during the current fiscal year and through fiscal year
2020 and, perhaps more importantly, many of our current customer
programs expanded during the quarter. In addition to securing
nearer-term business, our recently installed and highly experienced
business development team is advancing longer lead time discussions
with established biopharmaceutical clients for future commercial
opportunities.
“To support the on-boarding of new projects and
to deliver robust, compliant and cost-effective processes to our
expanding and diversifying customer base, we continue to strengthen
our process development function via the expansion and enhancement
of our laboratories and the addition of state-of-the-art equipment.
Process development services will become an increasingly important
contributor to revenue and will build a strong pipeline of future
manufacturing opportunities.
“It’s pleasing to be able to report revenue of
over $10 million and a backlog of $36 million during a quarter in
which revenue generating potential was limited by planned
sequential maintenance shutdowns of both of Avid’s cGMP
manufacturing facilities. These shutdowns, during which we
undertook important maintenance activities and upgraded systems
represent the most comprehensive overhaul program in the company’s
history and were crucial to maintaining compliance; serving our
current clients and winning new business, as well as minimizing
operational and regulatory risk.
“Collectively our significant operational and
commercial progress, along with diligent management of our
financial resources position Avid Bioservices well for transition
to cash generation and positive EBITDA.”
Recent Developments
- Signed project expansion orders with current clients
representing future revenue in the amount of $6.3 million during
the second quarter.
- Increased marketing and media activities during the quarter to
enhance industry visibility. Received double the number of
Requests for Proposal in Q2 2019 as compared to Q1 2019 and
increased the number of proposals issued by 100% during the same
period.
- Sold remaining legacy R&D asset, r84, to Oncologie, Inc.,
for $1.0 million upfront. r84 is a pre-clinical novel therapeutic
antibody asset targeting VEG-F that has demonstrated anti-tumor
activity in animal models. Under the terms of the purchase and
assignment agreement, Avid is eligible to receive up to an
additional $21.0 million in development, regulatory and
commercialization milestones, as well as low to mid-single digit
royalties on net sales upon commercialization of products utilizing
r84.
- 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.
- Successfully executed the most comprehensive sequential
maintenance overhaul in the company’s history, to best serve our
existing customers and entice new business.
Financial Highlights and
Guidance
- The company is reaffirming revenue guidance for the full FY
2019 of $51 million - $55 million.
- The revenue backlog as of October 31, 2018 was
$36 million, the majority of which we expect to recognize in
FY 2019.
- Contract manufacturing revenue from Avid's clinical and
commercial biomanufacturing services was $10.2
million for the second quarter of FY 2019 compared
to $12.8 million for the second quarter of FY 2018. The
decline in the second quarter of FY 2019 was primarily due to
decreased demand from our two lead customers as previously
disclosed. In addition, our revenues were impacted by the scheduled
facility maintenance and upgrade shutdown.
- Gross margin for the second quarter was a positive 3%, a
significant improvement compared to a gross margin of negative 27%
during the prior year period. The increase in gross margin for the
quarter was primarily attributed to our product mix resulting in
improved overhead efficiencies.
- Selling, general and administrative expenses for the second
quarter of FY 2019 were $2.8 million, compared to $3.6
million for the second quarter of FY 2018. The decrease in the
second quarter of FY 2019 was primarily due to reductions in
facility costs and legal, accounting and other professional
fees.
- For the second quarter of FY 2019, the company recorded
consolidated net loss attributable to common stockholders
of $2.9 million, or $0.05 per share, compared
to a consolidated net loss attributable to common stockholders
of $14.1 million, or $0.31 per share, for the second
quarter of FY 2018.
- Avid reported $32.7 million in cash and cash
equivalents as of October 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, December 10, 2018, at 4:30 PM EST (1:30 PM
PST).
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 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, 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 October
31, |
|
Six Months Ended October
31, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Contract manufacturing
revenue |
$ |
10,178 |
|
|
$ |
12,782 |
|
|
$ |
22,767 |
|
|
$ |
39,859 |
|
Cost of contract
manufacturing |
|
9,844 |
|
|
|
16,242 |
|
|
|
21,241 |
|
|
|
36,690 |
|
Gross
profit (loss) |
|
334 |
|
|
|
(3,460 |
) |
|
|
1,526 |
|
|
|
3,169 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling,
general and administrative |
|
2,816 |
|
|
|
3,596 |
|
|
|
6,031 |
|
|
|
7,449 |
|
Restructuring charges |
|
— |
|
|
|
1,258 |
|
|
|
— |
|
|
|
1,258 |
|
Total
operating expenses |
|
2,816 |
|
|
|
4,854 |
|
|
|
6,031 |
|
|
|
8,707 |
|
Operating loss |
|
(2,482 |
) |
|
|
(8,314 |
) |
|
|
(4,505 |
) |
|
|
(5,538 |
) |
Interest and other
income, net |
|
119 |
|
|
|
13 |
|
|
|
181 |
|
|
|
37 |
|
Loss from continuing
operations before income taxes |
$ |
(2,363 |
) |
|
$ |
(8,301 |
) |
|
$ |
(4,324 |
) |
|
$ |
(5,501 |
) |
Income
tax benefit |
|
173 |
|
|
|
— |
|
|
|
173 |
|
|
|
— |
|
Loss from continuing
operations |
$ |
(2,190 |
) |
|
$ |
(8,301 |
) |
|
$ |
(4,151 |
) |
|
$ |
(5,501 |
|
Income (loss) from
discontinued operations, net of tax |
|
739 |
|
|
|
(4,323 |
) |
|
|
739 |
|
|
|
(8,328 |
) |
Net loss |
$ |
(1,451 |
) |
|
$ |
(12,624 |
) |
|
$ |
(3,412 |
) |
|
$ |
(13,829 |
) |
Comprehensive loss |
$ |
(1,451 |
) |
|
$ |
(12,624 |
) |
|
$ |
(3,412 |
) |
|
$ |
(13,829 |
) |
Series E preferred
stock accumulated dividends |
|
(1,442 |
) |
|
|
(1,442 |
) |
|
|
(2,523 |
) |
|
|
(2,523 |
) |
Net loss attributable
to common stockholders |
$ |
(2,893 |
) |
|
$ |
(14,066 |
) |
|
$ |
(5,935 |
) |
|
$ |
(16,352 |
) |
Basic and diluted
weighted average common shares outstanding |
|
56,008,541 |
|
|
|
45,097,474 |
|
|
|
55,889,325 |
|
|
|
44,935,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
(loss) income per common share attributable to common
stockholders: |
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.06 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.18 |
) |
Discontinued operations |
$ |
0.01 |
|
|
$ |
(0.10 |
) |
|
$ |
0.01 |
|
|
$ |
(0.18 |
) |
Net loss
per share attributable to common stockholders |
$ |
(0.05 |
) |
|
$ |
(0.31 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.36 |
) |
|
|
|
|
|
|
|
|
AVID BIOSERVICES,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands, except share information)
|
|
|
|
|
October 31,2018 |
|
April 30,2018 |
|
Unaudited |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
32,694 |
|
|
$ |
42,265 |
|
Trade and
other receivables |
|
4,197 |
|
|
|
3,754 |
|
Contract
assets |
|
5,092 |
|
|
|
— |
|
Inventories |
|
9,736 |
|
|
|
16,129 |
|
Prepaid
expenses |
|
774 |
|
|
|
679 |
|
Assets of
discontinued operations |
|
— |
|
|
|
5,000 |
|
Total
current assets |
|
52,493 |
|
|
|
67,827 |
|
Property and equipment,
net |
|
26,279 |
|
|
|
26,479 |
|
Restricted cash |
|
1,150 |
|
|
|
1,150 |
|
Other assets |
|
302 |
|
|
|
304 |
|
Total
assets |
$ |
80,224 |
|
|
$ |
95,760 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts
payable |
$ |
3,223 |
|
|
$ |
1,909 |
|
Accrued
payroll and related costs |
|
1,829 |
|
|
|
2,564 |
|
Contract
liabilities |
|
17,307 |
|
|
|
27,935 |
|
Other
current liabilities |
|
433 |
|
|
|
905 |
|
Liabilities
of discontinued operations |
|
416 |
|
|
|
4,550 |
|
Total
current liabilities |
|
23,208 |
|
|
|
37,863 |
|
|
|
|
|
Deferred rent, less
current portion |
|
2,126 |
|
|
|
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 October 31, 2018 and April 30,
2018, respectively |
|
2 |
|
|
|
2 |
|
Common
stock—$0.001 par value; 150,000,000 shares authorized; 56,063,488
and 55,689,222 shares issued and outstanding at October 31, 2018
and April 30, 2018, respectively |
|
56 |
|
|
|
55 |
|
Additional
paid-in capital |
|
614,541 |
|
|
|
614,810 |
|
Accumulated
deficit |
|
(559,802 |
) |
|
|
(559,129 |
) |
Total
stockholders’ equity |
|
54,797 |
|
|
|
55,738 |
|
Total
liabilities and stockholders’ equity |
$ |
80,224 |
|
|
$ |
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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