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 2020
ended July 31, 2019.
Highlights Since April 30,
2019
“During the first quarter of 2020, we recorded
revenue that met our expectations for the period, significantly
strengthened our backlog and initiated a number of operational
improvements in our facilities,” stated Rick Hancock, interim
president and chief executive officer. “Despite our topline
strength, margins declined during the quarter due to several
factors, none of which are expected to impact our stated guidance
for the year. These factors include an increase in headcount
to accommodate growth in production demand, a realignment of the
company’s compensation structure to secure our existing work force,
and equipment repairs.
“Important achievements during the period
included the completion of an additional process validation
campaign for a customer that anticipates conducting future
commercial manufacturing at Avid. The company also entered
into two new contract manufacturing service agreements during the
first quarter, adding one of the world’s leading pharmaceutical
companies to our customer list. These projects are currently
in the onboarding process, both of which are proceeding
well.
“During the period, Avid also announced the
appointment of Catherine Mackey, Ph.D. as an independent member to
the company’s board of directors. With more than 30 years
experience in biopharma research and development, Dr. Mackey brings
an important perspective that will allow us to best support the
needs of our current, as well as prospective clients. The
board is thrilled with Dr. Mackey’s appointment and we look forward
to working together toward Avid’s continued growth.
“The highlights of the first quarter of 2020
were new customer contracts, significant backlog growth and
completion of another successful process validation campaign.
We believe each of these accomplishments will contribute
significantly to the future growth and expansion of the business
and we are eager to build on this momentum.”
Financial Highlights and Guidance
- The company is reaffirming revenue guidance for the full fiscal
year 2020 of $64 million - $67 million.
- Revenue was $15.3 million for the first quarter of
fiscal 2020, a 21% increase compared to $12.6 million for the
first quarter of last fiscal year. This increase is primarily
due to growing demand from a more diversified client
base.
- As of July 31, 2019, revenue backlog was
approximately $61 million, an increase of 34% as compared to
the fourth quarter of fiscal 2019. The company expects to
recognize the majority of this backlog in fiscal year
2020.
- Gross margin for the first quarter of fiscal 2020 of 7% was
down slightly compared to a gross margin of 9% in the prior year
period. Despite increased revenue during the first quarter of
2020, gross margin was impacted by hiring personnel to accommodate
growth in production demand, a realignment of the company’s
compensation structure to secure our existing work force, and
equipment repairs that impacted efficiencies during the
period. Management does not expect these factors to impact
our stated revenue guidance for the year.
- Selling, general and administrative expenses (“SG&A”) for
the first quarter of fiscal 2020 were $4.5 million compared
to $3.2 million for the first quarter of last year. The
increase in SG&A was primarily due to employee
separation-related expenses, and increased stock-based
compensation. Excluding the separation agreement expenses and
the increase in stock-based compensation, SG&A during the first
quarter of 2020 is consistent with SG&A for the prior year
quarter.
- For the first quarter of fiscal 2020, the company recorded
consolidated net loss attributable to common stockholders
of $4.6 million or $0.08 per share, compared to
a consolidated net loss attributable to common stockholders
of $3.4 million or $0.06 per share, for the
first quarter of fiscal 2019.
- Avid reported $28.9 million in cash and cash
equivalents as of July 31, 2019, compared to $32.4
million on April 30, 2019.
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
- Signed two new contract manufacturing service agreements to
support the development of novel drug candidates. The
agreements include the addition of one of the world’s leading
pharmaceutical companies to Avid’s growing list of customers, as
well as the expansion of the relationship with one of the company’s
existing biotechnology customers.
- Completed the first process validation campaign of fiscal
2020. 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.
- Appointed Catherine Mackey, Ph.D. as an independent member to
the company’s board of directors. Dr. Mackey is an
experienced leader, director and advisor with more than 30 years of
R&D and operations experience in the pharmaceutical,
biotechnology and agricultural industries, including over a decade
in key leadership roles at Pfizer Inc.
Conference Call
Avid will host a conference call and webcast
this afternoon, September 5, 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 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 not achieve positive cash flow
or EBITDA, 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.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)(IN THOUSANDS, EXCEPT PER SHARE
INFORMATION)
|
Three Months
EndedJuly 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
Revenues |
$ |
15,254 |
|
|
$ |
12,589 |
|
Cost of revenues |
|
14,168 |
|
|
|
11,397 |
|
Gross profit |
|
1,086 |
|
|
|
1,192 |
|
|
|
|
|
Operating expenses: |
|
|
|
Selling, general and
administrative |
|
4,459 |
|
|
|
3,215 |
|
Operating loss |
|
(3,373 |
) |
|
|
(2,023 |
) |
Interest and other income, net |
|
209 |
|
|
|
62 |
|
Net loss |
$ |
(3,164 |
) |
|
$ |
(1,961 |
) |
|
|
|
|
Comprehensive loss |
$ |
(3,164 |
) |
|
$ |
(1,961 |
) |
|
|
|
|
Series E preferred stock
accumulated dividends |
|
(1,442 |
) |
|
|
(1,442 |
) |
Net loss attributable to common
stockholders |
$ |
(4,606 |
) |
|
$ |
(3,403 |
) |
|
|
|
|
Basic and diluted net loss per
common share attributable to common stockholders |
$ |
(0.08 |
) |
|
$ |
(0.06 |
) |
|
|
|
|
|
Weighted average basic and
diluted shares outstanding |
|
|
|
56,167 |
|
|
|
55,770 |
|
|
|
|
|
|
AVID BIOSERVICES, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(IN THOUSANDS, EXCEPT PAR
VALUE)
|
July 31,2019 |
|
April 30,2019 |
ASSETS |
(unaudited) |
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
28,944 |
|
|
$ |
32,351 |
|
Accounts receivable |
|
8,223 |
|
|
|
7,374 |
|
Contract assets |
|
5,589 |
|
|
|
4,327 |
|
Inventory |
|
8,031 |
|
|
|
6,557 |
|
Prepaid expenses and other current assets |
|
777 |
|
|
|
709 |
|
Total current assets |
|
51,564 |
|
|
|
51,318 |
|
Property and equipment, net |
|
26,453 |
|
|
|
25,625 |
|
Operating lease right-of-use
assets |
|
22,601 |
|
|
|
— |
|
Restricted cash |
|
1,150 |
|
|
|
1,150 |
|
Other assets |
|
302 |
|
|
|
302 |
|
Total assets |
$ |
102,070 |
|
|
$ |
78,395 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
5,458 |
|
|
$ |
4,352 |
|
Accrued payroll and related costs |
|
3,230 |
|
|
|
3,540 |
|
Contract liabilities |
|
18,104 |
|
|
|
14,651 |
|
Operating lease liabilities |
|
1,382 |
|
|
|
— |
|
Other current liabilities |
|
761 |
|
|
|
619 |
|
Total current liabilities |
|
28,935 |
|
|
|
23,162 |
|
|
|
|
|
Operating lease liabilities, less
current portion |
|
23,451 |
|
|
|
— |
|
Deferred rent, less current
portion |
|
— |
|
|
|
2,072 |
|
Other long-term liabilities |
|
— |
|
|
|
93 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.001 par value; 5,000 shares authorized;
1,648 shares issued and outstanding at July 31, 2019 and
April 30, 2019, respectively |
|
2 |
|
|
|
2 |
|
Common stock, $0.001 par value; 150,000 shares authorized;
56,238 and 56,136 shares issued and outstanding at July 31,
2019 and April 30, 2019, respectively |
|
56 |
|
|
|
56 |
|
Additional paid-in capital |
|
613,395 |
|
|
|
613,615 |
|
Accumulated deficit |
|
(563,769 |
) |
|
|
(560,605 |
) |
Total stockholders’ equity |
|
49,684 |
|
|
|
53,068 |
|
Total liabilities and stockholders’ equity |
$ |
102,070 |
|
|
$ |
78,395 |
|
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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