Avid Bioservices, Inc. (NASDAQ:CDMO), 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 fourth quarter
and full fiscal year 2021, ended April 30, 2021.
Highlights Since January 31,
2021
“Fiscal 2021 was a very strong year for Avid.
During the year, revenues increased by 61% as compared to
fiscal 2020 and gross margins were significantly improved from 7%
to more than 30%. During fiscal 2021 we signed eight new customers,
and during the fourth quarter we successfully completed FDA
inspections for two product approvals with zero 483 observations.
During fiscal 2021, we generated more than $31 million in cash from
operations, and for the first time, we achieved four consecutive
quarters of operational profitability. Beyond our operational
successes, Avid’s financial position was significantly strengthened
during the year by both new and existing investors who demonstrated
support for Avid’s strategy through two separate offerings which
were completed in the third and fourth quarters of fiscal 2021,
raising combined net proceeds of $170.6 million. Further, as a sign
of the momentum we have moving into the next year, we ended fiscal
2021 with a backlog of $118 million, the majority of which we
expect to recognize during fiscal 2022. Given this backdrop, I am
pleased to report that we expect to record revenue of between
$115 million and $117 million in fiscal
2022, representing growth of approximately 20%
- 22% as compared to fiscal 2021,” stated Nicholas
Green, president and chief executive officer of Avid
Bioservices.
“The growth experienced during fiscal 2021 made
it increasingly evident that an expansion of our capacity is
required not only to best service our existing customers who are
advancing products through the clinical development process toward
commercialization, but to also maintain our competitive advantage
in attracting new customers seeking capacity today. As discussed
previously, Avid has initiated a two-phased expansion plan which
was designed to bring incremental capacity online by the end
of calendar 2021, and significantly more capacity in
calendar 2022. I am very pleased to report that both phases
are underway and advancing according to plan, and we look forward
to reporting progress on this effort in the coming quarters. Given
this work, it is important to note that our annual maintenance
shutdowns that are usually conducted back-to-back in Q2, will be
amended slightly this year with the Myford shutdown taking place in
Q3 to accommodate our expansion schedule.
“Looking ahead into fiscal 2022, we expect these
expansion investments, combined with ongoing investments in the
recruitment, training and retention of our workforce, to result in
a continued strengthening of our core business, opening doors to
new opportunities for growth. Given the expectation of increasing
demand, our additional planned capacity and a strong balance sheet,
we will not only be able to best support
additional customers working to develop mammalian drug
products, but we look forward to strategically evaluating adjacent
and/or strategic business expansions that may create value for Avid
and our customers.
“The exceptional execution of our team during
fiscal 2021 was transformative, bringing Avid to a position of
operational and financial strength. We look forward to the many
opportunities that lie ahead.”
Financial Highlights and
Guidance
- The company is providing revenue
guidance for the full fiscal year 2022 of $115
million to $117 million.
- Revenues for the fourth quarter of
fiscal 2021 were $27.6 million, more than double the revenues of
$12.6 million recorded during the fourth quarter of fiscal 2020.
For the full fiscal year 2021, revenues were $95.9 million, a 61%
increase as compared to revenues of $59.7 million in the prior year
period. The increases in revenue for both
the fourth quarter and full fiscal year 2021
were primarily due to the growth in the number and
scope of in-process and completed manufacturing runs, as
well as an increase in the number of process development
projects during the periods. Additionally, as previously
disclosed, fourth quarter and full fiscal year 2020 manufacturing
revenue was impacted by a production interruption.
- As of April 30,
2021, revenue backlog was $118 million, an increase of 82%
compared to $65 million at the end of last fiscal year. The company
expects to recognize the majority of this backlog during fiscal
2022.
- Gross margin for the fourth quarter
of fiscal 2021 was 29% compared to a gross margin of
negative 10% for the fourth quarter of fiscal 2020. Gross margin
for the full fiscal year 2021 was 31% compared to 7% in the prior
year period. The increases in gross margin during both
the fourth quarter and full fiscal year 2021
were primarily from higher plant utilization resulting from
higher manufacturing and process
development revenues during the periods. Additionally, full
fiscal year 2020 gross profit was impacted by certain costs
associated with the production interruption noted above, which
costs which did not recur during fiscal 2021.
- Selling, general and administrative
expenses (“SG&A”) for the fourth quarter of fiscal 2021 were
$5.1 million, an increase of 43% compared to $3.5 million recorded
for the fourth quarter of fiscal 2020. For the full fiscal year
2021, SG&A expenses were $17.1 million, an 18% increase
compared to $14.5 million for the prior year.
The increases in SG&A during both the fourth
quarter and full fiscal year
2021 were primarily due to increases in
payroll related costs, including stock-based
compensation.
- During the fourth quarter of fiscal
2021, Avid redeemed its outstanding 10.5% Series E Convertible
Preferred Stock. This redemption resulted in a one-time charge
of $3.4 million, which was unrelated to operations, and recorded as
a reduction to net income attributable to common stockholders. As a
result, for the fourth quarter of fiscal
2021, the company recorded a
net loss attributable to common stockholders
of approximately $2.7
million or $0.04 per basic and
diluted share, as compared to a net loss attributable to
common stockholders of $6.2 million or
$0.11 per basic and diluted share, for
the fourth quarter of fiscal 2020. However, when
adjusting for the one-time redemption charge, Avid would have
recorded net income attributable to common stockholders
of approximately $0.8 million, or $0.01 per basic and diluted
share, during the fourth quarter of fiscal 2021, marking the
company’s fourth consecutive quarter of net
income attributable to common stockholders. For the full fiscal
year 2021, the company recorded net income attributable to common
stockholders of $3.3 million or $0.06 per basic and diluted share,
compared to net loss attributable to common stockholders of $15.2
million or $0.27 per share, for fiscal 2020. Excluding the one-time
redemption charge, Avid would have recorded net income attributable
to common stockholders of approximately $6.8 million or $0.12 and
$0.11 per basic and diluted share, respectively, for the full
fiscal year 2021.
- Avid reported $169.9
million in cash and cash equivalents as of April 30, 2021, an
increase of $133.7 million from the end of the prior fiscal year.
The increase in cash and cash equivalents as compared to fiscal
2020, is primarily due to $31.2 million generated from operations
during the 2021 fiscal year, of which $17.9 million was generated
during the fourth quarter. The fiscal 2021 balance also
includes approximately $32.1 million in net proceeds
which were raised during
the third quarter in a follow-on underwritten
equity financing, as well as approximately $138.5 million
in net proceeds raised during the fourth quarter in an offering of
1.25% convertible senior notes.
More detailed financial information and analysis
may be found in Avid Bioservices’ Annual Report on Form 10-K, which
will be filed with the Securities and Exchange
Commission today.
Recent Corporate Developments
- Signed multiple new orders during
the fourth quarter, totaling approximately $26 million. These
projects span all areas of the business, from process development
to commercial manufacturing. During fiscal 2021, the company signed
new business orders for approximately $148 million as compared to
$80 million during fiscal 2020. Additionally, the company signed
eight new customers in fiscal 2021, a significant increase over
fiscal 2020.
- Completed an offering of 1.25%
convertible senior notes during the fourth quarter, raising net
proceeds of $138.5 million, after deducting initial purchaser
discounts and other debt issuance related expenses. The company
used approximately $12.8 million to purchase capped call
transactions with certain financial institution counterparties in
connection with the issuance of the convertible senior notes and
approximately $40.5 million in April 2021 to redeem all
of the company’s previously outstanding 10.5% Series
E Convertible Preferred Stock. The company plans to use the
remaining net proceeds for working capital and other general
corporate purposes. The company may also use a portion of
these funds for the acquisition of, or investment in, technologies,
solutions or businesses that complement our existing
capabilities, although it has no commitments to enter
into any such acquisitions or investments at this time.
- Two-part expansion of
the Myford facility continues to progress according to
plan. The first phase of the expansion, which was
initiated during the second quarter
of fiscal 2021, expands the production capacity
of the company’s existing Myford North
facility by adding a second downstream processing suite.
The second phase, which was initiated during the fourth
quarter of fiscal 2021, is designed to further expand
capacity through the build out of a second manufacturing train,
including both upstream and downstream processing suites
within Myford South.Combined, the company estimates
that the first and second phases of this expansion will result in a
total revenue generating capacity of up to $270 million
annually. While the company believes that this expansion is
critical to its ability to service the future needs of its
customers, Avid presently has adequate capacity to accommodate
current demand.
Conference Call
Avid will host a conference call and webcast
this afternoon, June 29, 2021, 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: https://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 28 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 that the ongoing COVID-19
pandemic will adversely affect our or our customers’
business and operations, 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 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 which could
adversely affect guided fiscal 2022 revenues, and the risk that
the completion of one or both
phases the of the Myford expansion may be
delayed, may cost more than anticipated or may not
increase revenue generating capacity by the amounts contemplated.
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, 2021, 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.CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)(In thousands, except per share
information)
|
|
|
|
|
Three Months Ended April 30, |
|
Twelve Months Ended April
30, |
|
|
2021 |
|
|
|
2020 |
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
Revenues |
$ |
27,606 |
|
|
$ |
12,550 |
|
|
$ |
95,868 |
|
|
$ |
59,702 |
|
Cost of revenues |
|
19,463 |
|
|
|
13,849 |
|
|
|
66,561 |
|
|
|
55,770 |
|
Gross profit (loss) |
|
8,143 |
|
|
|
(1,299 |
) |
|
|
29,307 |
|
|
|
3,932 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
|
5,055 |
|
|
|
3,528 |
|
|
|
17,064 |
|
|
|
14,517 |
|
Loss on lease termination |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
355 |
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
5,055 |
|
|
|
3,528 |
|
|
|
17,064 |
|
|
|
14,872 |
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
3,088 |
|
|
|
(4,827 |
) |
|
|
12,243 |
|
|
|
(10,940 |
) |
Interest and other income, net |
|
63 |
|
|
|
60 |
|
|
|
133 |
|
|
|
482 |
|
Interest expense |
|
(1,160 |
) |
|
|
(1 |
) |
|
|
(1,164 |
) |
|
|
(8 |
) |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
1,991 |
|
|
$ |
(4,768 |
) |
|
$ |
11,212 |
|
|
$ |
(10,466 |
) |
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
$ |
1,991 |
|
|
$ |
(4,768 |
) |
|
$ |
11,212 |
|
|
$ |
(10,466 |
) |
|
|
|
|
|
|
|
|
Series E preferred stock
accumulated dividends |
|
(1,211 |
) |
|
|
(1,442 |
) |
|
|
(4,455 |
) |
|
|
(4,686 |
) |
Impact of Series E preferred
stock redemption |
|
(3,439 |
) |
|
|
— |
|
|
|
(3,439 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to
common stockholders |
$ |
(2,659 |
) |
|
$ |
(6,210 |
) |
|
$ |
3,318 |
|
|
$ |
(15,152 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.04 |
) |
|
$ |
(0.11 |
) |
|
$ |
0.06 |
|
|
$ |
(0.27 |
) |
Diluted |
$ |
(0.04 |
) |
|
$ |
(0.11 |
) |
|
$ |
0.06 |
|
|
$ |
(0.27 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
60,927 |
|
|
|
56,482 |
|
|
|
58,222 |
|
|
|
56,326 |
|
Diluted |
|
63,142 |
|
|
|
56,482 |
|
|
|
59,426 |
|
|
|
56,326 |
|
AVID BIOSERVICES, INC.CONSOLIDATED
BALANCE SHEETS (In thousands, except par value)
|
|
|
|
|
April 30,2021 |
|
April 30,2020 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
169,915 |
|
|
$ |
36,262 |
|
Accounts receivable |
|
18,842 |
|
|
|
8,606 |
|
Contract assets |
|
6,112 |
|
|
|
3,300 |
|
Inventory |
|
11,871 |
|
|
|
10,883 |
|
Prepaid expenses |
|
1,064 |
|
|
|
712 |
|
Total current assets |
|
207,804 |
|
|
|
59,763 |
|
Property and equipment, net |
|
37,455 |
|
|
|
27,105 |
|
Operating lease right-of-use
assets |
|
18,691 |
|
|
|
20,100 |
|
Restricted cash |
|
350 |
|
|
|
350 |
|
Other assets |
|
1,210 |
|
|
|
302 |
|
Total assets |
$ |
265,510 |
|
|
$ |
107,620 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
9,257 |
|
|
$ |
5,926 |
|
Accrued payroll and related costs |
|
8,794 |
|
|
|
3,019 |
|
Contract liabilities |
|
50,769 |
|
|
|
29,120 |
|
Current portion of operating lease liabilities |
|
1,355 |
|
|
|
1,228 |
|
Note payable |
|
— |
|
|
|
4,379 |
|
Other current liabilities |
|
761 |
|
|
|
808 |
|
Total current liabilities |
|
70,936 |
|
|
|
44,480 |
|
|
|
|
|
Convertible senior notes,
net |
|
96,949 |
|
|
|
— |
|
Operating lease liabilities, less
current portion |
|
19,889 |
|
|
|
21,244 |
|
Total liabilities |
|
187,774 |
|
|
|
65,724 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.001 par value; 5,000 shares authorized;
no shares and 1,648 shares issued and outstanding at
respective dates |
|
— |
|
|
|
2 |
|
Common stock, $0.001 par value; 150,000 shares authorized;
61,069 and 56,483 shares issued and outstanding at respective
dates |
|
61 |
|
|
|
56 |
|
Additional paid-in capital |
|
637,534 |
|
|
|
612,909 |
|
Accumulated deficit |
|
(559,859 |
) |
|
|
(571,071 |
) |
Total stockholders’ equity |
|
77,736 |
|
|
|
41,896 |
|
Total liabilities and stockholders’ equity |
$ |
265,510 |
|
|
$ |
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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