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 and first six months of
fiscal 2021, ended October 31, 2020.
Highlights
Since July
31, 2020
“During the second quarter, we recorded strong
revenues, expanded our customer base and project pipeline, and
advanced the company’s expansion plans,” stated Nicholas Green,
president and chief executive officer of Avid Bioservices. “Driven
by growth in customer demand, the company achieved
higher-than-expected revenues and margins, and generated operating
cash flow and income from operations during the period. In
consideration of these results combined with our substantial
backlog and our visibility into customer demand, we are raising
revenue guidance for fiscal 2021 from between $76 and $81 million
to between $84 and $88 million.
“On the business development front, our team
continues to execute, signing new business orders and project
expansion orders with existing customers for $28 million during the
quarter and increasing backlog to $67 million, our highest level
since becoming a pure-play CDMO.
“With respect to operations, we have completed a
comprehensive review of our options and have initiated a phased
approach plan for expansion. Phase 1, which is currently underway,
is focused on the streamlining of existing facilities. We are
confident that this work will allow us to optimize capacity,
increase revenue, minimize near-term expense, and best align our
expansion with growth in customer demand.
“And finally, it is important to note that we
continue to execute our business and achieve growth without
interruption to our operations as a result of the COVID-19
pandemic. This resilience is due largely to the diligence and
dedication of our employees. Despite these challenging times,
Avid’s incredible workforce remains committed to excellence to
ensure the highest quality product for our clients.”
Financial Highlights and
Guidance
- The company is increasing revenue
guidance for the full fiscal year 2021 from between $76
million and $81 million to between $84 million and $88
million.
- Revenues for the second quarter of
fiscal 2021 were $21.1 million, a 15% increase compared to revenues
of $18.3 million recorded during the second quarter of fiscal 2020.
The year-over-year increase in revenue was primarily attributable
to the growth in the number and scope of in-process and/or
completed manufacturing runs during the quarter. In addition, the
increase in manufacturing revenues included the recognition of $1.7
million from changes in estimated variable revenue consideration as
a result of completing performance obligations for certain projects
during the quarter, therefore increasing revenue recognized for
those projects during the period. For the first six months of
fiscal 2021, revenues were $46.5 million, a 38% increase as
compared to revenues of $33.6 million in the prior year period. The
increase in revenues can be attributed to a $13.6 million increase
in manufacturing revenues primarily due to an increase in the
number and scope of in-process and/or completed manufacturing
runs during the first six months of fiscal 2021, partially offset
by a $0.7 million decrease in process development revenues.
- As of October 31,
2020, revenue backlog was $67 million, an increase of 12%
compared to $60 million at the end of the first quarter of fiscal
2021, and an increase of 3% compare to $65 million at the end of
last fiscal year. The company expects to recognize the majority of
this backlog over the next twelve months.
- Gross margin for the second quarter
of fiscal 2021 was 30%, a significant increase compared
to a gross margin of 18% for the second quarter of fiscal
2020. The increase in gross margin for the 2021 quarter
was primarily attributable to the growth in manufacturing revenues,
including the $1.7 million in additional manufacturing revenue
recognized, as previously discussed. Excluding the $1.7 million in
additional variable revenue consideration, gross margin for the
second quarter was approximately 24%. Gross margin for
the first six months of fiscal 2021 was 32%, a significant increase
compared to 13% in the prior year period. This increase was also
primarily due to the growth in manufacturing
revenues.
- Selling, general and administrative
expenses (“SG&A”) for the second quarter of fiscal 2021 were
$4.2 million, an increase compared to $3.5 million recorded for the
second quarter of fiscal 2020. The increase during the 2021 quarter
was due primarily to increases in payroll related costs, including
stock-based compensation. For the first six months of fiscal 2021,
SG&A expenses were $8 million, consistent with $8 million for
the prior year period.
- For the second quarter of fiscal
2021, the company recorded a consolidated net income attributable
to common stockholders of $0.8 million or $0.01 per basic and
diluted share, as compared to a consolidated net loss attributable
to common stockholders of $1.9 million or $0.03 per basic and
diluted share, for the second quarter of fiscal 2020. For the first
six months of fiscal 2021, the company recorded a consolidated net
income attributable to common stockholders of $4.5 million or $0.08
per basic and diluted share, compared to a consolidated net loss
attributable to common stockholders of $6.1 million or $0.11 per
basic and diluted share, for fiscal 2020.
- Avid reported $35.7
million in cash and cash equivalents as of October 31, 2020,
an increase of $7.5 million compared to cash of $28.2 million at
the end of the first quarter of fiscal 2021, and consistent with
$36.3 million in cash as of the prior fiscal year ended April 30,
2020. The company also generated cash flows from operating
activities of $8.1 million during the six months ended October 31.
2020.
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 orders for $28 million
during the quarter with new and existing customers, driving Avid’s
backlog to its highest level since transitioning to a dedicated
CDMO.
- Developed plans
for a two-phased expansion of our Myford facility. The first phase,
which has commenced, expands the production capacity of our
existing Myford North facility by adding a second downstream
processing suite. The second phase, the timing of which will be
dictated by revenue growth and projected customer demand, will
further expand capacity through the build out of a second
manufacturing train, including both upstream and downstream
processing suites within Myford South.The company estimates the
first phase will take approximately 12 to 15 months to complete at
an estimated cost of approximately $15 million and may increase the
company’s annual revenue generating capacity by up to $50 million,
bringing the combined annual revenue generating capacity of our
Franklin and Myford North facilities to up to $170 million.
Conference Call
Avid will host a conference call and webcast
this afternoon, December 2, 2020, 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: 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 27 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, the
risk that the company may need to raise additional capital to fund
its contemplated expansion plans, and the risk that the
commencement and/or completion of the planned expansions may be
delayed or may cost more than anticipated. 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, 2020, 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 INCOME
(LOSS)(Unaudited) (In thousands, except per share
information)
|
Three Months Ended October
31, |
|
Six Months EndedOctober 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
Revenues |
$ |
21,064 |
|
|
$ |
18,313 |
|
|
$ |
46,456 |
|
|
$ |
33,567 |
|
Cost of
revenues |
|
14,646 |
|
|
|
14,953 |
|
|
|
31,494 |
|
|
|
29,121 |
|
Gross profit |
|
6,418 |
|
|
|
3,360 |
|
|
|
14,962 |
|
|
|
4,446 |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling,
general and administrative |
|
4,166 |
|
|
|
3,534 |
|
|
|
7,991 |
|
|
|
7,993 |
|
Loss on
lease termination |
|
— |
|
|
|
355 |
|
|
|
— |
|
|
|
355 |
|
Total operating expenses |
|
4,166 |
|
|
|
3,889 |
|
|
|
7,991 |
|
|
|
8,348 |
|
Operating income (loss) |
|
2,252 |
|
|
|
(529 |
) |
|
|
6,971 |
|
|
|
(3,902 |
) |
Interest
and other income, net |
|
32 |
|
|
|
99 |
|
|
|
43 |
|
|
|
308 |
|
Net income (loss) |
$ |
2,284 |
|
|
$ |
(430 |
) |
|
$ |
7,014 |
|
|
$ |
(3,594 |
) |
Comprehensive income
(loss) |
$ |
2,284 |
|
|
$ |
(430 |
) |
|
$ |
7,014 |
|
|
$ |
(3,594 |
) |
Series E preferred stock
accumulated dividends |
|
(1,442 |
) |
|
|
(1,442 |
) |
|
|
(2,523 |
) |
|
|
(2,523 |
) |
|
|
|
|
|
|
|
|
Net income (loss) attributable
to common stockholders |
$ |
842 |
|
|
$ |
(1,872 |
) |
|
$ |
4,491 |
|
|
$ |
(6,117 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
$ |
0.08 |
|
|
$ |
(0.11 |
) |
Diluted |
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
$ |
0.08 |
|
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
56,660 |
|
|
|
56,253 |
|
|
|
56,592 |
|
|
|
56,210 |
|
Diluted |
|
57,248 |
|
|
|
56,253 |
|
|
|
57,073 |
|
|
|
56,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVID BIOSERVICES, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands,
except par value)
|
October 31,2020 |
|
April 30,2020 |
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
35,664 |
|
|
$ |
36,262 |
|
Accounts receivable |
|
11,568 |
|
|
|
8,606 |
|
Contract assets |
|
5,343 |
|
|
|
3,300 |
|
Inventory |
|
9,723 |
|
|
|
10,883 |
|
Prepaid expenses |
|
828 |
|
|
|
712 |
|
Total current assets |
|
63,126 |
|
|
|
59,763 |
|
Property
and equipment, net |
|
30,232 |
|
|
|
27,105 |
|
Operating lease right-of-use assets |
|
19,408 |
|
|
|
20,100 |
|
Restricted cash |
|
350 |
|
|
|
350 |
|
Other
assets |
|
479 |
|
|
|
302 |
|
Total assets |
$ |
113,595 |
|
|
$ |
107,620 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
5,654 |
|
|
$ |
5,926 |
|
Accrued payroll and related costs |
|
4,850 |
|
|
|
3,019 |
|
Contract liabilities |
|
31,450 |
|
|
|
29,120 |
|
Current portion of operating lease liabilities |
|
1,326 |
|
|
|
1,228 |
|
Note payable |
|
— |
|
|
|
4,379 |
|
Other current liabilities |
|
379 |
|
|
|
808 |
|
Total current liabilities |
|
43,659 |
|
|
|
44,480 |
|
|
|
|
|
Operating lease liabilities, less current portion |
|
20,550 |
|
|
|
21,244 |
|
Total liabilities |
|
64,209 |
|
|
|
65,724 |
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.001 par value; 5,000 shares authorized; 1,648
shares issued and outstanding at October 31, 2020 and April 30,
2020, respectively |
|
2 |
|
|
|
2 |
|
Common stock, $0.001 par value; 150,000 shares authorized; 56,722
and 56,483 shares issued and outstanding at October 31, 2020 and
April 30, 2020, respectively |
|
57 |
|
|
|
56 |
|
Additional paid-in capital |
|
613,384 |
|
|
|
612,909 |
|
Accumulated deficit |
|
(564,057 |
) |
|
|
(571,071 |
) |
Total stockholders’ equity |
|
49,386 |
|
|
|
41,896 |
|
Total liabilities and stockholders’ equity |
$ |
113,595 |
|
|
$ |
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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