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 third quarter
of fiscal 2022, ended January 31, 2022.
Highlights from the Quarter Ended
January 31, 2022, and Other Events:
“I am pleased to report another successful
quarter for Avid. Our financial and operational performance were
strong, demonstrating year-over-year growth in revenues, gross
margin, net income and adjusted EBITDA. This represents our seventh
consecutive quarter of operational profitability,” stated Nicholas
Green, president and chief executive officer of Avid
Bioservices.
“Fueling this growth has been the success of our
business development team. They continue to achieve robust new
business signings, as evidenced by our current backlog of $140
million – our highest backlog to date. We expect this trend to
continue as we increase capacity, expand our commercial team and
broaden our services, including our recent expansion into the cell
and gene therapy sector of the market.
“Finally, to support growth today and in the
future, the company continues to execute a strategically phased
expansion plan that allows us to align spending with increasing
market demand. This is highlighted by our downstream expansion,
which came on line this quarter just in time to support our
increased backlog, up from $120 million last quarter to $140
million.
“The company expects to launch its new viral
vector business in two phases with process and analytical
development suites launching in mid calendar 2022 and GMP
manufacturing suites coming on line approximately one year later.
In addition, we anticipate the completion of the Myford South
facility expansion in early calendar 2023. Combined, we expect
these expansions to organically increase the company’s total annual
revenue generating capacity from approximately $120 million to in
excess of $350 million in a period of three years.”
Financial Highlights and
Guidance
- The company is reiterating revenue
guidance for fiscal 2022 of $115 million to $117
million, a 20-22% increase over fiscal 2021.
- Revenues for the third quarter of
fiscal 2022 were $31.5 million, representing a 44% increase
compared to $21.8 million recorded in the prior year period. The
increase in revenues for the quarter can primarily be attributed to
an increase in the scope of in-process and completed manufacturing
runs and an increase in process development revenues primarily
associated with services provided to new customers as compared to
the prior year period. For the first nine months of fiscal 2022,
revenues were $88.4 million, a 29% increase compared to $68.3
million in the prior year period. The increase in revenues for the
nine months of fiscal 2022 as compared to the prior year period can
primarily be attributed to an increase in the number and scope of
in-process and completed manufacturing runs, in unutilized reserved
capacity fees, and in process development revenues.
- As of January 31,
2022, revenue backlog was $140 million, representing a net
increase of 17% compared to $120 million at the end of the same
quarter last year. The company expects to recognize the majority of
this backlog over the next twelve months.
- Gross margin for the third quarter
of fiscal 2022 was 29%, compared to a gross margin of 28% for the
third quarter of fiscal 2021. Gross margin for the first nine
months of fiscal 2022 was 34% compared to 31% for the prior year
period. The increases in gross margin for the quarter and the first
nine months were primarily from higher manufacturing and
process development revenues during the periods, partially
offset by increases in planned growth costs including compensation
and benefits, stock-based compensation, and facility and equipment
related costs.
- Selling, general and administrative
expenses (“SG&A”) for the third quarter of fiscal 2022 were
$5.8 million, an increase of 45% compared to $4.0 million recorded
for the third quarter of fiscal 2021. The increase in SG&A for
the third quarter was primarily due to stock-based compensation,
compensation and benefits, and facility and related expenses. For
the first nine months of fiscal 2022, SG&A expenses were $15.3
million as compared to $12.0 million for the prior year period. The
increase in SG&A during the nine months was primarily due to
stock-based compensation, facility and related expenses,
advertising costs, compensation and benefits, and legal and
accounting fees.
- For the third quarter of fiscal
2022, the company recorded net income attributable to common
stockholders of $2.2 million or $0.04 per basic and diluted share,
as compared to net income attributable to common stockholders of
$0.8 million or $0.01 per basic and diluted share, for the third
quarter of fiscal 2021. For the first nine months of fiscal 2022,
the company recorded net income attributable to common stockholders
of $12.1 million or $0.20 per basic and
$0.19 per diluted share, compared to net income attributable
to common stockholders of $5.6 million or $0.10 per
basic and diluted share, for the fiscal 2021 period.
- Avid reported $150.0
million in cash and cash equivalents as of January 31, 2022
compared to $169.9 million as of the prior fiscal year ended April
30, 2021.
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
- Drew Brennan, general manager of
Avid’s viral vectors business, has successfully recruited key
leadership for the viral vector business to manage process
development, quality, operations and facilities. The process of
adding additional strength and depth to the team is also well
underway, as is the construction of our 53,000 square foot
dedicated viral vector facility in Costa Mesa, CA.
- The company’s commercial team
signed multiple new orders during the third quarter, totaling
approximately a net $52 million. These projects
span all areas of the business, from process development to
commercial manufacturing.
- Phase I of the company’s Myford,
mammalian facility was completed and is now operational, increasing
annual revenue generating capacity from $120 million to $170
million. This expansion was strategically timed to accommodate the
company’s growing backlog, which reached $140 million by the end of
the third quarter. The company currently expects to complete the
second phase of our Myford South expansion, which includes both
upstream and downstream GMP manufacturing suites, during the first
quarter of calendar 2023. With respect to the viral vectors
business, the company expects to bring its process and analytical
development capacity on line in mid-calendar 2022 and ultimately
the GMP manufacturing suites on line approximately one year later.
Please visit the Avid website Facilities page for more information
about the company’s expansions and videos documenting progress
(https://avidbio.com/expansion-updates/).
Statement Regarding Use of Non-GAAP
Financial Measures
The company uses certain non-GAAP financial
measures such as non-GAAP adjusted net income, free cash flow, as
well as adjusted EBITDA. The company uses these non-GAAP financial
measures for financial and operational decision making and as a
means to evaluate period-to-period comparisons. The company
believes that they provide useful information about operating
results, enhance the overall understanding of our operating
performance and future prospects, and allow for greater
transparency with respect to key metrics used by management in our
financial and operational decision making. These non-GAAP financial
measures exclude amounts that the company does not consider part of
ongoing operating results when planning and forecasting and when
assessing the performance of the organization and our senior
management. The company computes non-GAAP financial measures using
the same consistent method from quarter to quarter and year to
year, and may consider whether other significant items that arise
in the future should be excluded from our non-GAAP financial
measures.
The company reports non-GAAP financial measures
in addition to, and not as a substitute for, or superior to,
measures of financial performance prepared in accordance with U.S.
generally accepted accounting principles (GAAP). These non-GAAP
financial measures are not based on any comprehensive set of
accounting rules or principles, differ from GAAP measures with the
same names, and may differ from non-GAAP financial measures with
the same or similar names that are used by other companies. The
company believes that non-GAAP financial measures should only be
used to evaluate our results of operations in conjunction with the
corresponding GAAP financial measures, and encourages investors to
carefully consider our results under GAAP, as well as the
supplemental non-GAAP information and the reconciliations between
these presentations, to more fully understand our business.
Non-GAAP net income excludes stock-based
compensation; business transition and related costs including
corporate initiatives into new business activities such as our
expansion into viral vectors for the cell and gene therapy sector
of the market and other costs directly associated with such
activities, and severance and related expenses; non-cash interest
expense on convertible senior notes for the accretion of the
issuance costs associated with our convertible senior notes; and
other income or expense items. Adjusted EBITDA excludes non-cash
operating charges for stock-based compensation, depreciation and
amortization as well as non-operating items such as interest
income, interest expense, gain or loss on disposal or sale of
assets, and income tax expense or benefit. For the reasons
explained above, adjusted EBITDA also excludes certain business
transition and related costs. The company also uses measures such
as free cash flow, which represents cash flow from operations less
cash used in the acquisition and disposition of capital.
Additionally, non-GAAP net income and adjusted
EBITDA are key components of the financial metrics utilized by the
company’s compensation committee to measure, in part, management’s
performance and determine significant elements of management’s
compensation. The company encourages investors to carefully
consider its results under GAAP, as well as its supplemental
non-GAAP information and the reconciliation between these
presentations, to more fully understand its business.
Reconciliations between GAAP and non-GAAP financial measures
included at the end of this press release.
Conference Call
Avid will host a conference call and webcast
this afternoon, March 8, 2022, 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 (NASDAQ:CDMO), an S&P
SmallCap 600 company, is a dedicated contract development and
manufacturing organization (CDMO) focused on development and CGMP
manufacturing of biologics. 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
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 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, the risk that
the completion of the second phase of
the Myford expansion and/or the viral vector facility may
be delayed, may cost more than anticipated or may
not increase revenue generating capacity by the amounts
contemplated, the risk that expanding into a new biologics
manufacturing segment may distract senior management’s focus on the
company’s existing operations and/or its current expansion of the
Myford facility, the risk that the company may experience delays in
hiring qualified individuals into the viral vector business, the
risk that the company may experience delays in engaging initial
customers for the viral vector business, and the risk that the
viral vector business may not become profitable for several years,
if ever. 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.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE
INCOME(Unaudited) (In thousands, except
per share information)
|
Three Months Ended January
31, |
|
Nine Months Ended January
31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
Revenues |
$31,508 |
|
|
$21,806 |
|
|
$88,371 |
|
|
$68,262 |
|
Cost of revenues |
|
22,421 |
|
|
|
15,604 |
|
|
|
58,707 |
|
|
|
47,098 |
|
Gross profit |
|
9,087 |
|
|
|
6,202 |
|
|
|
29,664 |
|
|
|
21,164 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and
administrative |
|
5,818 |
|
|
|
4,018 |
|
|
|
15,311 |
|
|
|
12,009 |
|
Total operating expenses |
|
5,818 |
|
|
|
4,018 |
|
|
|
15,311 |
|
|
|
12,009 |
|
Operating income |
|
3,269 |
|
|
|
2,184 |
|
|
|
14,353 |
|
|
|
9,155 |
|
Interest expense |
|
(718 |
) |
|
|
— |
|
|
|
(2,125 |
) |
|
|
(4 |
) |
Other income (expense), net |
|
(303 |
) |
|
|
23 |
|
|
|
(154 |
) |
|
|
70 |
|
|
|
|
|
— |
|
|
|
|
|
Net income |
$2,248 |
|
|
$2,207 |
|
|
$12,074 |
|
|
$9,221 |
|
|
|
|
|
|
|
|
|
Comprehensive income |
$2,248 |
|
|
$2,207 |
|
|
$12,074 |
|
|
$9,221 |
|
|
|
|
|
|
|
|
|
Series E preferred stock
accumulated dividends |
|
— |
|
|
|
(1,442 |
) |
|
|
— |
|
|
|
(3,604 |
) |
|
|
|
|
|
|
|
|
Net income attributable to
common stockholders |
$2,248 |
|
|
$765 |
|
|
$12,074 |
|
|
$5,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
Basic |
$0.04 |
|
$0.01 |
|
$0.20 |
|
$0.10 |
|
Diluted |
$0.04 |
|
$0.01 |
|
$0.19 |
|
$0.10 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
61,631 |
|
58,865 |
|
|
61,394 |
|
|
57,349 |
|
Diluted |
|
63,872 |
|
60,097 |
|
|
63,711 |
|
|
58,058 |
|
AVID BIOSERVICES,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)(In thousands, except par value)
|
January 31,2022 |
|
April 30,2021 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$149,957 |
|
|
$169,915 |
|
Accounts receivable, net |
|
28,009 |
|
|
|
18,842 |
|
Contract assets |
|
3,344 |
|
|
|
6,112 |
|
Inventory |
|
21,054 |
|
|
|
11,871 |
|
Prepaid expenses |
|
1,126 |
|
|
|
1,064 |
|
Total current assets |
|
203,490 |
|
|
|
207,804 |
|
|
|
|
|
Property and equipment, net |
|
69,395 |
|
|
|
37,455 |
|
Operating lease right-of-use
assets |
|
37,508 |
|
|
|
18,691 |
|
Other assets |
|
3,352 |
|
|
|
1,210 |
|
Restricted cash |
|
350 |
|
|
|
350 |
|
Total assets |
$314,095 |
|
|
$265,510 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$6,456 |
|
|
$9,257 |
|
Accrued compensation and benefits |
|
7,742 |
|
|
|
8,794 |
|
Contract liabilities |
|
58,991 |
|
|
|
50,769 |
|
Current portion of operating lease liabilities |
|
2,624 |
|
|
|
1,355 |
|
Other current liabilities |
|
1,489 |
|
|
|
761 |
|
Total current liabilities |
|
77,302 |
|
|
|
70,936 |
|
|
|
|
|
Convertible senior notes,
net |
|
139,313 |
|
|
|
96,949 |
|
Operating lease liabilities, less
current portion |
|
38,683 |
|
|
|
19,889 |
|
Finance lease liabilities, less
current portion |
|
2,222 |
|
|
|
— |
|
Total liabilities |
|
257,520 |
|
|
|
187,774 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.001 par value; 5,000 shares authorized; no
shares issued and outstanding at respective dates |
|
— |
|
|
|
— |
|
Common stock, $0.001 par value; 150,000 shares authorized; 61,725
and 61,069 shares issued and outstanding at respective dates |
|
62 |
|
|
|
61 |
|
Additional paid-in capital |
|
603,488 |
|
|
|
637,534 |
|
Accumulated deficit |
|
(546,975 |
) |
|
|
(559,859 |
) |
Total stockholders’ equity |
|
56,575 |
|
|
|
77,736 |
|
Total liabilities and stockholders’ equity |
$ |
314,095 |
|
|
$ |
265,510 |
|
AVID BIOSERVICES,
INC.ITEMIZED RECONCILIATION BETWEEN GAAP AND
NON-GAAP FINANCIAL MEASURES(Unaudited)
(In thousands)
|
Three Months Ended January
31, |
|
Nine Months Ended January
31, |
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
GAAP net income attributable to common
stockholders |
$2,248 |
|
$765 |
|
|
$12,074 |
|
$5,617 |
|
Stock-based compensation |
|
2,111 |
|
|
999 |
|
|
|
5,352 |
|
|
2,754 |
|
Business transition and related
costs |
|
834 |
|
|
8 |
|
|
|
1,771 |
|
|
220 |
|
Non-cash interest expense |
|
257 |
|
|
— |
|
|
|
766 |
|
|
— |
|
Preferred stock accumulated
dividends |
|
— |
|
|
1,442 |
|
|
|
— |
|
|
3,604 |
|
Adjusted net income |
$5,450 |
|
$3,214 |
|
|
$19,963 |
|
$12,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
attributable to common stockholders |
$2,248 |
|
$765 |
|
|
$12,074 |
|
$5,617 |
|
Depreciation and
amortization |
|
1,024 |
|
|
856 |
|
|
|
3,060 |
|
|
2,540 |
|
Interest expense |
|
718 |
|
|
— |
|
|
|
2,125 |
|
|
4 |
|
Other (income) expense, net |
|
303 |
|
|
(23 |
) |
|
|
154 |
|
|
(70 |
) |
Stock-based compensation |
|
2,111 |
|
|
999 |
|
|
|
5,352 |
|
|
2,754 |
|
Business transition and related
costs |
|
834 |
|
|
8 |
|
|
|
1,771 |
|
|
220 |
|
Preferred stock accumulated
dividends |
|
— |
|
|
1,442 |
|
|
|
— |
|
|
3,604 |
|
Adjusted EBITDA |
$7,238 |
|
$4,047 |
|
|
$24,536 |
|
$14,669 |
|
GAAP net cash provided by
operating activities |
$5,192 |
|
|
$5,189 |
|
|
$8,853 |
|
|
$13,322 |
|
Purchase of property and equipment |
(20,021 |
) |
|
|
(2,737 |
) |
|
|
(31,845 |
) |
|
|
(5,717 |
) |
Free cash flow |
$(14,829 |
) |
|
$2,452 |
|
|
$(22,992 |
) |
|
$7,605 |
|
|
|
|
|
|
|
|
|
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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