Tuesday, December 12, 2017 2:32:53 PM
12-11-17 Qtly CC-Transcript, PR(Fin’s Q2FY18/qe10-31-17), Avid Revs History Table
=> Total Revs May06-Oct17: $271.1mm/Avid + $24.1mm/Govt + $2.5mm/Lic. = $297.7mm.
*Cash at 10-31-17: $27.7mm
*As of Dec. 6, 2017, 45,212,760 shares o/s. (1:7 R/S eff. 7-10-17: 315mm/$.606=>45mm/$4.24 http://tinyurl.com/ycohqn6j )
*10Q/10-31-17 iss. 12-11-17: https://tinyurl.com/y75kwojs
...Pg.4: “Business Description – We are a company committed to improving the lives of patients by manufacturing pharmaceutical products through our CDMO, Avid Bioservices, Inc. Over the next 60 days, we plan to complete the transition from a R&D company to a dedicated CDMO company focused on dev. & mfg. of biopharmaceutical products derived from mammalian cell culture…” Pg.16: “We plan to take ADDL. STEPS steps over the near term, including but not limited to:
1. Rebranding the company as Avid Bioservices, Inc.
2. Changing our ticker symbol on the NASDAQ Capital Market to align with our rebranding efforts
3. Broadening our sales force
4. Increasing our marketing efforts to support our rebranding & vision
5. Completing the wind down of all R&D activities and the potential licensing/divestiture of our assets related to our R&D operations.”
This large post has 4 sections:
I. 12-11-17 Q2/FY18 Qtly. Earnings Conf. Call TRANSCRIPT (q/e 10-31-17)
II. 12-11-17 PPHM Press Release: Q2/FY18 Earnings & Developments
III. A link to “O/S Shares & ATM Sales History – 2006-curr.” (https://tinyurl.com/y76cbyt5 )
IV. Updated Table of Avid Revenues By Quarter (May’06-Current)
…Recall: Peregrine’s FY runs May-Apr, so FY’18 = May’17-Apr’18.
((( Orig. transcript from SeekingAlpha.com [https://tinyurl.com/ya7qxk8w ], with numerous corrections made. )))
Link to webcast replay: http://ir.peregrineinc.com/events.cfm => https://edge.media-server.com/m6/p/4euqa8wh
FULL TRANSCRIPT… 12-11-17 FY’18/Q2 Earnings Conf. Call (q/e 10-31-17) (Lias/Lytle)
WELCOME & FWD-LOOKING STATEMENTS: Tim Brons, Vida Strategic Partners (IR) http://www.peregrineinc.com
AVID’s PRESIDENT ROGER LIAS – OPENING COMMENTS:
Thanks to all of you who've dialed in and all of you who are participating today via webcast. As discussed, during our Q1 earnings call last September (9-11-17), the company is undergoing a broad-scale transformation, the goals of which are to shift complete focus to the Avid Bioservices contract development and mfg. business [CDMO] and the complete divestiture of all of Peregrine's legacy R&D assets, which include bavituximab. As previously discussed, the current biologics contract services market allows us to take advantage of our installed cGMP mfg. capacity and existing capabilities and expertise. Our exemplary track record in releasing commercial products to many global markets, including the United States and European Union, catalyzes the transition to a focused, revenue-generating services business with a potential for consistent & sustainable growth at less risk. We initiated a plan during Q1/FY18 (q/e 7-31-17) to effect the transformation of the business and we continue to execute this transition. During Q2, we have achieved several important milestones that we believe will facilitate a successful outcome. I will give an overview addressing our corporate & organizational progress, and then we'll turn the call over to Paul to address the company's financial results for Q2.
Before discussing advances and executing our new corporate strategy however, I would like to first address the fact that I am beginning today's call instead of Steve King. Today, we'll be discussing our work to transition to a dedicated CDMO business and our progress in that effort. And for that reason, as President of Avid Bioservices, which represents the future of the company, I'm very pleased to be able to address you all today.
Next, I would like to address the proxy matters that have been publicly deliberated in recent months. As many of you know, several of Peregrine's investors have collectively lobbied for the new direction that the company is taking and a new Board composition [Ronin/SWIN, full history: https://tinyurl.com/y7ou7ssb ]. We recently entered into a settlement agreement with these investors under which 4 existing Board members have resigned and 4 new indep. Board members have been appointed. More specifically, on 11-27-17, directors Steven King, Carlton Johnson, Eric Swartz, and David Pohl each resigned from Peregrine's BOD and from the BOD of Avid Bioservices. The vacancies created by these resignations were immediately filled by Richard Hancock, Joel McComb, and Gregory Sargen, each of whom were nominated by the investor group for election at Peregrine's upcoming 2017 Annual Meeting of Stockholders [1-18-18]. In addition, Joseph Carleone, who is indep. of both the investors and of Peregrine, joined the Board and is serving as Chairman. Each of these appointees has very significant experience in the biomfg. industry, and the newly seated Board has already demonstrated that they will add great value as we work to establish Avid as a leading CDMO. In addition to the newly appointed members, Mark Bamforth, Patrick Walsh, and I will continue to serve on the Board. We've recently announced that we will hold our 2017 ASM on Jan. 18, 2018. We encourage all shareholders to review the biographies and accomplishments of these Board appointees, and we request your support for them in your proxy voting. We believe each new member will continue to bring a wealth of experience and the industry leadership required to take Avid to the next level. I am personally very pleased that we have avoided further distraction and are now able to focus fully on the execution of our strategic plan and the complete transition of the company to a dedicated CDMO.
I would now like to discuss in more detail some of the advances we've made with respect to our corporate strategy. In recent months, we have made substantial progress towards establishing the company as a dedicated CDMO with the potential to achieve significant growth. During Q1, we recorded $12.8M in revenue, and on a y-t-d basis, we reported revenues of approx. $40M. This is in line with the guidance provided earlier in the year, and we continue to expect revenue for FY18 to be consistent with revenue from last year, with most revenue recognized in the 1st & 2nd quarters. Though we achieved a 6-yr. compound annual growth rate of ~38% between FY11 & FY17, we are projecting relatively flat revenue this year due to a previously announced decrease in demand from our 2 largest customers. We expect this lull in growth to be temporary, as these customers sell through current inventory and work through a regulatory filing delay. This situation, however, points to the urgent need to access new growth opportunities for Avid to diversify our client base and to broaden Avid's service offering. To that end, during my first 2 months with the company, I've worked closely with the Avid team to establish a sustainable growth strategy for the company for the near term and into the future. This strategy is comprised of 3 primary components:
1. Firstly, we will diversify and broaden our customer base & project mix.
2. Next, we will expand & strengthen Avid's current service offerings, taking advantage of current capabilities and available space to increase revenue-generating potential. Activities will include optimization of production capacity within existing facilities and the addition of process dev. capabilities and strengthening of our commercial terms.
3. Finally, to further increase growth potential & profitability, we will, in future, introduce new service offerings into the biologics contract services market.
As we effect this strategy, Avid will no longer need to compete for resources with the company's internal R&D programs or be impacted by mgt. decisions related to the other side of the legacy business. There certainly remains some issues that need to be addressed in order for Avid to operate more efficiently as a dedicated CDMO, but we expect these to be short term, and we are already working actively to make the necessary changes. The fact that Avid has been able to grow to a $50M excess capacity business despite Peregrine's focus on dev. of R&D assets, and with extremely limited marketing visibility, demonstrates, I believe, both the strength and the potential of the company. Our target market remains strong & dynamic. The broad pharmaceutical industry remains highly dependent on the shift in focus from traditional small molecule drugs to biologics. In addition, we see acceleration in biosimilar dev. for global markets. Biologic sales are projected to reach greater than $250B by 2020 at a compound annual growth rate of around 9%. This represents very nearly half of the top 100 pharmaceutical products, and a significant majority of these products are derived from mammalian cell culture and require the type of process development and cGMP mfg. capabilities that we offer here at Avid. The explosive growth in the biologics market has necessitated considerable focus on the mfg. technologies & process economics. Avid's state-of-the-art Myford facility, featuring single-use bioreactors and other modern process innovations in custom-designed clean rooms, has been widely praised by current & future customers, including pharmaceutical multinationals, and this provides the opportunity to deliver highly efficient and cost-effective manufacturing. The demand for biologics CDMO services remains very strong and is widely predicted that, while there is no one-size-fits-all mfg. approach to biologics, we are seeing considerable growth in investment in new facilities & capacity, there will remain an imbalance between supply & demand for the foreseeable future.
I will now provide some addl. information on the 3 aspects of Avid Bioservices' strategy at a high level and how we intend to take advantage of this market opportunity:
First, we are working to expand and, importantly, diversify our customer base as a broader customer portfolio will help mitigate the risks associated with being reliant on a few large clients. Again, while we believe the current decrease in demand from 2 of our largest clients is temporary, we are working to obtain significant addl. visibility into their future production needs based on excellent existing relationships and improved communications. We must clearly bring in new customer projects as soon as possible to increase utilization rates for our existing capacity. In support of this important objective, we are executing our marketing & promotional plan, including some re-branding, to greatly increase market visibility and commercial reach and to position Avid Bioservices for the first time ever in its history as an expert and reliable, dedicated service provider. Our long experience and available state-of-the-art cGMP mfg. capacity, capable of producing both clinical-stage and commercial-stage biopharmaceuticals, position us extremely well to take advantage of the considerable market opportunity. We've recently hired Tracy Kinjerski as VP of Business Operations to lead this effort [11-29-17: https://tinyurl.com/yc4zenkc ]. Tracy is a senior business dev. executive with over 17 years of experience in the biopharmaceutical industry, almost all of which have been focused in contract development and mfg. of biologics. Tracy most recently served as Senior Director of Global Business Dev. at CMC Biologics, a global contract mfg. organization. There she achieved rapid success in her role spearheading business dev. & client relationship management, which resulted in significant new business growth. Prior to CMC Biologics, Tracy held senior corp. development positions with other leading CDMOs, including Fujifilm Diosynth, Althea Technologies, and Avecia Biologics. In her new role, Tracy is charged with expanding the company's client base and driving growth at Avid. In addition to her responsibilities in business dev., including strengthening our presence in the Eastern United States, Tracy will strengthen Avid's project mgt. and client relationship operations and systems and will direct our marketing & promotional activities. We're thrilled to have Tracy on board in this important role, and we believe that she will make significant contributions to Avid's continued growth, strengthening of the revenue backlog and profitability. We are actively engaging with numerous potential new customers with products at all stages of development and are confident that we will be able to announce additions to our client base in the near future. Concurrent with our ramp up in business development efforts, we continue to work closely with the 4 new customers that were signed earlier in 2017. While we expect to recognize some revenue from these relationships in this FY18, as we kick off projects and effect technology transfers, it will be FY19 before we see significant revenues derived from these new customers. These projects, ranging from early-stage development to commercialization, have the potential to make meaningful contribution to the top line in the future. While we continue to focus on opportunities to transfer any existing larger scale & later stage mfg. projects over the near term, it is important that we also continue to secure addl. early stage process development and clinical mfg. projects that will deliver the opportunity for significant incremental mfg. revenue in the future. As a final part of the first component of our strategy, we are taking immediate action to strengthen our contractual mechanisms and related terms and conditions with focus on pricing, forecasting, customer commitment, and revenue recognition.
The 2nd arm of Avid's new growth strategy is the expansion & strengthening of current service offerings. This includes the addition of process dev. capabilities and optimizing current mfg. operations. As a dedicated contract manufacturer, we need to both broaden & strengthen our process dev. capabilities. Not only does process dev. work represent an attractive & profitable standalone business opportunity, but, as just mentioned, it also generates future mfg. opportunities and allows development of strong client relationships with visibility & access to additional future projects. Process dev. laboratories & capabilities are used as shop fronts by our peers in the biologics contract mfg. space. And as we diversify both the client base and the project mix, we need to develop competitive capabilities in this area capable of delivering a strong project pipeline. Necessary expansions include addl. modern and well equipped laboratory space and strengthened service offerings in areas such as analytical development, cell line development, and formulation. The addition of new equipment and technologies will allow us to greatly increase throughput & efficiency and to deliver first-in-class process dev. services to our customers. Planning for these additions commenced during Q2 (q/e 10-31-17). On the mfg. side, we continue to ensure that Avid's facilities are state-of-the-art and capable of meeting the highest industry standards. The sophistication of our Myford facility clearly provides an advantage in this respect, but there are a number of areas for improvement. In recent months, we have expanded capacity by installing & validating 2 new 2,000L bioreactors in this facility, and we've already secured some commitments for this capacity. We also continue to work on changes necessary to improve efficiency & throughput when operating this facility in multi-product mode. Due to its modular design, the use of single-use mfg. technologies and already operational supporting quality laboratories, warehousing, and utilities, there's the potential to relatively quickly and cost-effectively install addl. mfg. capacity in available shelf space within the Myford facility. This provides the opportunity to organically & significantly grow our current drug substance mfg. business within our existing facilities.
Finally, beyond growth, strengthening, and extension of our current service offering, there's tremendous opportunity in areas that Avid is not currently active. This represents the 3rd facet of the growth strategy. At present, Avid is focused on the production of antibodies and various classes of recombinant proteins derived from mammalian cell culture. Opportunities exist to manufacture other biologics derived from microbial expression systems, and advances in gene, cellular and immunotherapies, antibody drug conjugates, and multi-specific antibody products feed a growing demand for manufacture of newer classes of products, including viral vectors and vaccines, which are quite similar but distinct mfg. processes to those currently offered at Avid. The available space in the Myford mfg. facility also provides us with the opportunity to consider addl. vertically integrated, high-value mfg. services, such as fill-and-finish drug product manufacture in support of customers' clinical requirements. While incorporating such offerings into the business will undoubtedly deliver technical and regulatory challenges, they offer considerable growth opportunity, and they ultimately contribute to the transformation of Avid into a global and leading CDMO. We continue to evaluate these strategic opportunities and we'll report our conclusions as they are reached. Given today's strong biologics market, the growing demand and limited production capacity available globally, it is clear that there is a tremendous opportunity for Avid in the coming years. We have established a strategy to take full advantage of promising market conditions and have launched a number of efforts to position Avid to successfully achieve stable growth and leadership in this sector.
Before turning over the call to Paul, I'd like to address 2 addl. steps that must be completed in order to finalize & formalize this transition: First, as discussed previously, we are in active discussions to divest the legacy Peregrine R&D assets and have taken action to formally wind down all R&D related activities not required to effect the transaction. We will keep you updated on progress. Lastly, we are taking steps to transition Peregrine and Avid into a single entity and will change the name of the company to Avid Bioservices Inc. Through this process, there will be no change to the company's shares outstanding or to the shares held by individual shareholders. We are currently taking steps to effect this transition, and we expect to have the entire process complete in early 2018. I look forward to completing the transition to a dedicated CDMO, to focusing on execution and to keeping you updated on progress. With that, I’ll hand over to Paul, who will cover the qtly financial results.
PAUL LYTLE (CFO): [10-31-17 10Q iss. 12-11-17: https://tinyurl.com/y75kwojs ]
I'll now discuss our financial results for Q2/FY18, starting with revenue. During Q2, we recognized $12.8M in contract mfg. revenue compared to $23.4M for Q2/FY17. While the current qtr revenue declined compared to the same prior year period, we have achieved higher revenue to date for the current 6mo. period of almost $40M vs. the same prior year period of $29M. In addition, as Roger mentioned, we are still on track to achieve the full FY’18 revenue guidance of $50-55M. This means though, we expect revenue for the remainder of FY18 year to be relatively light due to the decrease in demand from our 2 largest customers, combined with the normal dev. and mfg. time lines of new customer projects. As a backdrop, it's important to note that new customer projects generally commence with either a technology transfer of a known or defined mfg. process, or we can develop a new mfg. process for them, which can take up to 1 year before the higher value mfg. revenue is generated. Therefore, customers that we secure in FY18 will generally contribute more meaningfully to top line revenue in FY19, and reinforces our need to secure new business over the near term. This brings me to our revenue backlog. As of today, our existing customers have signed and committed to $33M in future mfg. services, of which we expect to recognize $10-15M over the remainder of FY18. In addition to our committed backlog, it's important to highlight that our customers have historically committed to services that cover a relatively short period of time as their project advances. Therefore, the committed backlog does not generally include all mfg. services required to fully execute on their programs. As a result, we do have a soft backlog of business on top of what has been committed to, and our goal over the near term is to continue to convert the soft backlog to a committed backlog. Let me shift gears now to discuss our gross margins on contract mfg. revenue. During Q2, our gross margin declined to a negative 27%. This was mostly driven by mfg. capacity that was not utilized during the quarter, also referred to as idle capacity. During Q2, idle capacity negatively impacted gross margin by 39 percentage points. As we look to improve these margins, in addition to focusing on our book of business and growing our customer base & backlog, we are also actively evaluating our overall cost structure as a dedicated CDMO, and we plan to align our cost structure to match the future needs of this new dedicated CDMO business. Turning now to operating expenses. Total operating expenses for Q2/FY18 were $9.2M compared to $12M for Q2/FY17. Included in operating expenses this qtr was $1.6M in restructuring charges associated with workforce reduction pursuant to our restructuring plan implemented last August 2017. R&D expenses decreased to $3.7M in Q2/FY18 compared to $7M for Q2/FY17, in line with our ongoing wind-down of R&D activities. It's important to note that over the next few months, we will continue to rapidly wind down all R&D costs to zero, supporting only those efforts needed to pursue the license or sale of our R&D assets. And for Q2/FY18, SG&A expenses decreased to $3.9M compared to $5M for Q2/FY17. The company's consolidated net loss attributable to common stockholders was $14.1M or $.31/sh. for Q2/FY18 compared to $5.5M or $.16/sh. for the same prior year qtr. Cash & cash equivalents as of Oct. 31, 2017, were $27.7M compared to $46.8M at FYE April 30, 2017.
As further discussed in the company's 10-Q [https://tinyurl.com/y75kwojs ], which was filed today, we plan to raise addl. capital within the next 6 months to support our continued operations and other initiatives that will enhance our CDMO operations. The amount of capital we need to raise will depend on a number of factors, including, the amount of new business we can secure over the near term, the anticipated changes in our operations as we wind down R&D operations and align our cost structure to meet the future needs of the CDMO business, and the capital needed to support our other initiatives within our near term strategic plans that will enhance our operations. Due to some of these uncertainties, we cannot quantify the amount of capital we need to raise today, but we are focused on minimizing dilution and only raising sufficient capital to achieve these goals. This concludes my financial overview. I will now open the call up for questions.
Q&A: [beg. 23:01]
1. Tarun Aswani (for Caroline Palomeque) - Noble Life Science Partners http://noblelsp.com/research
TA: ”This is Tarun Aswani calling in on behalf of Caroline. For Avid, can you specifically outline what you'll be looking for if the strategy is based on potential M&A? And likewise, if the company plans to grow organically, what can we expect to see specifically moving forward for Avid?”
Roger Lias: Hi, Tarun. This is Roger. Thanks for your question. And thanks for your standing in for Caroline. We're still looking at that. One the problems we face, which is not necessarily a problem in the big picture, is we have a lot of opportunity. I'm very keen to make sure that we're running before we walk and focusing on our slightly nearer term opportunities to start off with. With respect to M&A, there are certainly opportunities out there, but I see probably in that regard, short term focus would be on some add-on adjunct services perhaps in areas such as cell line development or analytical. With the organic growth, again as outlined, certainly for the foreseeable, reasonably near future, we certainly need to consolidate what we have. We have tremendous opportunity occasioned to us by the available capacity, but we also have tremendous opportunity to bring on new capacity within our existing infrastructure. So, I think without a doubt, that has to be our short-term focus. We, I believe, will be opportunistic with respect to other services. I think, for instance, fill-finish, drug product work is relatively easily conceptualized as a bolt-on, as an add-on, to our current services. If we start talking about viral vectors and other such products, clearly these involve addl. capital and so on and so forth. so I believe we have to be more cautious and more opportunistic in those areas.
TA: ”Great. Thank you very much for answering the question.”
DR. LIAS’S CLOSING COMMENTS:
Thank you everybody, again, for participating in today's call. I'd certainly like to take the opportunity to welcome our new Board of Directors and to thank them for their input and guidance to date. And of course, as always, I'd like to thank our stockholders for their continued support. Thank you, and have a great afternoon. And with that, I will conclude the call. Thank you.
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12-11-17/PR: Peregrine Pharmaceuticals Reports Financial Results for Q2/FY2018 and Recent Developments
* Avid Bioservices Records Revenues of $12.8 Million in the Second Quarter of FY2018
* Transition to a Dedicated CDMO Business Nearing Completion
http://ir.peregrineinc.com/releasedetail.cfm?ReleaseID=1051443
TUSTIN, Dec. 11, 2017: Peregrine Pharmaceuticals, Inc. (NASDAQ:PPHM/PPHMP), a company committed to improving patient lives by manufacturing and delivering high quality biologics, today announced financial results for the second quarter of fiscal year (FY) 2018 ended October 31, 2017, and provided an update on its contract manufacturing operations, and other corporate highlights.
HIGHLIGHTS SINCE JULY 31, 2017
"Today, we are pleased to report that the company has made great progress in its transition from an R&D focused business to a dedicated contract development and manufacturing organization (CDMO)," stated Roger J. Lias, PhD, President of Avid Bioservices. "In late November, the company came to an agreement with an investor group [Ronin/SWIM, see: https://tinyurl.com/y7ou7ssb ], appointing a highly qualified new board of directors consisting of 3 new independent members from this investor group and one mutually designated independent member in addition to myself and the 2 independent members previously appointed. We have now added 6 highly qualified and independent board members since October. In addition, we are focused on hiring experienced and successful CDMO professionals who are dedicated to revenue growth through the expansion and diversification of Avid's client base, as evidenced by the recently announced hiring of Tracy Kinjerski as VP of Business Operations. We are actively planning to expand Avid's service offerings and enhance our manufacturing infrastructure to ensure that we are offering the highest quality services, and state-of-the-art facilities to our customers. We are also taking steps to officially change the name of the entire organization to Avid Bioservices, Inc. to formalize this transition. Lastly, we are in continued discussions with third parties regarding the divestiture of the company's remaining R&D assets and we will keep you apprised on our progress as we advance the process."
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[FULL HISTORY of PPHM-Ronin PR’s, Letters, 13-D’s, Form4’s, Proxy’s, etc: https://tinyurl.com/y7ou7ssb ]
RECENT DEVELOPMENTS AT AVID BIOSERVICES
Established a dedicated CDMO management infrastructure with the hiring of Roger J. Lias, PhD, as the President of Avid Bioservices and director. [9-11-17: http://tinyurl.com/yd3eh3uv ]
• Dr. Lias brings more than 20 years of experience in the industry having held senior management positions at several leading CDMOs including Cytovance Biologics, KBI BioPharma, Diosynth RTP (formerly Covance Biotechnology Services) and Lonza Biologics.
Strengthened Avid's sales and business development function with the hiring of Tracy Kinjerski as VP of Business Operations. [11-29-17: https://tinyurl.com/yc4zenkc ]
• Ms. Kinjerski brings more than 17 years of experience with a focus in contract development and manufacturing. She is charged with driving Avid's growth through the strategic expansion and diversification of the company's commercial and clinical client base.
Reconstituted the board of directors to include 6 independent directors, all with significant CDMO experience.
• In October 2017, Mark R. Bamforth was appointed as an independent member of the board of directors. Mr. Bamforth has 30 years of biologics leadership experience including founding two CDMOs, Brammer Bio, where he is currently the president and CEO, and Gallus BioPharmaceuticals, which was acquired by DPx Holdings B.V., the parent company of Patheon. Additionally, he served for more than 20 years in key roles at Genzyme Corporation, including 10 years as a corporate officer responsible for running global manufacturing.
• In October 2017, Patrick Walsh was appointed as an independent member of the board of directors. Mr. Walsh has a record of leading successful, high-growth CDMOs and he has also led complex laboratory and pharmaceutical manufacturing operations including parenteral and active pharmaceutical ingredients (API) on a global scale.
• In November 2017, the company entered into a settlement agreement with its largest shareholder (Ronin/SWIM) regarding the composition of Peregrine's board of directors. Under the terms of the Agreement, on November 27, 2017, directors Steven W. King, Carlton M. Johnson, Jr., Eric S. Swartz and David H. Pohl each tendered his resignation, effective immediately, from Peregrine's board of directors, and from the board of directors of Avid Bioservices. The vacancies created by these resignations were immediately filled by three individuals who were nominated by Ronin/SWIM for election at Peregrine's upcoming 2017 Annual Meeting of Stockholders (Richard B. Hancock, Gregory P. Sargen and Joel McComb), and one director (Joseph Carleone, Ph.D.) who is independent of Ronin/SWIM and new to Peregrine.
• Joseph Carleone, Ph.D. (independent appointee): Dr. Carleone is Chairman of the Board of AMPAC Fine Chemicals LLC, a leading manufacturer of pharmaceutical active ingredients. Prior to this position, Dr. Carleone was President, Chief Executive Officer and director of American Pacific Corporation, a leading custom manufacturer of fine and specialty chemicals and propulsion products.
• Richard B. Hancock (Ronin/SWIM appointee): Richard (Rick) B. Hancock has worked in the biologic CDMO industry for over 30 years in various operational and executive roles, serving most recently as President and CEO of Althea Technologies, Inc., a large molecule CDMO producing a wide range of biologics, vaccines and parenteral products.
• Joel McComb (Ronin/SWIM appointee): Joel McComb is the CEO, Chairman and Co-Founder of BioSpyder Technologies, Inc. Prior to BioSpyder, Mr. McComb served as Senior Vice President and General Manager of Illumina, Inc., President of GE Healthcare's Life Sciences and Discovery Systems division, and President of GE Healthcare's Interventional Medicine division.
• Gregory P. Sargen (Ronin/SWIM appointee): Gregory P. Sargen currently serves as Executive Vice President - Corporate Development and Strategy of Cambrex Corporation ("Cambrex"), a global manufacturer and provider of services to life sciences companies. Prior to his current role, Mr. Sargen served as Executive Vice President and Chief Financial Officer of Cambrex.
Expanded production capacity in the Myford facility to allow organic and significant growth using existing facilities.
• In recent months, the company expanded its capacity in its Myford facility by installing two new 2,000 liter single-use bioreactors.
FINANCIAL HIGHLIGHTS AND RESULTS
The company maintains its manufacturing revenue guidance for the full FY 2018 of $50-55 million.
Contract manufacturing revenue from Avid's clinical and commercial biomanufacturing services was $12.8 million for the second quarter of FY 2018 compared to $23.4 million for the second quarter of FY 2017.
Avid's current manufacturing revenue backlog is $33.0 million, representing estimated future manufacturing revenue to be recognized under committed contracts. Most of the backlog is expected to be recognized during the remainder of FY 2018 and into FY 2019.
Total operating expenses for the second quarter of FY 2018 were $9.2 million, compared to $12.0 million for the second quarter of FY 2017. For the second quarter of FY 2018, total operating expenses included restructuring charges of $1.6 million associated with termination benefits including severance and other employee related costs related to a workforce reduction pursuant to a restructuring plan implemented in August 2017. The company is also actively evaluating its overall operating expenses and cost structure as a dedicated CDMO and plans to align its cost structure to match the future needs of the business.
Research and development expenses decreased to $3.7 million in the second quarter of FY 2018 compared to $7.0 million for the second quarter of FY 2017. Over the next 60 or fewer days, the Company will continue to rapidly wind down all research and development costs to zero and plans to support only those efforts needed to pursue the license or sale of its research and development assets.
Cost of contract manufacturing increased to $16.2 million in the second quarter of FY 2018 compared to $15.4 million for the second quarter of FY 2017.
For the second quarter of FY 2018, selling, general and administrative expenses decreased to $3.9 million compared to $5.0 million for FY 2017.
Peregrine's consolidated net loss attributable to common stockholders was $14.1 million or $0.31 per share, for the second quarter of FY 2018, compared to a net loss attributable to common stockholders of $5.5 million, or $0.16 per share, for the same prior year quarter.
Peregrine reported $27.7 million in cash and cash equivalents as of October 31, 2017, compared to $46.8 million at fiscal year ended April 30, 2017. As further discussed in the Company's Quarterly Report on Form 10-Q, the Company plans to raise additional capital within the next 6 months to support its continued operations and other initiatives that will enhance its CDMO operations.
More detailed financial information and analysis may be found in Peregrine's Quarterly Report on Form 10-Q [https://tinyurl.com/y75kwojs ], which will be filed with the Securities and Exchange Commission today.
CONFERENCE CALL
Peregrine will host a conference call and webcast this afternoon, December 11, 2017, at 4:30PM EST (1:30PM PST). To listen to the conference call, please dial (877) 312-5443 or (253) 237-1126 and request the Peregrine Pharmaceuticals conference call. To listen to the live webcast, or access the archived webcast, please visit: http://ir.peregrineinc.com/events.cfm .
REPLAY: https://edge.media-server.com/m6/p/4euqa8wh
ABOUT PEREGRINE PHARMACEUTICALS, INC.
Peregrine Pharmaceuticals, Inc. is a company transitioning from an R&D focused business to a pure play contract development and manufacturing organization (CDMO). Peregrine's in-house CDMO services, including cGMP manufacturing and development capabilities, are provided through its wholly-owned subsidiary Avid Bioservices, Inc. ( http://www.avidbio.com ). Peregrine is pursuing the licensing or sale of its proprietary R&D assets, including its lead immunotherapy candidate, bavituximab, which is currently being evaluated in clinical trials in combination with immune stimulating therapies for the treatment of various cancers. For more information, please visit http://www.peregrineinc.com .
ABOUT AVID BIOSERVICES, INC.
Avid Bioservices, a wholly owned subsidiary of Peregrine Pharmaceuticals, provides a comprehensive range of process development, high quality cGMP clinical and commercial manufacturing services for the biotechnology and biopharmaceutical industries. With nearly 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. For more information about Avid, please visit http://www.avidbio.com .
Safe Harbor *snip*
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
PEREGRINE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
Three Months Ended
October 31, Six Months Ended October 31,
2017 2016 2017 2016
Contract manufacturing revenue $ 12,782,000 $ 23,370,000 $ 39,859,000 $ 28,979,000
Cost of contract manufacturing 16,242,000 15,441,000 36,690,000 18,503,000
Gross profit (loss) (3,460,000 ) 7,929,000 3,169,000 10,476,000
Operating expenses:
Selling, general and administrative 3,867,000 4,984,000 8,080,000 10,044,000
Research and development 3,722,000 7,022,000 7,367,000 15,591,000
Restructuring charges 1,588,000 — 1,588,000 —
Total operating expenses 9,177,000 12,006,000 17,035,000 25,635,000
Operating loss (12,637,000 ) (4,077,000 ) (13,866,000 ) (15,159,000 )
Other income (expense):
Interest and other income 14,000 21,000 41,000 46,000
Interest and other expense (1,000 ) — (4,000 ) —
Net loss $ (12,624,000 ) $ (4,056,000 ) $ (13,829,000 ) $ (15,113,000 )
Comprehensive loss $ (12,624,000 ) $ (4,056,000 ) $ (13,829,000 ) $ (15,113,000 )
Series E preferred stock
accumulated dividends (1,442,000 ) (1,442,000 ) (2,523,000 ) (2,477,000 )
Net loss attributable to common stockholders
$ (14,066,000 ) $ (5,498,000) $(16,352,000) $(17,590,000)
Weighted average common shares outstanding:
Basic and Diluted (1) 45,097,474 34,973,681 44,935,600 34,600,776
Basic and diluted loss per common share (1) $ (0.31 ) $ (0.16 ) $ (0.36 ) $ (0.51 )
(1) All share and per share amounts of our common stock for all prior fiscal year periods presented have been retroactively adjusted to reflect the 1:7 reverse stock split of our issued and outstanding common stock, which took effect on July 10, 2017 (Note 1).
PEREGRINE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
October 31, 2017 April 30, 2017 Unaudited
ASSETS
Current assets:
Cash and cash equivalents $ 27,727,000 $ 46,799,000
Trade and other receivables 3,508,000 7,742,000
Inventories 16,518,000 33,099,000
Prepaid expenses 1,223,000 1,460,000
Total current assets 48,976,000 89,100,000
Property and equipment, net 27,148,000 26,515,000
Restricted cash 1,150,000 1,150,000
Other assets 1,353,000 1,347,000
Total assets $ 78,627,000 $ 118,112,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,739,000 $ 5,779,000
Accrued clinical trial and related fees 5,392,000 4,558,000
Accrued payroll and related costs 4,063,000 6,084,000
Deferred revenue 7,473,000 28,500,000
Customer deposits 13,138,000 17,017,000
Other current liabilities 745,000 993,000
Total current liabilities 33,550,000 62,931,000
Deferred rent, less current portion 2,171,000 1,599,000
Commitments and contingencies
Stockholders' equity: Preferred stock—$0.001 par value; authorized 5,000,000 shares;
1,647,760 issued and outstanding at October 31, 2017 and April 30,
2017, respectively 2,000 2,000
Common stock—$0.001 par value; authorized 500,000,000 shares;
45,172,632 and 44,014,040 issued and outstanding at October 31,
2017 and April 30, 2017, respectively 45,000 44,000
Additional paid-in capital 594,004,000 590,971,000
Accumulated deficit (551,145,000 ) (537,435,000 )
Total stockholders' equity 42,906,000 53,582,000
Total liabilities and stockholders' equity $ 78,627,000 $ 118,112,000
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From 10-Q header: “As of Dec. 6, 2017, there were 45,212,760 shares outstanding.”
- - - - - - - - - - - - - - - - -
Latest 10K 4-30-17 iss. 7-14-17 http://tinyurl.com/ycxu4l5n PR: http://tinyurl.com/yb4wulvu (Cash 4-30-17=$46.8mm); Amended 8-25-17: http://tinyurl.com/yb5jq7vc
Latest 10Q 10-31-17 iss. 12-11-17 https://tinyurl.com/y75kwojs PR: http://ir.peregrineinc.com/releasedetail.cfm?ReleaseID=1051443 (Cash 10-31-17=$27.7mm)
ALL SEC filings for PPHM: http://tinyurl.com/6d4jw8
12-11-17: O/S Shares & ATM Sales History (’06–curr.) https://tinyurl.com/y76cbyt5
**NOTES:
1. PPHM shares were 1:7 Reverse Split eff. 7-10-17 (~315mm/$.606=>~45mm/$4.24) http://tinyurl.com/ycohqn6j
2. Per the 4-30-10 10-K (pub. 7-14-17), ALL ATM Agreements have been fully used – none remain (F-20 & F-28). If any new ATM’s are opened (and reported via Form 424B5), they go against the $67mm remaining on the orig. $150mm shelf filed via the S-3 filed 4-23-14. 10K: http://tinyurl.com/ycxu4l5n
3. The last ATM sales made (a/o the 10-31-17 10Q iss 12-11-17) were these: • Sold 5/1/17-6/30/17: $4,307,000gr./1,051,258sh. = $4.10/sh.
= = = = = = = = = = = = = = = = = = = = = = = = = = = =
Updated PPHM REVS-BY-QTR TABLE, now thru FY18'Q2(qe 10-31-17), per the 10-Q (https://tinyurl.com/y75kwojs ) issued 12-11-17.
• Total Revs since May’06: ($271.1mm/Avid + $24.1mm/Govt + $2.5mm/Lic.) = $297.7mm
• 12-11-17: FY'18 (May'17-Apr'18) Avid revs guidance $50-55mm (committed B/L=$33mm). **
• Deferred-Revs at 10-31-17 total $7.5mm, DOWN from $15.1mm at 7-31-17.
• Cust.Deposits at 10-31-17 total $13.1mm, UP from $2.7mm at 7-31-17.
• Inventories at 10-31-17 total $16.5mm, DOWN from $24.2mm at 7-31-17.
• Avid’s Gross-Profit over last 4 qtrs: $12.1mm on revs of $68.5mm (GP%=17.6)
• Recall, Avid Rev$ from Gov’t DTRA Contract work (6/30/08 – 4/15/11, totaling $24.15mm), went into GOVT-REVS, not AVID-REVS, in the Financials.
**10-31-17 10Q/p.18: “For FY18 (fye 4-30-18) we have secured 4 new cust’s since Jan.2017. However, as previously disclosed, during FY18/Q1 we experienced unanticipated decreases in mfg. demand from our largest cust. [Halozyme] and a regulatory filing delay from our 2nd largest cust., both of which will impact our ability to increase revenue during the remainder of FY’18 and potentially beyond.”
Avid’s website: http://www.avidbio.com
- - - - - - - - PPHM’s Fiscal Qtr’s (FY runs May – April):
FY’10-Q3 = q/e 1-31-10 – rep. 3-11-10 Thu (B4 mkt)
FY’10-Q4 = q/e 4-30-10 – rep. 7-14-10 Wed (after mkt)
FY’11-Q1 = q/e 7-31-10 – rep. 9-9-10 Thu (after mkt)
FY’11-Q2 = q/e 10-31-10 – rep. 12-9-10 Thu (after mkt)
FY’11-Q3 = q/e 1-31-10 – rep. 3-11-11 Fri (after mkt)
FY’11-Q4 = q/e 4-30-11 – rep. 7-14-11 Thu (after mkt)
FY’12-Q1 = q/e 7-31-11 – rep. 9-9-11 Fri (B4 mkt)
FY’12-Q2 = q/e 10-31-11 – rep. 12-12-11 Mon (after mkt)
FY’12-Q3 = q/e 1-31-12 – rep. 3-9-12 Fri (after mkt)
FY’12-Q4 = q/e 4-30-12 – rep. 7-16-12 Mon (after mkt)
FY’13-Q1 = q/e 7-31-12 – rep. 9-10-12 Mon (B4 mkt)
FY’13-Q2 = q/e 10-31-12 – rep. 12-10-12 Mon (after mkt)
FY’13-Q3 = q/e 1-31-13 – rep. 3-12-13 Tue (after mkt)
FY’13-Q4 = q/e 4-30-13 – rep. 7-11-13 Thu (after mkt)
FY’14-Q1 = q/e 7-31-13 – rep. 9-9-13 Mon (after mkt)
FY’14-Q2 = q/e 10-31-13 – rep. 12-10-13 Tue (after mkt)
FY’14-Q3 = q/e 1-31-14 – rep. 3-7-14 Fri (B4 mkt)
FY’14-Q4 = q/e 4-30-14 – rep. 7-14-14 Mon (after mkt)
FY’15-Q1 = q/e 7-31-14 – rep. 9-9-14 Tue (after mkt)
FY’15-Q2 = q/e 10-31-14 – rep. 12-10-14 Wed (after mkt)
FY’15-Q3 = q/e 1-31-15 – rep. 3-12-15 Thu (after mkt)
FY’15-Q4 = q/e 4-30-15 – rep. 7-14-15 Tue (after mkt)
FY’16-Q1 = q/e 7-31-15 – rep. 9-9-15 Wed (after mkt)
FY’16-Q2 = q/e 10-31-15 – rep. 12-10-15 Thu (after mkt)
FY’16-Q3 = q/e 1-31-16 – rep. 3-9-16 Wed (B4 mkt)
FY’16-Q4 = q/e 4-30-16 – rep. 7-14-16 Thu (after mkt)
FY’17-Q1 = q/e 7-31-16 – rep. 9-8-16 Thu (after mkt)
FY’17-Q2 = q/e 10-31-16 – rep. 12-12-16 Mon (after mkt)
FY’17-Q3 = q/e 1-31-17 – rep. 3-13-17 Mon (after mkt)
FY’17-Q4 = q/e 4-30-17 – rep. 7-14-17 Fri (after mkt)
FY’18-Q1 = q/e 7-31-17 – rep. 9-11-17 Mon (after mkt)
FY’18-Q2 = q/e 10-31-17 – rep. 12-11-17 Mon (after mkt)
= = = = = = = = = = = =
“Going Concern” stmt. ELIMINATED from 10-K pub. 7-11-13; RE-INSTATED in 10-K pub. 7-14-17…
2012: 4-30-12 10-K iss. 7-16-12 Pg.68: “As more fully described in Note 2, the Company’s recurring losses from operations & recurring neg. cash flows from operating activities raise substantial doubt about its ability to continue as a going concern.” http://tinyurl.com/79o57b2
2013 & 2014 & 2015 & 2016 10-K's: http://tinyurl.com/p58jcbw etc...=> (((NO GOING CONCERN STATEMENT INCLUDED.)))
2017 7-14-17: “Going Concern” re-instated in the 4-30-17 10-K (pg.13) http://tinyurl.com/ycxu4l5n
CASH a/o 4-30-13: $35.2mm
CASH a/o 6-30-13: $42.6mm
CASH a/o 7-31-13: $41.6mm
CASH a/o 10-31-13: $44.4mm
CASH a/o 1-31-14: $63.2mm
CASH a/o 2-15-14: $79.7mm
CASH a/o 4-30-14: $77.5mm
CASH a/o 6-30-14: $78.3mm
CASH a/o 7-31-14: $73.3mm
CASH a/o 10-31-14: $64.4mm
CASH a/o 1-31-15: $55.2mm
CASH a/o 4-30-15: $68.0mm
CASH a/o 7-31-15: $59.0mm
CASH a/o 10-31-15: $72.0mm
CASH a/o 1-31-16: $67.5mm
CASH a/o 4-30-16: $61.4mm
CASH a/o 7-31-16: $44.2mm
CASH a/o 10-31-16: $49.5mm
CASH a/o 1-31-17: $41.5mm
CASH a/o 4-30-17: $46.8mm
CASH a/o 7-31-17: $37.3mm
CASH a/o 10-31-17: $27.7mm
= = = = = = = = = = A look at #Employees per the 10K’s…
2011 10-K: "As of 4-30-11, we employed 154 full-time emps & 2 part-time emps”
2012 10-K: "As of 4-30-12, we employed 172 full-time emps & 2 part-time emps."
2013 10-K: "As of 4-30-13, we employed 182 full-time emps & 5 part-time emps."
2014 10-K: "As of 4-30-14, we employed 180 full-time emps & 4 part-time emps."
2015 10-K: "As of 4-30-15, we employed 211 full-time emps & 4 part-time emps."
2016 10-K: "As of 4-30-16, we employed 281 full-time emps & 3 part-time emps."
2017 10-K: "As of 4-30-17, we employed 319 full-time emps & 4 part-time emps."
2017 Q/E 7-31-17: On 8-9-17, we commenced a restructuring plan… expect to be completed in Oct’17… reduced workforce by 60 emps (20%), reduced R&D from 22 to 11.
=> Total Revs May06-Oct17: $271.1mm/Avid + $24.1mm/Govt + $2.5mm/Lic. = $297.7mm.
*Cash at 10-31-17: $27.7mm
*As of Dec. 6, 2017, 45,212,760 shares o/s. (1:7 R/S eff. 7-10-17: 315mm/$.606=>45mm/$4.24 http://tinyurl.com/ycohqn6j )
*10Q/10-31-17 iss. 12-11-17: https://tinyurl.com/y75kwojs
...Pg.4: “Business Description – We are a company committed to improving the lives of patients by manufacturing pharmaceutical products through our CDMO, Avid Bioservices, Inc. Over the next 60 days, we plan to complete the transition from a R&D company to a dedicated CDMO company focused on dev. & mfg. of biopharmaceutical products derived from mammalian cell culture…” Pg.16: “We plan to take ADDL. STEPS steps over the near term, including but not limited to:
1. Rebranding the company as Avid Bioservices, Inc.
2. Changing our ticker symbol on the NASDAQ Capital Market to align with our rebranding efforts
3. Broadening our sales force
4. Increasing our marketing efforts to support our rebranding & vision
5. Completing the wind down of all R&D activities and the potential licensing/divestiture of our assets related to our R&D operations.”
This large post has 4 sections:
I. 12-11-17 Q2/FY18 Qtly. Earnings Conf. Call TRANSCRIPT (q/e 10-31-17)
II. 12-11-17 PPHM Press Release: Q2/FY18 Earnings & Developments
III. A link to “O/S Shares & ATM Sales History – 2006-curr.” (https://tinyurl.com/y76cbyt5 )
IV. Updated Table of Avid Revenues By Quarter (May’06-Current)
…Recall: Peregrine’s FY runs May-Apr, so FY’18 = May’17-Apr’18.
((( Orig. transcript from SeekingAlpha.com [https://tinyurl.com/ya7qxk8w ], with numerous corrections made. )))
Link to webcast replay: http://ir.peregrineinc.com/events.cfm => https://edge.media-server.com/m6/p/4euqa8wh
FULL TRANSCRIPT… 12-11-17 FY’18/Q2 Earnings Conf. Call (q/e 10-31-17) (Lias/Lytle)
WELCOME & FWD-LOOKING STATEMENTS: Tim Brons, Vida Strategic Partners (IR) http://www.peregrineinc.com
AVID’s PRESIDENT ROGER LIAS – OPENING COMMENTS:
Thanks to all of you who've dialed in and all of you who are participating today via webcast. As discussed, during our Q1 earnings call last September (9-11-17), the company is undergoing a broad-scale transformation, the goals of which are to shift complete focus to the Avid Bioservices contract development and mfg. business [CDMO] and the complete divestiture of all of Peregrine's legacy R&D assets, which include bavituximab. As previously discussed, the current biologics contract services market allows us to take advantage of our installed cGMP mfg. capacity and existing capabilities and expertise. Our exemplary track record in releasing commercial products to many global markets, including the United States and European Union, catalyzes the transition to a focused, revenue-generating services business with a potential for consistent & sustainable growth at less risk. We initiated a plan during Q1/FY18 (q/e 7-31-17) to effect the transformation of the business and we continue to execute this transition. During Q2, we have achieved several important milestones that we believe will facilitate a successful outcome. I will give an overview addressing our corporate & organizational progress, and then we'll turn the call over to Paul to address the company's financial results for Q2.
Before discussing advances and executing our new corporate strategy however, I would like to first address the fact that I am beginning today's call instead of Steve King. Today, we'll be discussing our work to transition to a dedicated CDMO business and our progress in that effort. And for that reason, as President of Avid Bioservices, which represents the future of the company, I'm very pleased to be able to address you all today.
Next, I would like to address the proxy matters that have been publicly deliberated in recent months. As many of you know, several of Peregrine's investors have collectively lobbied for the new direction that the company is taking and a new Board composition [Ronin/SWIN, full history: https://tinyurl.com/y7ou7ssb ]. We recently entered into a settlement agreement with these investors under which 4 existing Board members have resigned and 4 new indep. Board members have been appointed. More specifically, on 11-27-17, directors Steven King, Carlton Johnson, Eric Swartz, and David Pohl each resigned from Peregrine's BOD and from the BOD of Avid Bioservices. The vacancies created by these resignations were immediately filled by Richard Hancock, Joel McComb, and Gregory Sargen, each of whom were nominated by the investor group for election at Peregrine's upcoming 2017 Annual Meeting of Stockholders [1-18-18]. In addition, Joseph Carleone, who is indep. of both the investors and of Peregrine, joined the Board and is serving as Chairman. Each of these appointees has very significant experience in the biomfg. industry, and the newly seated Board has already demonstrated that they will add great value as we work to establish Avid as a leading CDMO. In addition to the newly appointed members, Mark Bamforth, Patrick Walsh, and I will continue to serve on the Board. We've recently announced that we will hold our 2017 ASM on Jan. 18, 2018. We encourage all shareholders to review the biographies and accomplishments of these Board appointees, and we request your support for them in your proxy voting. We believe each new member will continue to bring a wealth of experience and the industry leadership required to take Avid to the next level. I am personally very pleased that we have avoided further distraction and are now able to focus fully on the execution of our strategic plan and the complete transition of the company to a dedicated CDMO.
I would now like to discuss in more detail some of the advances we've made with respect to our corporate strategy. In recent months, we have made substantial progress towards establishing the company as a dedicated CDMO with the potential to achieve significant growth. During Q1, we recorded $12.8M in revenue, and on a y-t-d basis, we reported revenues of approx. $40M. This is in line with the guidance provided earlier in the year, and we continue to expect revenue for FY18 to be consistent with revenue from last year, with most revenue recognized in the 1st & 2nd quarters. Though we achieved a 6-yr. compound annual growth rate of ~38% between FY11 & FY17, we are projecting relatively flat revenue this year due to a previously announced decrease in demand from our 2 largest customers. We expect this lull in growth to be temporary, as these customers sell through current inventory and work through a regulatory filing delay. This situation, however, points to the urgent need to access new growth opportunities for Avid to diversify our client base and to broaden Avid's service offering. To that end, during my first 2 months with the company, I've worked closely with the Avid team to establish a sustainable growth strategy for the company for the near term and into the future. This strategy is comprised of 3 primary components:
1. Firstly, we will diversify and broaden our customer base & project mix.
2. Next, we will expand & strengthen Avid's current service offerings, taking advantage of current capabilities and available space to increase revenue-generating potential. Activities will include optimization of production capacity within existing facilities and the addition of process dev. capabilities and strengthening of our commercial terms.
3. Finally, to further increase growth potential & profitability, we will, in future, introduce new service offerings into the biologics contract services market.
As we effect this strategy, Avid will no longer need to compete for resources with the company's internal R&D programs or be impacted by mgt. decisions related to the other side of the legacy business. There certainly remains some issues that need to be addressed in order for Avid to operate more efficiently as a dedicated CDMO, but we expect these to be short term, and we are already working actively to make the necessary changes. The fact that Avid has been able to grow to a $50M excess capacity business despite Peregrine's focus on dev. of R&D assets, and with extremely limited marketing visibility, demonstrates, I believe, both the strength and the potential of the company. Our target market remains strong & dynamic. The broad pharmaceutical industry remains highly dependent on the shift in focus from traditional small molecule drugs to biologics. In addition, we see acceleration in biosimilar dev. for global markets. Biologic sales are projected to reach greater than $250B by 2020 at a compound annual growth rate of around 9%. This represents very nearly half of the top 100 pharmaceutical products, and a significant majority of these products are derived from mammalian cell culture and require the type of process development and cGMP mfg. capabilities that we offer here at Avid. The explosive growth in the biologics market has necessitated considerable focus on the mfg. technologies & process economics. Avid's state-of-the-art Myford facility, featuring single-use bioreactors and other modern process innovations in custom-designed clean rooms, has been widely praised by current & future customers, including pharmaceutical multinationals, and this provides the opportunity to deliver highly efficient and cost-effective manufacturing. The demand for biologics CDMO services remains very strong and is widely predicted that, while there is no one-size-fits-all mfg. approach to biologics, we are seeing considerable growth in investment in new facilities & capacity, there will remain an imbalance between supply & demand for the foreseeable future.
I will now provide some addl. information on the 3 aspects of Avid Bioservices' strategy at a high level and how we intend to take advantage of this market opportunity:
First, we are working to expand and, importantly, diversify our customer base as a broader customer portfolio will help mitigate the risks associated with being reliant on a few large clients. Again, while we believe the current decrease in demand from 2 of our largest clients is temporary, we are working to obtain significant addl. visibility into their future production needs based on excellent existing relationships and improved communications. We must clearly bring in new customer projects as soon as possible to increase utilization rates for our existing capacity. In support of this important objective, we are executing our marketing & promotional plan, including some re-branding, to greatly increase market visibility and commercial reach and to position Avid Bioservices for the first time ever in its history as an expert and reliable, dedicated service provider. Our long experience and available state-of-the-art cGMP mfg. capacity, capable of producing both clinical-stage and commercial-stage biopharmaceuticals, position us extremely well to take advantage of the considerable market opportunity. We've recently hired Tracy Kinjerski as VP of Business Operations to lead this effort [11-29-17: https://tinyurl.com/yc4zenkc ]. Tracy is a senior business dev. executive with over 17 years of experience in the biopharmaceutical industry, almost all of which have been focused in contract development and mfg. of biologics. Tracy most recently served as Senior Director of Global Business Dev. at CMC Biologics, a global contract mfg. organization. There she achieved rapid success in her role spearheading business dev. & client relationship management, which resulted in significant new business growth. Prior to CMC Biologics, Tracy held senior corp. development positions with other leading CDMOs, including Fujifilm Diosynth, Althea Technologies, and Avecia Biologics. In her new role, Tracy is charged with expanding the company's client base and driving growth at Avid. In addition to her responsibilities in business dev., including strengthening our presence in the Eastern United States, Tracy will strengthen Avid's project mgt. and client relationship operations and systems and will direct our marketing & promotional activities. We're thrilled to have Tracy on board in this important role, and we believe that she will make significant contributions to Avid's continued growth, strengthening of the revenue backlog and profitability. We are actively engaging with numerous potential new customers with products at all stages of development and are confident that we will be able to announce additions to our client base in the near future. Concurrent with our ramp up in business development efforts, we continue to work closely with the 4 new customers that were signed earlier in 2017. While we expect to recognize some revenue from these relationships in this FY18, as we kick off projects and effect technology transfers, it will be FY19 before we see significant revenues derived from these new customers. These projects, ranging from early-stage development to commercialization, have the potential to make meaningful contribution to the top line in the future. While we continue to focus on opportunities to transfer any existing larger scale & later stage mfg. projects over the near term, it is important that we also continue to secure addl. early stage process development and clinical mfg. projects that will deliver the opportunity for significant incremental mfg. revenue in the future. As a final part of the first component of our strategy, we are taking immediate action to strengthen our contractual mechanisms and related terms and conditions with focus on pricing, forecasting, customer commitment, and revenue recognition.
The 2nd arm of Avid's new growth strategy is the expansion & strengthening of current service offerings. This includes the addition of process dev. capabilities and optimizing current mfg. operations. As a dedicated contract manufacturer, we need to both broaden & strengthen our process dev. capabilities. Not only does process dev. work represent an attractive & profitable standalone business opportunity, but, as just mentioned, it also generates future mfg. opportunities and allows development of strong client relationships with visibility & access to additional future projects. Process dev. laboratories & capabilities are used as shop fronts by our peers in the biologics contract mfg. space. And as we diversify both the client base and the project mix, we need to develop competitive capabilities in this area capable of delivering a strong project pipeline. Necessary expansions include addl. modern and well equipped laboratory space and strengthened service offerings in areas such as analytical development, cell line development, and formulation. The addition of new equipment and technologies will allow us to greatly increase throughput & efficiency and to deliver first-in-class process dev. services to our customers. Planning for these additions commenced during Q2 (q/e 10-31-17). On the mfg. side, we continue to ensure that Avid's facilities are state-of-the-art and capable of meeting the highest industry standards. The sophistication of our Myford facility clearly provides an advantage in this respect, but there are a number of areas for improvement. In recent months, we have expanded capacity by installing & validating 2 new 2,000L bioreactors in this facility, and we've already secured some commitments for this capacity. We also continue to work on changes necessary to improve efficiency & throughput when operating this facility in multi-product mode. Due to its modular design, the use of single-use mfg. technologies and already operational supporting quality laboratories, warehousing, and utilities, there's the potential to relatively quickly and cost-effectively install addl. mfg. capacity in available shelf space within the Myford facility. This provides the opportunity to organically & significantly grow our current drug substance mfg. business within our existing facilities.
Finally, beyond growth, strengthening, and extension of our current service offering, there's tremendous opportunity in areas that Avid is not currently active. This represents the 3rd facet of the growth strategy. At present, Avid is focused on the production of antibodies and various classes of recombinant proteins derived from mammalian cell culture. Opportunities exist to manufacture other biologics derived from microbial expression systems, and advances in gene, cellular and immunotherapies, antibody drug conjugates, and multi-specific antibody products feed a growing demand for manufacture of newer classes of products, including viral vectors and vaccines, which are quite similar but distinct mfg. processes to those currently offered at Avid. The available space in the Myford mfg. facility also provides us with the opportunity to consider addl. vertically integrated, high-value mfg. services, such as fill-and-finish drug product manufacture in support of customers' clinical requirements. While incorporating such offerings into the business will undoubtedly deliver technical and regulatory challenges, they offer considerable growth opportunity, and they ultimately contribute to the transformation of Avid into a global and leading CDMO. We continue to evaluate these strategic opportunities and we'll report our conclusions as they are reached. Given today's strong biologics market, the growing demand and limited production capacity available globally, it is clear that there is a tremendous opportunity for Avid in the coming years. We have established a strategy to take full advantage of promising market conditions and have launched a number of efforts to position Avid to successfully achieve stable growth and leadership in this sector.
Before turning over the call to Paul, I'd like to address 2 addl. steps that must be completed in order to finalize & formalize this transition: First, as discussed previously, we are in active discussions to divest the legacy Peregrine R&D assets and have taken action to formally wind down all R&D related activities not required to effect the transaction. We will keep you updated on progress. Lastly, we are taking steps to transition Peregrine and Avid into a single entity and will change the name of the company to Avid Bioservices Inc. Through this process, there will be no change to the company's shares outstanding or to the shares held by individual shareholders. We are currently taking steps to effect this transition, and we expect to have the entire process complete in early 2018. I look forward to completing the transition to a dedicated CDMO, to focusing on execution and to keeping you updated on progress. With that, I’ll hand over to Paul, who will cover the qtly financial results.
PAUL LYTLE (CFO): [10-31-17 10Q iss. 12-11-17: https://tinyurl.com/y75kwojs ]
I'll now discuss our financial results for Q2/FY18, starting with revenue. During Q2, we recognized $12.8M in contract mfg. revenue compared to $23.4M for Q2/FY17. While the current qtr revenue declined compared to the same prior year period, we have achieved higher revenue to date for the current 6mo. period of almost $40M vs. the same prior year period of $29M. In addition, as Roger mentioned, we are still on track to achieve the full FY’18 revenue guidance of $50-55M. This means though, we expect revenue for the remainder of FY18 year to be relatively light due to the decrease in demand from our 2 largest customers, combined with the normal dev. and mfg. time lines of new customer projects. As a backdrop, it's important to note that new customer projects generally commence with either a technology transfer of a known or defined mfg. process, or we can develop a new mfg. process for them, which can take up to 1 year before the higher value mfg. revenue is generated. Therefore, customers that we secure in FY18 will generally contribute more meaningfully to top line revenue in FY19, and reinforces our need to secure new business over the near term. This brings me to our revenue backlog. As of today, our existing customers have signed and committed to $33M in future mfg. services, of which we expect to recognize $10-15M over the remainder of FY18. In addition to our committed backlog, it's important to highlight that our customers have historically committed to services that cover a relatively short period of time as their project advances. Therefore, the committed backlog does not generally include all mfg. services required to fully execute on their programs. As a result, we do have a soft backlog of business on top of what has been committed to, and our goal over the near term is to continue to convert the soft backlog to a committed backlog. Let me shift gears now to discuss our gross margins on contract mfg. revenue. During Q2, our gross margin declined to a negative 27%. This was mostly driven by mfg. capacity that was not utilized during the quarter, also referred to as idle capacity. During Q2, idle capacity negatively impacted gross margin by 39 percentage points. As we look to improve these margins, in addition to focusing on our book of business and growing our customer base & backlog, we are also actively evaluating our overall cost structure as a dedicated CDMO, and we plan to align our cost structure to match the future needs of this new dedicated CDMO business. Turning now to operating expenses. Total operating expenses for Q2/FY18 were $9.2M compared to $12M for Q2/FY17. Included in operating expenses this qtr was $1.6M in restructuring charges associated with workforce reduction pursuant to our restructuring plan implemented last August 2017. R&D expenses decreased to $3.7M in Q2/FY18 compared to $7M for Q2/FY17, in line with our ongoing wind-down of R&D activities. It's important to note that over the next few months, we will continue to rapidly wind down all R&D costs to zero, supporting only those efforts needed to pursue the license or sale of our R&D assets. And for Q2/FY18, SG&A expenses decreased to $3.9M compared to $5M for Q2/FY17. The company's consolidated net loss attributable to common stockholders was $14.1M or $.31/sh. for Q2/FY18 compared to $5.5M or $.16/sh. for the same prior year qtr. Cash & cash equivalents as of Oct. 31, 2017, were $27.7M compared to $46.8M at FYE April 30, 2017.
As further discussed in the company's 10-Q [https://tinyurl.com/y75kwojs ], which was filed today, we plan to raise addl. capital within the next 6 months to support our continued operations and other initiatives that will enhance our CDMO operations. The amount of capital we need to raise will depend on a number of factors, including, the amount of new business we can secure over the near term, the anticipated changes in our operations as we wind down R&D operations and align our cost structure to meet the future needs of the CDMO business, and the capital needed to support our other initiatives within our near term strategic plans that will enhance our operations. Due to some of these uncertainties, we cannot quantify the amount of capital we need to raise today, but we are focused on minimizing dilution and only raising sufficient capital to achieve these goals. This concludes my financial overview. I will now open the call up for questions.
Q&A: [beg. 23:01]
1. Tarun Aswani (for Caroline Palomeque) - Noble Life Science Partners http://noblelsp.com/research
TA: ”This is Tarun Aswani calling in on behalf of Caroline. For Avid, can you specifically outline what you'll be looking for if the strategy is based on potential M&A? And likewise, if the company plans to grow organically, what can we expect to see specifically moving forward for Avid?”
Roger Lias: Hi, Tarun. This is Roger. Thanks for your question. And thanks for your standing in for Caroline. We're still looking at that. One the problems we face, which is not necessarily a problem in the big picture, is we have a lot of opportunity. I'm very keen to make sure that we're running before we walk and focusing on our slightly nearer term opportunities to start off with. With respect to M&A, there are certainly opportunities out there, but I see probably in that regard, short term focus would be on some add-on adjunct services perhaps in areas such as cell line development or analytical. With the organic growth, again as outlined, certainly for the foreseeable, reasonably near future, we certainly need to consolidate what we have. We have tremendous opportunity occasioned to us by the available capacity, but we also have tremendous opportunity to bring on new capacity within our existing infrastructure. So, I think without a doubt, that has to be our short-term focus. We, I believe, will be opportunistic with respect to other services. I think, for instance, fill-finish, drug product work is relatively easily conceptualized as a bolt-on, as an add-on, to our current services. If we start talking about viral vectors and other such products, clearly these involve addl. capital and so on and so forth. so I believe we have to be more cautious and more opportunistic in those areas.
TA: ”Great. Thank you very much for answering the question.”
DR. LIAS’S CLOSING COMMENTS:
Thank you everybody, again, for participating in today's call. I'd certainly like to take the opportunity to welcome our new Board of Directors and to thank them for their input and guidance to date. And of course, as always, I'd like to thank our stockholders for their continued support. Thank you, and have a great afternoon. And with that, I will conclude the call. Thank you.
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12-11-17/PR: Peregrine Pharmaceuticals Reports Financial Results for Q2/FY2018 and Recent Developments
* Avid Bioservices Records Revenues of $12.8 Million in the Second Quarter of FY2018
* Transition to a Dedicated CDMO Business Nearing Completion
http://ir.peregrineinc.com/releasedetail.cfm?ReleaseID=1051443
TUSTIN, Dec. 11, 2017: Peregrine Pharmaceuticals, Inc. (NASDAQ:PPHM/PPHMP), a company committed to improving patient lives by manufacturing and delivering high quality biologics, today announced financial results for the second quarter of fiscal year (FY) 2018 ended October 31, 2017, and provided an update on its contract manufacturing operations, and other corporate highlights.
HIGHLIGHTS SINCE JULY 31, 2017
"Today, we are pleased to report that the company has made great progress in its transition from an R&D focused business to a dedicated contract development and manufacturing organization (CDMO)," stated Roger J. Lias, PhD, President of Avid Bioservices. "In late November, the company came to an agreement with an investor group [Ronin/SWIM, see: https://tinyurl.com/y7ou7ssb ], appointing a highly qualified new board of directors consisting of 3 new independent members from this investor group and one mutually designated independent member in addition to myself and the 2 independent members previously appointed. We have now added 6 highly qualified and independent board members since October. In addition, we are focused on hiring experienced and successful CDMO professionals who are dedicated to revenue growth through the expansion and diversification of Avid's client base, as evidenced by the recently announced hiring of Tracy Kinjerski as VP of Business Operations. We are actively planning to expand Avid's service offerings and enhance our manufacturing infrastructure to ensure that we are offering the highest quality services, and state-of-the-art facilities to our customers. We are also taking steps to officially change the name of the entire organization to Avid Bioservices, Inc. to formalize this transition. Lastly, we are in continued discussions with third parties regarding the divestiture of the company's remaining R&D assets and we will keep you apprised on our progress as we advance the process."
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[FULL HISTORY of PPHM-Ronin PR’s, Letters, 13-D’s, Form4’s, Proxy’s, etc: https://tinyurl.com/y7ou7ssb ]
RECENT DEVELOPMENTS AT AVID BIOSERVICES
Established a dedicated CDMO management infrastructure with the hiring of Roger J. Lias, PhD, as the President of Avid Bioservices and director. [9-11-17: http://tinyurl.com/yd3eh3uv ]
• Dr. Lias brings more than 20 years of experience in the industry having held senior management positions at several leading CDMOs including Cytovance Biologics, KBI BioPharma, Diosynth RTP (formerly Covance Biotechnology Services) and Lonza Biologics.
Strengthened Avid's sales and business development function with the hiring of Tracy Kinjerski as VP of Business Operations. [11-29-17: https://tinyurl.com/yc4zenkc ]
• Ms. Kinjerski brings more than 17 years of experience with a focus in contract development and manufacturing. She is charged with driving Avid's growth through the strategic expansion and diversification of the company's commercial and clinical client base.
Reconstituted the board of directors to include 6 independent directors, all with significant CDMO experience.
• In October 2017, Mark R. Bamforth was appointed as an independent member of the board of directors. Mr. Bamforth has 30 years of biologics leadership experience including founding two CDMOs, Brammer Bio, where he is currently the president and CEO, and Gallus BioPharmaceuticals, which was acquired by DPx Holdings B.V., the parent company of Patheon. Additionally, he served for more than 20 years in key roles at Genzyme Corporation, including 10 years as a corporate officer responsible for running global manufacturing.
• In October 2017, Patrick Walsh was appointed as an independent member of the board of directors. Mr. Walsh has a record of leading successful, high-growth CDMOs and he has also led complex laboratory and pharmaceutical manufacturing operations including parenteral and active pharmaceutical ingredients (API) on a global scale.
• In November 2017, the company entered into a settlement agreement with its largest shareholder (Ronin/SWIM) regarding the composition of Peregrine's board of directors. Under the terms of the Agreement, on November 27, 2017, directors Steven W. King, Carlton M. Johnson, Jr., Eric S. Swartz and David H. Pohl each tendered his resignation, effective immediately, from Peregrine's board of directors, and from the board of directors of Avid Bioservices. The vacancies created by these resignations were immediately filled by three individuals who were nominated by Ronin/SWIM for election at Peregrine's upcoming 2017 Annual Meeting of Stockholders (Richard B. Hancock, Gregory P. Sargen and Joel McComb), and one director (Joseph Carleone, Ph.D.) who is independent of Ronin/SWIM and new to Peregrine.
• Joseph Carleone, Ph.D. (independent appointee): Dr. Carleone is Chairman of the Board of AMPAC Fine Chemicals LLC, a leading manufacturer of pharmaceutical active ingredients. Prior to this position, Dr. Carleone was President, Chief Executive Officer and director of American Pacific Corporation, a leading custom manufacturer of fine and specialty chemicals and propulsion products.
• Richard B. Hancock (Ronin/SWIM appointee): Richard (Rick) B. Hancock has worked in the biologic CDMO industry for over 30 years in various operational and executive roles, serving most recently as President and CEO of Althea Technologies, Inc., a large molecule CDMO producing a wide range of biologics, vaccines and parenteral products.
• Joel McComb (Ronin/SWIM appointee): Joel McComb is the CEO, Chairman and Co-Founder of BioSpyder Technologies, Inc. Prior to BioSpyder, Mr. McComb served as Senior Vice President and General Manager of Illumina, Inc., President of GE Healthcare's Life Sciences and Discovery Systems division, and President of GE Healthcare's Interventional Medicine division.
• Gregory P. Sargen (Ronin/SWIM appointee): Gregory P. Sargen currently serves as Executive Vice President - Corporate Development and Strategy of Cambrex Corporation ("Cambrex"), a global manufacturer and provider of services to life sciences companies. Prior to his current role, Mr. Sargen served as Executive Vice President and Chief Financial Officer of Cambrex.
Expanded production capacity in the Myford facility to allow organic and significant growth using existing facilities.
• In recent months, the company expanded its capacity in its Myford facility by installing two new 2,000 liter single-use bioreactors.
FINANCIAL HIGHLIGHTS AND RESULTS
The company maintains its manufacturing revenue guidance for the full FY 2018 of $50-55 million.
Contract manufacturing revenue from Avid's clinical and commercial biomanufacturing services was $12.8 million for the second quarter of FY 2018 compared to $23.4 million for the second quarter of FY 2017.
Avid's current manufacturing revenue backlog is $33.0 million, representing estimated future manufacturing revenue to be recognized under committed contracts. Most of the backlog is expected to be recognized during the remainder of FY 2018 and into FY 2019.
Total operating expenses for the second quarter of FY 2018 were $9.2 million, compared to $12.0 million for the second quarter of FY 2017. For the second quarter of FY 2018, total operating expenses included restructuring charges of $1.6 million associated with termination benefits including severance and other employee related costs related to a workforce reduction pursuant to a restructuring plan implemented in August 2017. The company is also actively evaluating its overall operating expenses and cost structure as a dedicated CDMO and plans to align its cost structure to match the future needs of the business.
Research and development expenses decreased to $3.7 million in the second quarter of FY 2018 compared to $7.0 million for the second quarter of FY 2017. Over the next 60 or fewer days, the Company will continue to rapidly wind down all research and development costs to zero and plans to support only those efforts needed to pursue the license or sale of its research and development assets.
Cost of contract manufacturing increased to $16.2 million in the second quarter of FY 2018 compared to $15.4 million for the second quarter of FY 2017.
For the second quarter of FY 2018, selling, general and administrative expenses decreased to $3.9 million compared to $5.0 million for FY 2017.
Peregrine's consolidated net loss attributable to common stockholders was $14.1 million or $0.31 per share, for the second quarter of FY 2018, compared to a net loss attributable to common stockholders of $5.5 million, or $0.16 per share, for the same prior year quarter.
Peregrine reported $27.7 million in cash and cash equivalents as of October 31, 2017, compared to $46.8 million at fiscal year ended April 30, 2017. As further discussed in the Company's Quarterly Report on Form 10-Q, the Company plans to raise additional capital within the next 6 months to support its continued operations and other initiatives that will enhance its CDMO operations.
More detailed financial information and analysis may be found in Peregrine's Quarterly Report on Form 10-Q [https://tinyurl.com/y75kwojs ], which will be filed with the Securities and Exchange Commission today.
CONFERENCE CALL
Peregrine will host a conference call and webcast this afternoon, December 11, 2017, at 4:30PM EST (1:30PM PST). To listen to the conference call, please dial (877) 312-5443 or (253) 237-1126 and request the Peregrine Pharmaceuticals conference call. To listen to the live webcast, or access the archived webcast, please visit: http://ir.peregrineinc.com/events.cfm .
REPLAY: https://edge.media-server.com/m6/p/4euqa8wh
ABOUT PEREGRINE PHARMACEUTICALS, INC.
Peregrine Pharmaceuticals, Inc. is a company transitioning from an R&D focused business to a pure play contract development and manufacturing organization (CDMO). Peregrine's in-house CDMO services, including cGMP manufacturing and development capabilities, are provided through its wholly-owned subsidiary Avid Bioservices, Inc. ( http://www.avidbio.com ). Peregrine is pursuing the licensing or sale of its proprietary R&D assets, including its lead immunotherapy candidate, bavituximab, which is currently being evaluated in clinical trials in combination with immune stimulating therapies for the treatment of various cancers. For more information, please visit http://www.peregrineinc.com .
ABOUT AVID BIOSERVICES, INC.
Avid Bioservices, a wholly owned subsidiary of Peregrine Pharmaceuticals, provides a comprehensive range of process development, high quality cGMP clinical and commercial manufacturing services for the biotechnology and biopharmaceutical industries. With nearly 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. For more information about Avid, please visit http://www.avidbio.com .
Safe Harbor *snip*
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
PEREGRINE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
Three Months Ended
October 31, Six Months Ended October 31,
2017 2016 2017 2016
Contract manufacturing revenue $ 12,782,000 $ 23,370,000 $ 39,859,000 $ 28,979,000
Cost of contract manufacturing 16,242,000 15,441,000 36,690,000 18,503,000
Gross profit (loss) (3,460,000 ) 7,929,000 3,169,000 10,476,000
Operating expenses:
Selling, general and administrative 3,867,000 4,984,000 8,080,000 10,044,000
Research and development 3,722,000 7,022,000 7,367,000 15,591,000
Restructuring charges 1,588,000 — 1,588,000 —
Total operating expenses 9,177,000 12,006,000 17,035,000 25,635,000
Operating loss (12,637,000 ) (4,077,000 ) (13,866,000 ) (15,159,000 )
Other income (expense):
Interest and other income 14,000 21,000 41,000 46,000
Interest and other expense (1,000 ) — (4,000 ) —
Net loss $ (12,624,000 ) $ (4,056,000 ) $ (13,829,000 ) $ (15,113,000 )
Comprehensive loss $ (12,624,000 ) $ (4,056,000 ) $ (13,829,000 ) $ (15,113,000 )
Series E preferred stock
accumulated dividends (1,442,000 ) (1,442,000 ) (2,523,000 ) (2,477,000 )
Net loss attributable to common stockholders
$ (14,066,000 ) $ (5,498,000) $(16,352,000) $(17,590,000)
Weighted average common shares outstanding:
Basic and Diluted (1) 45,097,474 34,973,681 44,935,600 34,600,776
Basic and diluted loss per common share (1) $ (0.31 ) $ (0.16 ) $ (0.36 ) $ (0.51 )
(1) All share and per share amounts of our common stock for all prior fiscal year periods presented have been retroactively adjusted to reflect the 1:7 reverse stock split of our issued and outstanding common stock, which took effect on July 10, 2017 (Note 1).
PEREGRINE PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
October 31, 2017 April 30, 2017 Unaudited
ASSETS
Current assets:
Cash and cash equivalents $ 27,727,000 $ 46,799,000
Trade and other receivables 3,508,000 7,742,000
Inventories 16,518,000 33,099,000
Prepaid expenses 1,223,000 1,460,000
Total current assets 48,976,000 89,100,000
Property and equipment, net 27,148,000 26,515,000
Restricted cash 1,150,000 1,150,000
Other assets 1,353,000 1,347,000
Total assets $ 78,627,000 $ 118,112,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,739,000 $ 5,779,000
Accrued clinical trial and related fees 5,392,000 4,558,000
Accrued payroll and related costs 4,063,000 6,084,000
Deferred revenue 7,473,000 28,500,000
Customer deposits 13,138,000 17,017,000
Other current liabilities 745,000 993,000
Total current liabilities 33,550,000 62,931,000
Deferred rent, less current portion 2,171,000 1,599,000
Commitments and contingencies
Stockholders' equity: Preferred stock—$0.001 par value; authorized 5,000,000 shares;
1,647,760 issued and outstanding at October 31, 2017 and April 30,
2017, respectively 2,000 2,000
Common stock—$0.001 par value; authorized 500,000,000 shares;
45,172,632 and 44,014,040 issued and outstanding at October 31,
2017 and April 30, 2017, respectively 45,000 44,000
Additional paid-in capital 594,004,000 590,971,000
Accumulated deficit (551,145,000 ) (537,435,000 )
Total stockholders' equity 42,906,000 53,582,000
Total liabilities and stockholders' equity $ 78,627,000 $ 118,112,000
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From 10-Q header: “As of Dec. 6, 2017, there were 45,212,760 shares outstanding.”
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Latest 10K 4-30-17 iss. 7-14-17 http://tinyurl.com/ycxu4l5n PR: http://tinyurl.com/yb4wulvu (Cash 4-30-17=$46.8mm); Amended 8-25-17: http://tinyurl.com/yb5jq7vc
Latest 10Q 10-31-17 iss. 12-11-17 https://tinyurl.com/y75kwojs PR: http://ir.peregrineinc.com/releasedetail.cfm?ReleaseID=1051443 (Cash 10-31-17=$27.7mm)
ALL SEC filings for PPHM: http://tinyurl.com/6d4jw8
12-11-17: O/S Shares & ATM Sales History (’06–curr.) https://tinyurl.com/y76cbyt5
**NOTES:
1. PPHM shares were 1:7 Reverse Split eff. 7-10-17 (~315mm/$.606=>~45mm/$4.24) http://tinyurl.com/ycohqn6j
2. Per the 4-30-10 10-K (pub. 7-14-17), ALL ATM Agreements have been fully used – none remain (F-20 & F-28). If any new ATM’s are opened (and reported via Form 424B5), they go against the $67mm remaining on the orig. $150mm shelf filed via the S-3 filed 4-23-14. 10K: http://tinyurl.com/ycxu4l5n
3. The last ATM sales made (a/o the 10-31-17 10Q iss 12-11-17) were these: • Sold 5/1/17-6/30/17: $4,307,000gr./1,051,258sh. = $4.10/sh.
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Updated PPHM REVS-BY-QTR TABLE, now thru FY18'Q2(qe 10-31-17), per the 10-Q (https://tinyurl.com/y75kwojs ) issued 12-11-17.
• Total Revs since May’06: ($271.1mm/Avid + $24.1mm/Govt + $2.5mm/Lic.) = $297.7mm
• 12-11-17: FY'18 (May'17-Apr'18) Avid revs guidance $50-55mm (committed B/L=$33mm). **
• Deferred-Revs at 10-31-17 total $7.5mm, DOWN from $15.1mm at 7-31-17.
• Cust.Deposits at 10-31-17 total $13.1mm, UP from $2.7mm at 7-31-17.
• Inventories at 10-31-17 total $16.5mm, DOWN from $24.2mm at 7-31-17.
• Avid’s Gross-Profit over last 4 qtrs: $12.1mm on revs of $68.5mm (GP%=17.6)
• Recall, Avid Rev$ from Gov’t DTRA Contract work (6/30/08 – 4/15/11, totaling $24.15mm), went into GOVT-REVS, not AVID-REVS, in the Financials.
**10-31-17 10Q/p.18: “For FY18 (fye 4-30-18) we have secured 4 new cust’s since Jan.2017. However, as previously disclosed, during FY18/Q1 we experienced unanticipated decreases in mfg. demand from our largest cust. [Halozyme] and a regulatory filing delay from our 2nd largest cust., both of which will impact our ability to increase revenue during the remainder of FY’18 and potentially beyond.”
Avid’s website: http://www.avidbio.com
AVID PROFITABILITY (GROSS*) BY QTR:
QTR Avid-Rev$ CostofMfg$ Gross-Profit$ GP%
FY13Q1 7-31-12 4,135,000 2,024,000 2,111,000 51%
FY13Q2 10-31-12 6,061,000 3,703,000 2,358,000 39%
FY13Q3 1-31-13 6,961,000 3,651,000 3,310,000 47%
FY13Q4 4-30-13 4,176,000 3,217,000 959,000 23%
FY14Q1 7-31-13 4,581,000 2,670,000 1,911,000 42%
FY14Q2 10-31-13 7,354,000 4,195,000 3,159,000 43%
FY14Q3 1-31-14 3,885,000 2,416,000 1,469,000 38%
FY14Q4 4-30-14 6,474,000 3,829,000 2,645,000 41%
FY15Q1 7-31-14 5,496,000 3,583,000 1,913,000 35%
FY15Q2 10-31-14 6,263,000 4,139,000 2,124,000 34%
FY15Q3 1-31-15 5,677,000 3,113,000 2,564,000 45%
FY15Q4 4-30-15 9,308,000 4,758,000 4,550,000 49%
FY16Q1 7-31-15 9,379,000 4,608,000 4,771,000 51%
FY16Q2 10-31-15 9,523,000 4,741,000 4,782,000 50%
FY16Q3 1-31-16 6,672,000 3,896,000 2,776,000 42%
FY16Q4 4-30-16 18,783,000 9,721,000 9,062,000 48%
FY17Q1 7-31-16 5,609,000 3,062,000 2,547,000 45%
FY17Q2 10-31-16 23,370,000 15,441,000 7,929,000 34%
FY17Q3 1-31-17 10,747,000 7,974,000 2,773,000 26%
FY17Q4 4-30-17 17,904,000 11,782,000 6,122,000 34%
FY18Q1 7-31-17 27,077,000 20,448,000 6,629,000 24%
FY18Q2 10-31-17 12,782,000 16,242,000 -3,460,000 -27%
FY13 TOTAL: 21,333,000 12,595,000 8,738,000 41%*
FY14 TOTAL: 22,294,000 13,110,000 9,184,000 41%*
FY15 TOTAL: 26,744,000 15,393,000 11,151,000 42%*
FY16 TOTAL: 44,357,000 22,966,000 21,391,000 48%*
FY17 TOTAL: 57,630,000 38,259,000 19,371,000 34%*
*Avid Net-Profit (ie, incl. Selling, G&A) not split out from PPHM-Corp. in the financials.
.
PPHM REVENUES (in thousands) DEFERRED
-------REVENUES------- REVENUES INVEN-
Quarter Avid Govt Lic. TOTAL Avid Govt TORIES
FY07Q1 7-31-06 398 0 23 421 317 0 971
FY07Q2 10-31-06 636 0 48 684 1388 0 1899
FY07Q3 1-31-07 347 0 16 363 2202 0 1325
FY07Q4 4-30-07 2111 0 129 2240 1060 0 1916
FY08Q1 7-31-07 1621 0 4 1625 1820 0 2363
FY08Q2 10-31-07 1863 0 29 1892 1338 0 3500
FY08Q3 1-31-08 1662 0 13 1675 1434 0 2394
FY08Q4 4-30-08 751 0 150 901 2196 0 2900
FY09Q1 7-31-08 1193 324 0 1517 4021 980 4628
FY09Q2 10-31-08 983 958 0 1941 6472 1701 6700
FY09Q3 1-31-09 5778 1048 0 6826 4805 3262 5547
FY09Q4 4-30-09 5009 2683 175 7867 3776 3871 4707
FY10Q1 7-31-09 2070 4671 9 6750 5755 2332 6177
FY10Q2 10-31-09 5308 1510 78 6896 4260 3989 5850
FY10Q3 1-31-10 2945 6854 78 9877 3052 76 3861
FY10Q4 4-30-10 2881 1461 78 4420 2406 78 3123
FY11Q1 7-31-10 983 2111 115 3209 3719 47 4692
FY11Q2 10-31-10 3627 966 78 4671 2447 35 3555
FY11Q3 1-31-11 1922 882 79 2883 4300 40 3915
FY11Q4 4-30-11 1970 681 78 2729 5617 0 5284
FY12Q1 7-31-11 5439 0 216 5655 4145 0 4481
FY12Q2 10-31-11 4154 0 78 4232 2012 0 3178
FY12Q3 1-31-12 3203 0 78 3281 2552 0 2722
FY12Q4 4-30-12 1987 0 78 2065 3651 0 3611
FY13Q1 7-31-12 4135 0 116 4251 6056 0 5744
FY13Q2 10-31-12 6061 0 78 6139 6221 0 5426
FY13Q3 1-31-13 6961 0 78 7039 5061 0 4635
FY13Q4 4-30-13 4176 0 78 4254 4171 0 4339
FY14Q1 7-31-13 4581 0 107 4688 4164 0 5679
FY14Q2 10-31-13 7354 0 0 7354 3468 0 4033
FY14Q3 1-31-14 3885 0 0 3885 4329 0 5224
FY14Q4 4-30-14 6474 0 0 6474 5241 0 5530
FY15Q1 7-31-14 5496 0 0 5496 4670 0 5998
FY15Q2 10-31-14 6263 0 37 6300 3612 0 5379
FY15Q3 1-31-15 5677 0 0 5677 5752 0 6148
FY15Q4 4-30-15 9308 0 0 9308 6630 0 6148
FY16Q1 7-31-15 9379 0 292 9671 8291 0 10457
FY16Q2 10-31-15 9523 0 0 9523 9688 0 12554
FY16Q3 1-31-16 6672 0 37 6709 15418 0 15189
FY16Q4 4-30-16 18783 0 0 18783 15418 0 15189
FY17Q1 7-31-16 5609 0 0 5609 21531 0 25274
FY17Q2 10-31-16 23370 0 0 23370 21531 0 25274
FY17Q3 1-31-17 10747 0 0 10747 26367 0 33829
FY17Q4 4-30-17 17904 0 0 17904 28500 0 33099
FY18Q1 7-31-17 27077 0 0 27077 13433 0 24235
FY18Q2 10-31-17 12782 0 0 12782 7473 0 16518
Totals: 271058 24149 2453 297660 <=since5/1/2006
.
TOTAL REV’s BY YEAR (Avid+Gov’t+Lic):
FY04 4-30-04 3,314 …Avid(CMO)= 3,039 (Avid-Revs don’t incl. Govt-SVCS)
FY05 4-30-05 4,959 …Avid(CMO)= 4,684
FY06 4-30-06 3,193 …Avid(CMO)= 3,005
FY07 4-30-07 3,708 …Avid(CMO)= 3,492
FY08 4-30-08 6,093 …Avid(CMO)= 5,897
FY09 4-30-09 18,151 …Avid(CMO)= 12,963
FY10 4-30-10 27,943 …Avid(CMO)= 13,204
FY11 4-30-11 13,492 …Avid(CMO)= 8,502
FY12 4-30-12 15,233 …Avid(CMO)= 14,783
FY13 4-30-13 21,683 …Avid(CMO)= 21,333
FY14 4-30-14 22,401 …Avid(CMO)= 22,294
FY15 4-30-15 26,781 …Avid(CMO)= 26,744
FY16 4-30-16 44,686 …Avid(CMO)= 44,357
FY17 4-30-17 57,630 …Avid(CMO)= 57,630
...Total Gov’t Revs from 7-2008 inception thru FY11Q1(Apr’11): $24.15mm
.
PPHM’S QTLY. NET LOSS BY QTR:
FY08Q1 7-31-07 4,656,000
FY08Q2 10-31-07 6,207,000
FY08Q3 1-31-08 6,154,000
FY08Q4 4-30-08 6,159,000
FY09Q1 7-31-08 5,086,000
FY09Q2 10-31-08 4,497,000
FY09Q3 1-31-09 3,332,000
FY09Q4 4-30-09 3,609,000
FY10Q1 7-31-09 2,428,000
FY10Q2 10-31-09 2,787,000
FY10Q3 1-31-10 1,538,000
FY10Q4 4-30-10 7,741,000
FY11Q1 7-31-10 7,695,000
FY11Q2 10-31-10 7,513,000
FY11Q3 1-31-11 8,929,000
FY11Q4 4-30-11 10,014,000
FY12Q1 7-31-11 8,092,000
FY12Q2 10-31-11 12,055,000
FY12Q3 1-31-12 11,090,000
FY12Q4 4-30-12 10,882,000
FY13Q1 7-31-12 7,664,000
FY13Q2 10-31-12 8,753,000
FY13Q3 1-31-13 4,914,000
FY13Q4 4-30-13 8,449,000
FY14Q1 7-31-13 7,600,000
FY14Q2 10-31-13 7,790,000
FY14Q3 1-31-14 9,724,000
Net loss attributable to common stockholders (incl. PREF Div’s):
2-11-14: PPHM Raises $16.2M selling 700k Pref. Shares w/10.5% DIV)
FY14Q4 4-30-14 10,649,000
FY15Q1 7-31-14 14,157,000
FY15Q2 10-31-14 13,131,000
FY15Q3 1-31-15 14,027,000
FY15Q4 4-30-15 13,513,000
FY16Q1 7-31-15 15,101,000
FY16Q2 10-31-15 14,578,000
FY16Q3 1-31-16 18,227,000
FY16Q4 4-30-16 13,264,000
FY17Q1 7-31-16 12,437,000
FY17Q2 10-31-16 4,498,000
FY17Q3 1-31-17 9,216,000
FY17Q4 4-30-17 6,714,000
FY18Q1 7-31-17 2,647,000
FY18Q2 10-31-17 14,066,000
Period Halozyme Cust-A Other-Custs
FYE 4-30-14 91% 1% 8%
FYE 4-30-15 79% 12% 9%
FYE 4-30-16 69% 26% 5%
Q/E 7-31-16 65% 29% 6%
Q/E 10-31-16 77% 10% 13%
Q/E 1-31-17 29% 56% 15%
FYE 4-30-17 58% 26% 16%
Q/E 7-31-17 78% 16% 16%
Q/E 10-31-17 Cust%’s section Removed from this 10-Q)
- - - - - - - - PPHM’s Fiscal Qtr’s (FY runs May – April):
FY’10-Q3 = q/e 1-31-10 – rep. 3-11-10 Thu (B4 mkt)
FY’10-Q4 = q/e 4-30-10 – rep. 7-14-10 Wed (after mkt)
FY’11-Q1 = q/e 7-31-10 – rep. 9-9-10 Thu (after mkt)
FY’11-Q2 = q/e 10-31-10 – rep. 12-9-10 Thu (after mkt)
FY’11-Q3 = q/e 1-31-10 – rep. 3-11-11 Fri (after mkt)
FY’11-Q4 = q/e 4-30-11 – rep. 7-14-11 Thu (after mkt)
FY’12-Q1 = q/e 7-31-11 – rep. 9-9-11 Fri (B4 mkt)
FY’12-Q2 = q/e 10-31-11 – rep. 12-12-11 Mon (after mkt)
FY’12-Q3 = q/e 1-31-12 – rep. 3-9-12 Fri (after mkt)
FY’12-Q4 = q/e 4-30-12 – rep. 7-16-12 Mon (after mkt)
FY’13-Q1 = q/e 7-31-12 – rep. 9-10-12 Mon (B4 mkt)
FY’13-Q2 = q/e 10-31-12 – rep. 12-10-12 Mon (after mkt)
FY’13-Q3 = q/e 1-31-13 – rep. 3-12-13 Tue (after mkt)
FY’13-Q4 = q/e 4-30-13 – rep. 7-11-13 Thu (after mkt)
FY’14-Q1 = q/e 7-31-13 – rep. 9-9-13 Mon (after mkt)
FY’14-Q2 = q/e 10-31-13 – rep. 12-10-13 Tue (after mkt)
FY’14-Q3 = q/e 1-31-14 – rep. 3-7-14 Fri (B4 mkt)
FY’14-Q4 = q/e 4-30-14 – rep. 7-14-14 Mon (after mkt)
FY’15-Q1 = q/e 7-31-14 – rep. 9-9-14 Tue (after mkt)
FY’15-Q2 = q/e 10-31-14 – rep. 12-10-14 Wed (after mkt)
FY’15-Q3 = q/e 1-31-15 – rep. 3-12-15 Thu (after mkt)
FY’15-Q4 = q/e 4-30-15 – rep. 7-14-15 Tue (after mkt)
FY’16-Q1 = q/e 7-31-15 – rep. 9-9-15 Wed (after mkt)
FY’16-Q2 = q/e 10-31-15 – rep. 12-10-15 Thu (after mkt)
FY’16-Q3 = q/e 1-31-16 – rep. 3-9-16 Wed (B4 mkt)
FY’16-Q4 = q/e 4-30-16 – rep. 7-14-16 Thu (after mkt)
FY’17-Q1 = q/e 7-31-16 – rep. 9-8-16 Thu (after mkt)
FY’17-Q2 = q/e 10-31-16 – rep. 12-12-16 Mon (after mkt)
FY’17-Q3 = q/e 1-31-17 – rep. 3-13-17 Mon (after mkt)
FY’17-Q4 = q/e 4-30-17 – rep. 7-14-17 Fri (after mkt)
FY’18-Q1 = q/e 7-31-17 – rep. 9-11-17 Mon (after mkt)
FY’18-Q2 = q/e 10-31-17 – rep. 12-11-17 Mon (after mkt)
= = = = = = = = = = = =
“Going Concern” stmt. ELIMINATED from 10-K pub. 7-11-13; RE-INSTATED in 10-K pub. 7-14-17…
2012: 4-30-12 10-K iss. 7-16-12 Pg.68: “As more fully described in Note 2, the Company’s recurring losses from operations & recurring neg. cash flows from operating activities raise substantial doubt about its ability to continue as a going concern.” http://tinyurl.com/79o57b2
2013 & 2014 & 2015 & 2016 10-K's: http://tinyurl.com/p58jcbw etc...=> (((NO GOING CONCERN STATEMENT INCLUDED.)))
2017 7-14-17: “Going Concern” re-instated in the 4-30-17 10-K (pg.13) http://tinyurl.com/ycxu4l5n
CASH a/o 4-30-13: $35.2mm
CASH a/o 6-30-13: $42.6mm
CASH a/o 7-31-13: $41.6mm
CASH a/o 10-31-13: $44.4mm
CASH a/o 1-31-14: $63.2mm
CASH a/o 2-15-14: $79.7mm
CASH a/o 4-30-14: $77.5mm
CASH a/o 6-30-14: $78.3mm
CASH a/o 7-31-14: $73.3mm
CASH a/o 10-31-14: $64.4mm
CASH a/o 1-31-15: $55.2mm
CASH a/o 4-30-15: $68.0mm
CASH a/o 7-31-15: $59.0mm
CASH a/o 10-31-15: $72.0mm
CASH a/o 1-31-16: $67.5mm
CASH a/o 4-30-16: $61.4mm
CASH a/o 7-31-16: $44.2mm
CASH a/o 10-31-16: $49.5mm
CASH a/o 1-31-17: $41.5mm
CASH a/o 4-30-17: $46.8mm
CASH a/o 7-31-17: $37.3mm
CASH a/o 10-31-17: $27.7mm
= = = = = = = = = = A look at #Employees per the 10K’s…
2011 10-K: "As of 4-30-11, we employed 154 full-time emps & 2 part-time emps”
2012 10-K: "As of 4-30-12, we employed 172 full-time emps & 2 part-time emps."
2013 10-K: "As of 4-30-13, we employed 182 full-time emps & 5 part-time emps."
2014 10-K: "As of 4-30-14, we employed 180 full-time emps & 4 part-time emps."
2015 10-K: "As of 4-30-15, we employed 211 full-time emps & 4 part-time emps."
2016 10-K: "As of 4-30-16, we employed 281 full-time emps & 3 part-time emps."
2017 10-K: "As of 4-30-17, we employed 319 full-time emps & 4 part-time emps."
2017 Q/E 7-31-17: On 8-9-17, we commenced a restructuring plan… expect to be completed in Oct’17… reduced workforce by 60 emps (20%), reduced R&D from 22 to 11.
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