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agree... here's an sec filing from feb about lias relocation stuff.... had some deadlines to move to get reimbursed...
http://ir.avidbio.com/node/18041/html
chart is way oversold and lias replacement is better imo having actually been a ceo ...
think about this.... extra capacity w/o expansion is maybe $45 mil range.... not much when looking at BP needs for commercialization of a drug that could be used with ten other cutting edge I-O drugs... and you can't switch horses that easily... particularly on something as big as enhaze could get in short order... one possibility for delay is halo/roche and others are estimating demand over next two years....both halo cc and cdmo cc mention estimating demand... my guess enhaze could take all of CDMO capacity and expansion.... per last couple cc's, halo has been planning for their enhaze commercialization with their suppliers.... AVID... are you in or out? if out we need to go elsewhere... They should have these estimates by now.... this could be the delay in signing new orders if enhaze is the game changer play...
What I am saying is grab as much halo biz as possible and sell the company to a bigger company where the risk of having one client would not be a problem. And given the halo biz could lead to biz with several major BPs as they combine enhaze with their I-O drugs, a bigger CDMO would love to get their hands on that kind of biz. And a bigger CDMO would not need as much admin overhead in Tustin.
I believe the "new" manuf facility is related to Avid...
The enhaze program with Halo could explode in the not too distant future....
https://s21.q4cdn.com/250105458/files/doc_presentations/2019/HALO-010919-JPM_FINALv2.pdf
CDMO mgmt wants to diversify client base to reduce risk which would put a limit on a client wanting to do biz... not a good problem to have cause it forces a client to look elsewhere and one could lose the biz if the new source could take all the biz.... but another bigger CDMO would not have that problem with diversification and would love that biz...
So what avenue is best for getting risk adjusted value? My guess is someone ie acquirer will pay discounted value on a teed up deal with predictable and measurable dcf... if the demand for enhaze is strong and CDMO is in a position to capture this biz then the SP at $3.70 is undervalued... how much impact on value does a Lias situation have in the above scenario? not much given the replacement has a better resume...
Hopefully we have some smart folks at the helm that can get the best risk adjusted value... Tappan, Ronin etc will know when to hold em and fold em because they want to make a bunch of money... For once I am comfortable having a good BOD where the entire 7 member bod is cheaper than one member of the previous bod with 100 times the experience.
Not too worried about contract announcements because cdmo is at the mercy of client in terms of release and most of the biotech clients don't broadcast what they are doing to the world. Could be many factors including roger might of been good in one area like strategic planning .... also Raleigh area vs SoCal is totally diff.... one has to want to live is SoCal imo.. Hancock's company that was sold is located in SoCal. now it's revenue build and hopefully sale of company..... The lead shareholders and BOD are profit motivated versus suck on the teet bod that was more interested in holding on to the $500k allowance. I also don't think mgmt cares about SP when institutions prob want shares and mgmt usually awards options after FY end and the CC in mid july.
We went from having the worst BOD on nasdaq to one of the best. I would prefer that any corrective action be taken if needed. With Tappan, Ronin etc on board watching their investments and a BOD that actually knows what they are doing and knows what needs to be done including leadership changes, then the changes will hopefully be made sooner than later. Lias did a good job imo getting the ship ready. Whether Lias was asked to leave or wanted to leave for whatever reasons, so be it. Hancock seems to have a better resume so we should be in good hands. Right now is execution time. The market is out there. At a minimum the company should be a takeover candidate w/ a decent halo contract and potential w/ expansion capacity. This will put pressure on them to start defending SP.
agree and i think of this old chinese proverb.... is it really a bad thing? we will see as this plays out...
https://www.thoughtco.com/chinese-proverbs-sai-weng-lost-his-horse-2278437
Hancock has a strong resume and prob has better skill set for the next leg of this journey given he was ceo of a cdmo that was sold. I thought Lias did a great job turning the ship around.
yes part of the issue was biosimilars cutting into roche products.. from reading halo investor presentation, enhaze could allow reformulation w new patent protection... so short term blip imo and not fully researched... what is gaining traction is the delivery mode of enhaze which makes treatment a lot faster and more efficient vs IV delivery...
Key highlight of HALO earnings report..
"In February 2019, we announced that Genentech, a member of the Roche Group, received approval from the FDA for Herceptin Hylecta™, a co-formulation of trastuzumab and rHuPH20. Herceptin Hylecta™ is approved for the treatment of certain people with HER2-positive early breast cancer. Herceptin Hylecta™ is a ready-to-use formulation that can be administered in two to five minutes, compared to 30 to 90 minutes for intravenous trastuzumab. In April 2019, Roche made Herceptin Hylecta™ available in the U.S."
go back to the cdmo last cc regarding halo.....
and others working on ENHAZE.... things are getting interesting.... when will they need the extra capacity?
The FY 2019 ends 4/30/19 and the CC for past years has been mid July. Lias stated on both qtr cc's and in some presentations that the work they are doing is gearing up for FY 20. My guess is rev updates related to halo and the "contracts" they are working on will be disclosed at that time.
Given they reworked and consolidated all the employee option programs in December, my guess is options awarded between now and July CC.
At 85% capacity they should be able to get to $85 mil revs (they have 43 mil backlog for fy 20) plus 25% process dev rev. AT 5 times sales multiple, the sp should be $8 to $10. A recent comp valued another biologic manuf at 6.8 multiple. They should be able to hit these numbers. And this assumes zero contribution from bavi/oncologie milestones. All imo.
Great.... we can get info real time....
If you are in the area, you can get building permit info from the city of Tustin in person. The info is not on the internet. My source says last permit was mid dec. Stephanie has some explaining to do. Just wonder if any large investors are informed. Per Lias past presentations, it appears expansion would be a material event....
The question is whether the landlord is building out the space which is typical in leases... a tenant will trigger the expansion per the lease and the rent will typically increase as money is spent.... so Stephanie's answer could technically be true.
I would leave the preferred alone and do a capital raise in conjunction with contract announcements and the reason for expansion.... timed right it should not be too dilutive and would recover quickly vs the death spiral financing the previous clowns did...
Remember that Ronin wanted to speak at ASM and present his plan and SK told him no..... SK thought he had the power to keep Ronin crew out... SK got booted when he lost the battle... same with PL and glad to see both go....imo the had zero respect for shareholders while at the same time funding the company on shareholder backs...
Now if mgmt can get FY 2020 rev's to $85 mil which is 85% capacity ($43 mil backlog now) on Manuf rev plus 25% Process dev per Lias breakdown, so ballpark $105 mil rev's times 6 multiple for $630 Mil MC or ballpark $10 per share. Plus add in value for expansion which costs $30 mil for another $100 mil rev times 5 or 6 multiple and you get and $500 to $600 additional value. Then add the bavi lottery ticket which has zero value now...
Sooner or later Lias has to start showing progress as it relates to SP...
Hopefully sooner and most likely by mid july CC...
cdmo could have a tenant improvement allowance in their lease .. all part of the rent package.... and it makes sense to get the shell work done...typically tenant triggers work when needed and rent adjustments are made as money spent... we might have to wait for the mid july cc when annual results are presented to find out about future revs... halo... new contracts ... expansion plans etc... would not be surprised if they fly below radar until then... IB's need another retail shakeout...
bavi in two trials now.... one enrolled early for brain cancer and other is with keytruda... i think these are open label ... others planned per oncologie website... both w/ merck drugs so if it is going to happen, merck has first look... if they work i guess merck works w/ oncologie all imo
https://www.oncologie.international/ongoing-trials
yes human nature is still in play... hopefully some better operators this time around... if you compare 2017 proxy to 2018 proxy, SK and PL and JS have no shares and I believe the current crew will put those options back in play... have no problem with mgmt team making money... the old fashioned way by earning it...
as for square footage comparisons... yes prob a factor... but values are based on revs ... not SF
read the last cc transcript... they are gearing up ... pay attention to the halo discussions and look at halo presentations w/ enhaze .... i am very happy w/ progress
as for institutional interest, three 13g's filed within a week of each other in feb including tappan increase to 8.6%. i spoke w tappan folks when they first got involved... i thought pphm value was bavi at the time and tappan said avid was the value play... ronin folks said the same thing w/ their public letter
as for sp value and mgmt's timing, they filed an S-8 in dec which basically consolidates the option programs for employees.... i don't think there is any hurry on SP until some of the options are distributed ... Lias said on an earlier cc that all the work they are doing won't show until fy 20 which starts may 1 ....
http://ir.avidbio.com/static-files/60b13425-406a-4819-92ff-533f8aaad271
we should be a takeover target in the not too distant future so Lias needs to show value in current sp ...and the bod is not married to this company with $500k paychecks.... all imo
interactive cdmo chart.... at first glance it looks like a lot of competition .... but many companies don't manuf biologics
https://www.kurmannpartners.com/cdmo/
click on company to go to company website....
based on initial review, not many biologics manuf below $250 mil rev's .... have not looked at companies above $250 mil rev
many of the companies on chart are overseas in europe or china...
here are the brammer bio cliff notes... $1.7 bil sale
https://www.fiercebiotech.com/medtech/thermo-fisher-to-buy-viral-vector-maker-brammer-bio-for-1-7b
"The lab equipment giant estimated that Brammer Bio will deliver $250 million in annual revenue by the end of 2019, and expects its growth to outpace the 25% rate projected for the larger gene and cell therapy market."
At $1.7 bil, it's 6.8 multiple on forward looking revs ...
what does the picture look like w/ avid and halo and other contracts over the next fiscal year which starts May 1?
Interesting M&A art on Pharma overall with segment on CDMO market.... page 13 talks about biologics cdmo's demand higher multiples and are rare targets... once we get clarity on Halo and other contracts and expansion timeline, we should be a takeover target IMO
https://www.kurmannpartners.com/fileadmin/user_upload/import2015/MR-Pharma_Biotech/KP_Pharma_M_A_report_2019.pdf
another lottery ticket... i check oncologie website from time to time... this is new to me... the potential value to cdmo is in any milestones for trials ...
https://www.oncologie.international/our-pipeline
Varisacumab is an investigational monoclonal antibody that uniquely blocks the epitope for vascular endothelial growth factor A (VEGFA), binding only to VEGF Receptor 2 (VEGFR2). VEGF is a validated cancer pathway, and new understanding shows the importance of selectivity on the receptor VEGFR2 compared to VEGFR1.
Oncologie acquired Varisacumab from Avid Bioservices, Inc. in October 2018.
on another topic... the persistent shorting as evidenced by the circuit breaker yesterday makes me wonder about a capital placement on the near term horizon... and given the ad for a project engineer, one doesn't hire a full time engineer for a small lab expansion... if there is projected add rev from expansion, the dilution should be offset by discounted value of future revs... and is mgmt really going to bat for shareholders or is this groundhog day with the option grant game.... they reworked the plan last dec per dec filing... hopefully mgmt understands what happened to the last regime when they put their own interests ahead of shareholders...
Any guess on finra naked shorts today? My guess plus 70%.... these sellers would have sold yesterday if they were "sellers" imo.... accumulation or placement soon or both...
I thought the cc was great.... and remember releasing contract details is up to the client.... IMO we are close to capacity in existing facility and headed towards expansion of the vacant space (all speculation on my part).... granted several things have to go right and several things can go wrong both inside the control and outside the control such as a trial failure (we know all too well)...
On the back of a napkin valuation using 5 times sales and a 10% vacancy factor (i'm real estate so whatever the equivalent term for manuf)... $100 mil capacity plus 25% lab rev ($125 mil)x 90% =$112 mil times 5 multiple gives a $560 market cap and 60 mil shares equals $9 SP. No contribution from Oncologie which is basically a lottery ticket. As for upside.... same numbers as above given $100 mil in add capacity upon completion which costs $30 mil per Lias presentation. Discount that rev stream back for add present value... so in my book $560 mil plus anywhere from $200 to $300 mil add value translates $11 to $13 per share assuming some dilution for cost of build out... all imo and back of the napkin ballpark... is there something I'm missing? And if the M&A market is still hot, we should see some action if we continue to be undervalued.... the current BOD is not compromised with $500k annuities
interesting job opening...
https://avidbio.applicantpro.com/jobs/1006473.html
basically a parking ticket... they prob made a lot more than $2 mil for violations...
http://www.finra.org/newsroom/2019/finra-fines-cantor-fitzgerald-2-million-regulation-sho-violations-and-supervisory
yes.... could that be in the works? i don't know... the chicken and the egg... capacity/deal or deal/capacity... with construction and lead times, one has to think they need to get started... will be interesting to see finra shorts... and one doesn't know how much each party will pony up... tenant finish, equipment, installation and testing costs etc... a $10 mil raise or more would not surprise me to cover some of this... you have to finish out the building just to get going...
read the halo cc transcript and the latest halo investor presentation
https://s21.q4cdn.com/250105458/files/doc_presentations/2019/HALO-010919-JPM_FINALv2.pdf
cdmo produces for roche/halo .... expansion/capital raise around the corner?? .... someone wants your shares... all imo
and the last cdmo cc transcripts (excerpt below)
Equally as important as engaging new customers is the increasing strength of our relationships with our existing customers. During Q2, we gained increased visibility into forecast for several of our larger ongoing programs. Customer concerns related to confidentiality prevent us from sharing these specific projections based on this information at this time, but we believe demand from these customers will positively impact revenue, margins, and capacity in the coming quarters. Unsurprisingly, given the history of the relationship between our two companies and its importance, we are frequently asked about our business with Halozyme Therapeutics and the outlook for continued commercial manufacturer of enzyme products used in their enhanced platform by their partner companies such as Roche. Our relationship with Halozyme remains strong and we were able to review, both technical & commercial progress with our colleagues there at a recent business review meeting. Halozyme’s booked sales of recombinant human hyaluronidase enzymes and enhanced drug products have recently increased, and this trend is expected to continue into 2019, as Halozyme partners advance their clinical programs and begin preparing for commercialization.
interesting language and terms in 8-k..... Lias relocation stuff......
one possibility...
.....tee it up and sell it within two years could be in play imo.....
Assuming those groups mentioned own the following based on latest filings:
Tappan 4,854,100
Dart 4,300,993
Ronin Group 2,362,000
and you get 60% institutional ownership.... no wonder why there is 70 to 80% naked shorting on some days... shares are probably not available... all imo
I went over the sec filings and found this doc from dec 10... if i read it correctly, they are totally reworking the options for the company rolling all the incentive plans into one and letting lapsed options roll into new... 7.2 mil shares... big section on director indemnification in doc... makes sense and they will time news to their advantage... glad employees will benefit... imo the old crew took most of the spoils... my guess is private placement before news cycle starts (sneak a few option grants in the meantime)... could be another group of pirates but lets just hope the current crew is more competent this time
http://ir.avidbio.com/sec-filings/sec-filing/s-8/0001683168-18-003651
agree and the deals they have been talking about require expansion down the road.... how far down the road? could happen tomorrow with someone signing the dotted line... build out would take a year and a client would want to see the capability of expanding (which includes financial resources in hand).... they should have enough visibility to make some moves...just building out the vacant shell would take $70 a sf (or more) times 40,000 sf so roughly $3 mil just to start... all WAG
this is all based on halo ramping up and continuing with avid as a supplier...
so the prospectus is prob out like last year (jan 25) for the placement they announced feb 14 2018.... placement coming imo short term pain but expansion is where the value will be .... $30 mil cost for $100 mil additional rev potential and using a five multiple on rev equates to a $500 mil val add...
when i spoke with the tappan guy right after they filed their first filing, he said this is the value play...
we should recover much quicker than last one given we are further along the plan... all imo
Blackrock also recently filed a 13 d for Halozyme
http://d18rn0p25nwr6d.cloudfront.net/CIK-0001159036/5e5b236d-43f9-48ba-a832-b1eeff86f5bf.pdf
after reading cdmo latest cc transcripts, all the "big" deals they are working on would probably require the ability for capacity expansion IMO... the clients are not going to saddle up with Avid unless Avid can handle program expansions... ie the sticky part of the equation.... my guess is an equity raise in the not to distant future to satisfy ability to expand... short term pressure on price but big rev expansion potential which is where valuation inflection point will be ... if correct on this assumption, the timing of contracts should mitigate pricing pressure... and AVID is at the mercy of clients in making any announcements....all imo
new 13G Blackrock...
http://ir.avidbio.com/node/17976/html
on another note, HALO ready to ramp up trials where Avid has been a major supplier
pg 9 and 13....
https://s21.q4cdn.com/250105458/files/doc_presentations/2019/HALO-010919-JPM_FINALv2.pdf
yes but it is a little more complicated given the logistics and construction times, approval times etc. IMO they should be planning and ordering equipment with long lead times.... I think Lias is on the ball with this and having a BOD with actual experience is a plus here. They should have enough visibility to plan accordingly and they will not telegraph what they are doing. Hopefully we become a takeover target if SP lags value and we don't have an entrenched BOD tied to outlandish pay which would prevent a decent takeover price. If in fact they were at the JPM conference that was mentioned in a post, we imo are playing in a different league. Again frustrated like everyone else.
And we have real analysts asking the right questions and Lias can't hide the Avid numbers like the previous crew did with the overall PPHM reporting.