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I’m a shareholder too. I don’t like how things have played out and speculating on what they could have done to protect the share price is a futile effort in my opinion. Just looking at how they framed this expansion it is quite possible that any potential promissory notes occurred prior to this entire scenario playing out as it did. They were committed already and had no choice but to follow through.
Everyone was fooled by inflation including a lot of top economists that expected inflation to be very short lived.
Sh__ happens. The most important question they should be asking is, What’s Important Now? The fact that they won later stage business in the first quarter tells me that is the question they are asking. They are following the money winning later stage business that, in such a sticky environment, has to be applauded. Agree with a prior poster that indicated that later stage pipeline business is more valuable than start up business because of what it can lead to. Not easy to win business from other CDMO’s unless there were capacity constraints.
As far as their salaries let’s see how things develop. I agree wholeheartedly that they must worthy of such rewards. I just want to give them a bit more time. I believe we will be okay in the end. I’m still a believer!
It’s been a very tough market for financing of new biotechs for the past 2 years culminating in the worst stats for such in the first half of 2023. Avid has been executing on expansion for the majority of that time. Yes it would be great had they had companies lining up prior to the completion of expansion. They may have had promissory notes likely with contingencies. They may have not seen such a downturn in investment. When contingencies are not met the promissory notes terminate without any payments being made. The point is the downturn timing was tough and likely caught the entire industry by surprise. The key is although the tough market continues there are signs of improvement in this second half of 2023. Maybe they will have the opportunity to revisit some of those companies that they could have had contingent promissory notes with prior the downturn. And had they been done with expansion at the inception of the downturn instead of what appears to be the end of the downturn we would likely be having a much more difficult conversation. The experts see this turning in the second half of 2023 going into 2024. Do your own research.
Excuses are not of any value when building businesses. But Nick and company should be afforded a little extra time to deal with the potential curve ball thrown to the entire industry. The experts see things improving and possibly significantly going into 2024. It is what it is. IMHO I side with the experts. improvement is coming.
More researched facts and projections:
The global CDMO (Contract Development and Manufacturing Organizations) Industry market is projected to reach a size of 278 billion dollars by 2024.
The CDMO industry is expected to grow at a CAGR (Compound Annual Growth Rate) of 12.4% from 2020 to 2026.
The market for CDMOs is expanding because of a number of developments, including the expansion of small and mid-sized pharma and biotech firms, the trend toward personalized medicine, and the rising need for biologics.
The Pharmaceutical Contract Development and Manufacturing Organization (CDMO) Market revenue in the United States was valued at USD 54.21 billion in 2023.
While China and India have established themselves as significant providers of API manufacturing services, the United States continues to be the main outsourcing hub for pharmaceutical companies.
The Biologics CDMO Market size is expected to grow from USD 15.83 billion in 2023 to USD 33.95 billion by 2030, at a CAGR of 11.51% during the forecast period (2023-2028).
Bottom line: the market, albeit currently tougher, is poised to come back soon and offers viable opportunities for Avid’s growth in my opinion.
Some interesting industry facts and projections that effects Avid’s potential.
“But the last two years have seen venture capital and overall funding within the industry dry up due to the economic downturn, which has heavily impacted many biotech companies.”
“Although the biotech IPO slump continued through the first half of 2023, there are promising signs of recovery in the industry. While investors have become more cautious, they appear increasingly interested in later-stage biotech companies with compelling clinical trial results.”
“Sees brighter times for biotech
In the coming 12 to 18 months, the investment company expects the majority of biotech companies to recover from the low levels prevailing at the moment.”
“Inside the market of emerging biotech’s
In its latest quarterly report, IPO research firm Renaissance Capital said it expects a “steady rise in listings” in the second half of 2023, citing a pause in interest rate hikes and improving returns among this year's debuting companies.”
This too will pass.
https://www.tipranks.com/stocks/cdmo/forecast#
So who is right Zacks or these analysts? Quite a dichotomy.
Try 714-508-6100
Concerning margins taking a hit there were increased costs because of labor, overhead and increased depreciation because of hiring of personnel and additional facility and equipment-related cost ahead of the mammalian and cell and gene therapy facility expansions. Added expenses. Obviously as they fill capacity margins will rise accordingly.
Concerning having enough added business to cover expansion costs I somewhat recall that was the intent but I don’t recall Nick ever indicating definitively that they met that goal. I personally would be surprised if they were able to pull that off prior to breaking ground on expansions. Just too many unknowns and potential delays. Most prospective customers would likely look elsewhere for a more stable process unless Avid was providing sweetheart deals to incentivize new signings reliant on the completion of expansions. I doubt they did that. But who knows. AIMO.
Anyway they can fill capacity, even temporarily, works.
I’m not sure what you mean by modify the annual shutdown or overhaul but currently with excess capacity they should be able to run at full strength year round without interruption and still complete the full annual overhaul. That is assuming the new equipment brought in during expansion is appropriate for the affected project runs.
Frankly I look forward to the day that the annual overhaul impacts capacity in the corresponding quarter again. That means capacity is close to full, if not 100% full, and we are on our way to maximum value! They will get there.
All the selling is likely pre-planned under rule 10b5-1. It is the best way to ensure there are no concerns with the SEC. Because it is pre-planned they sometimes sell at deflated prices. It is added income at pre-planned intervals.
“Rule 10b5-1 permits major holders to sell a predetermined number of shares at a predetermined time. Many corporate executives use 10b5-1 plans to avoid accusations of insider trading.”
https://www.investopedia.com/terms/r/rule-10b5-1.asp
It’s the proper approach legally.
And when I say I think it will take several more quarters I meant that sales will likely be flat for several quarters before they get their legs and really start closing accounts. I didn’t mean it will take several quarters to fill capacity.
All I can talk to is my experience which includes almost 30 years in manufacturing concluding in co-starting a successful software business in which I sold my stake in the business and retired. It didn’t sound from the questions in the call that the participating analysts understood the dynamics. But that is speculation.
It’s important to understand from a potential customer with a more aggressive timeline standpoint — signing with a CDMO “relying on an expansion” to service said customers needs is just too risky. It would be tough for any organization, regardless their stellar track record, to close those potential accounts. The risk is not only in potential timeline being moved back because of delays but in concern for any new process to be fine tuned prior to mass production. Thus they choose other suppliers.
And those potential accounts with far less aggressive timelines know that any risk will be mitigated by the time their runs are scheduled for production. Such accounts are far more easily closed. Thus an increase in backlog, as was reported, yet flat projections for this coming fiscal year. It’s all timing. Once they get past this expansion period and iron out any issues that inevitably arise with new operations I believe sales will take off expeditiously and that 400 million in capacity will be filled promptly! I anticipate this taking several more quarters. Everything has happened as can be expected in my opinion.
Flat sales based on what?
:: Significant increased demand based capacity.
:: Services from A to Z
:: Stellar regulatory record
:: Increased sales force
:: Increased trained workforce
:: More phase 3 products
:: Etc. Etc.
I think Nick is “projecting” low to set up a year of projection beats. Not deceitful — just very conservative. Resetting the bar…
Avid should be incorporating AI if they want to stay ahead of the curve. CDMOs that embrace AI technologies and foster a culture of innovation are likely to gain a competitive edge in this rapidly evolving landscape. It only makes sense from manufacturing optimization, quality assurance and compliance and accelerated drug discovery standpoints. Go big or go home. Let’s see if they unveil their future plans at the next meeting. It is definitely material information.
So looking at the 5 warning signs cited in these articles, the one that really stuck out to me was earnings are supposed to decline by 13.6% over the next 3 years. Wow was that their objective with these expansions — to destroy earnings. Hmmm questionable stat to say the least. These articles have little worth in my opinion.
Wall Street Journal has CDMO with 4 buys and an average expected price of $22.25.
https://www.wsj.com/market-data/quotes/CDMO/research-ratings
Let’s not spread misinformation for political reasons. I see nothing concerning ESG in their statements. Being environmentally responsible is good business.
Catalent company said that macroeconomic conditions explained the earnings drop. These conditions include inflation, an unfavorable foreign exchange rate, and short-term, cash-sensitive decisions by some of Catalent's customers.
I don’t know if Zeibell is responsible but it seems they communicate in a very defensive manner. I doubt anyone wants fluff or bs but they don’t even communicate new contracts as they happen. And we know they happen because the backlog continues to grow and the company continues to progress. They just don’t tout it. Yes we hear about the growth in backlog at the end of the quarter and that is legally sufficient — but in terms of promoting a growth company—that is the absolute minimum that can and should be done. We individual investors are not the enemy. We only want success for this company. We support them fully and appreciate their efforts. As long as they are honest they have nothing to fear from us.
Zeibell was the guy who guided the ship under old management. Because of that group’s less than capable and honest ways, in my opinion, a defensive approach was legally necessary. That is no longer the case. It’s a totally different company with different leadership. It deserves a completely different approach legally and more importantly promotionally. There is no need to look at retail as the potential enemy any longer. Promote new contracts as they happen. Be honest an up front. Support the share price with facts as they happen. Manage with confidence not fear. We are so fortunate that change came when it did. We are thankful and appreciative for our new found success. There is nothing to fear from retail shareholders. Support us as we support you. More importantly support the share price by touting “FACTS” as they happen so that no entity can come in with a lower that expected bid and potentially buy the company at lower than desirable price point. Support the share price by showing confidence and buying shares, where and when legally possible, with open market transactions. If Zeibell is responsible for this defensive approach then by all means change would be positive, in my opinion.
I agree. I don’t want watered down bs. I just want them to protect the share price with facts at this vulnerable time. Diversity in prospective customers is valued. They have indicated from the start that they don’t want all their eggs in one basket. All new customers big and small represent success. That is strategically smart.
They are maneuvering as good as can be expected from a company standpoint in my opinion. And they are attractive from a buyout standpoint for obvious reasons. Protecting the share price at this time ensures that any suitor pays a premium for a premium company. Let’s get the price back up to ensure that CDMO cannot be gamed. It is just a timing concern.
Personally I hope leadership understands the need to begin announcing new business as it occurs — without giving details if the customer wishes to keep such information undisclosed. Waiting until the quarterly to announce general numbers, although legal, is not wise in my opinion. Why not show a pattern of growth as it occurs. Support the stock price by disclosing positive facts immediately. It only makes sense.
Great insight. These guys are systematically brilliant. I spent most of my career in manufacturing and know how critical it is to have strong systems in place regardless the complexity or lack there of in the products being produced. Systems make or break manufacturing companies. Most insightful articles I have read to date. We’re in very good hands. Just need to navigate this transitional time. Need to protect against any low ball buyouts. The next few quarters will be critical in my opinion.
It could be a suggestion from their new people director to develop a reputation as a good corporate citizen and a good place to work (and even a good place to get laid off from). Just making it more attractive for employees.
We know this upcoming reported quarter is not going to be stellar because of planned machine overhauls. But it is all planned and should be reflected in the quarterly expected numbers. We know the backlog has continued to grow. We know that the expansions are on schedule or possibly even ahead of schedule. There has been no negative news to date. It appears institutional ownership is still above 115% according to Fintel. Yes peculiar but I see it as a positive. We know the market has been brutal for the majority of companies. We know the CDMO market is in great need of further capacity. We also know the CDMO business is very sticky making it highly difficult for companies to change manufacturers. I guess we wait and see how things develop but right now everything seems very positive. If there is a why it has not been divulged publicly. We wait and watch.
I want to remind everyone where we came from. And more than that where we are going. I don’t know the intent of the BOD. It does seem at times that they resent retail. But I don’t want that to cloud my mind. All I see is a clear vision and a “management group” that, to date, has exercised that vision as flawlessly as one can expect. I see a CEO that rules through vision and praise of others which, in my opinion, shows true leadership and strength of character. I trust in him and his team and believe he will lead his team to capitalize on the great potential of this opportunity. I believe that a man of character would refuse to allow outside forces to hurt his team through a less than ethical approach. And I know if he openly allows less than ethical practices to hurt his supporters then he is hurting his team for we are all shareholders including the members of his team. He does not strike me as the type of person that would allow that. I see a bright future under his leadership. A future that we will all share in. Allow things to fully develop. I believe in the end we will all be nicely rewarded. Trust.
https://finance.yahoo.com/news/does-avid-bioservices-cdmo-potential-135501119.html
Interesting article on Avid.
Games. Needs to stop soon.
The difference is Aveo was in the low $5’s at the beginning of the year. That’s quite a jump to $15. It had sustained growth since May. Apples and oranges with CDMO. We have plateaued. We will likely see that same sustained growth pattern prior to any buyout.
All I can say is they got back to work pretty quick which is all good. Supply issues have not affected expansions.
Call your broker.
Yes but you need a control number??
AVID BIOSERVICES, INC. is hosting a Virtual Stockholder Meeting on Tuesday, October 18, 2022, at 10:00 AM, PDT and the stockholders of record will be able to vote and ask questions online during the meeting. If you would like to attend the virtual meeting and have your control number, please log in 15 minutes prior to the start of the meeting.
Wouldn’t it be nice if there were no party affiliations. Everyone took responsibility for improving their own situations. Judgement was non existent. Leaders were chosen for their goodness, morality and strength of character. Everyone tried to contribute to making this world a better place and didn’t place that sole responsibility on elected officials. We all became the stewards for future generations and didn’t get so self absorbed. Can you imagine? CDMO will contribute to that possibility for all of us. I believe it is that powerful an investment. All we have to do is change our focus. It will never be a perfect world because I know I get caught up in taking sides at times and complaining when I perceive things as less than optimal. But I try to catch myself and ask myself, “ What am I doing to make things better for all?” Can you imagine?
On August 1, 2022, Delaware corporations became authorized by statute to include a provision in their certificate of incorporation exculpating certain officers from personal liability for breaches of their fiduciary duty of care in actions brought against them other than those brought by or in the right of the corporation.
Brand new statute that they are taking advantage of. I don’t think it’s anything nefarious.
What the bill proposes is starting in 2026, assuming this bill becomes law, Medicare can negotiate 10 drug prices. And then in 2027, it can negotiate 15, and by 2029, it can negotiate 20. Though nobody knows specifically which drugs just yet. Medicare will “not” be able to negotiate all drugs. The bill will focus on high-cost drugs that are covered under Medicare Parts D or B, meaning they're retail prescription drugs or administered by a physician. And they have to have been on the market for a while to be eligible for negotiation. For some drugs, it's nine years, and for others, it's 13.
In my opinion based on the facts above there will be a nominal effect on drug research and development. And it may make CDMO capabilities more in demand.
Lithium is not the future. Solid state batteries are the future. Future generations deserve better from us. We should all want to pass on a healthy planet. So instead of looking for reasons to say we can’t do this. We should all be looking for solutions. I am a true Reagan conservative who happens to live in Colorado breathing the smoke from all the recent fires (along with my grand daughter and grand son) knowing that Climate change is a real issue. I am not supportive of this current Republican Party. I don’t watch cable news. They are not the party that I once knew. I also despise the beliefs of the far left. Look for solutions together in the center. Dissension is much healthier there.
I agree wholeheartedly. Those stimulus checks likely had a nominal affect. The Russian Ukraine war, the rush on demand as pandemic eased and the supply chain issues because of work force reductions during pandemic and China shut downs had the bulk of the effect on inflation. But good discussion. I think it important that we all come to the center and work together as one people, one nation. The sooner that happens, the sooner our economy will get back on track and our investments will reap the benefit. Far right and far left beliefs only work to destroy this country and any investments we may have domestically.
Corp you’re making too much sense. Stop it. -) Hopefully we get good news this coming quarterly. This stock will find its true value once again.
That’s logical. I’m hoping we’ve seen the worst of this and we can continue the climb back to stronger valuations.
Point taken.
Keep an eye on this situation with a 40% owner who has questionable history with CDMO/PPHM. CDMO should never be sold at fire sale prices to “any” entity. It has been doing everything right and setting up to be a bigger player in this industry. Hopefully Blackrock is a supporting entity who wants CDMO to continue to grow its value in the marketplace. Keep an eye on this situation. It’s not the norm.