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Bavi’s success doesn’t surprise me one bit. Problem is OncXerna is in no position to pay phase 3 royalties. Thus the slow walk of Bavi in all these phase 2 trials. Eliminate phase 3 royalties and allow Bavi to proceed to potential approval without the added financial burden for a yet unproven entity. Take royalties on approval only. Win win for everyone. AIMO
Informative, unbiased article. Very good read. Sadly, seems like more information than we will ever glean from the company under current legal guidance. Certainly doesn’t shine a positive light on the players involved in the note fiasco including internal legal. Just inexcusable and there should be “accountability”. Even so paints a positive picture for Avid’s future.
I just wish Nick would stand up, communicate, take the heat and move forward even though the note fiasco was not his direct responsibility. That’s leadership. I’m ready for them to move past this. AIMO
E means temporarily delinquent in regulatory filings for the Nasdaq. We knew that. They will take care of that — hopefully sooner than later. I’m sure they are triple checking numbers prior to filing. Probably wise to do so.
Personally although the screw up with the note is literally unbelievable on the surface — it is early after expansion completion with significant market challenges to judge them too critically. In my opinion selling at one of their weakest points would not benefit us. I am certainly willing to give them time to right the ship and get us in a much stronger negotiation position. To our knowledge they do have 1 product of 8 that has already been approved. That leaves 7 in the wings. Get a couple more of those products to be approved and we will once again have the upper hand. I’m hoping to see another quarterly call and I really would applaud more transparency concerning these late stage products. AIMO
The question is, will they even have a call this quarter. They already met their legal obligation filing the 8k. My bet is no call this quarter. Will we see another quarter under the current BOD and management is the big question? I hope they do have a call. I hope we see another quarter. Selling from a position of weakness when there is significant untapped potential is more than unwise.
Personally I don’t want to see them selling from weakness. Especially since they have 8 late stage products awaiting potential FDA approval. Nick indicated with the right combination of approvals they could fill capacity. They already have 1 approval. I’m hoping to hear a positive tone in this quarterly call with a proactive approach — forward planning for the future.
The conspiracy was likely the fact that the company and OncXerna knew that OncXerna would never be able to pay royalties. They would not have the resources. So the contract was just for appearance. OncXerna was never going to take Bavi to phase 3, assuming it proved out, until after Avid was sold. And both companies knew it.
Interesting. Where did you hear the OncXerna ran out of money? Not sure why they have a site under maintenance if they are out of business? Unless they are in the process of soliciting for funds and plan on continuing once they get funded.
I know we have been purposely kept in the dark concerning any progress Bavi is making in clinical trials. Many don’t even want to discuss it which has likely been the company’s objective all along. They want us to forget about Bavi. So much so that OncXerna’s website has been down since last Nov. for “maintenance”. And of course the phone number listed for OncXerna no longer works. Now I know something about site maintenance. It doesn’t last 4 months and if for some odd reason it does — you never take down the original site while such maintenance is occurring. They want nothing out there. That is obvious to me. I’ve talked to Rolf Brekken about Bavi and he says that he also is wondering why it’s taking so long to progress Bavi through trials and come to a decision. But he is in the dark also. So he couldn’t offer any further color on the subject. I’m trying to get a hold of the current lead investigator as we speak.
OncXerna going underground with no published website and a non-working phone number occurred coincidentally after I asked the SEC to make public the specific timeline for Bavi royalties which amounts to 96 million accumulative prior to approval as it completes certain phases of specific trials. It is these phases of current trials which is the information that has not been made public.
And if Bavi is approved Licensee shall pay to licensor royalty fees as follows:
A: an amount equal to 9% of aggregate net sales (in all countries and territories) of up to $100,000,000 of each product;
B: An amount equal to 11% of aggregate net sales (in all countries and territories) from $100,000,001 to $200,000,000 of each product;
C: An amount equal to 13% of aggregate net sales (in all countries and territories) from $200,000,001 to $500,000,000 of each product;
D: An amount equal to 14% of aggregate net sales (in all countries and territories) from $500,000,001 to $1,000,000,000 for each product;
E: An amount equal to 16% of aggregate net sales (in all countries and territories) equal to or greater than $1,000,000,001 for each product.
The latest phase 2 results for Bavi in conjunction with Pembrolizumab “Keytruda” can be found here.
https://www.onclive.com/view/bavituximab-plus-pembrolizumab-elicits-responses-in-untreated-advanced-hcc
I am not saying Bavi will be approved or even be eligible for royalty payments. That has yet to be announced. I am just wondering why Avid’s BOD and management purposely seem to keep us in the dark on this subject. Especially now since Royalty money would be highly valued during this crisis. And of course if there is a low ball bid for the company I’m sure Bavi potential will not even be mentioned.
Unfortunately the person responsible at the SEC refused to make trial specifics public. The reason being it would compromise any future contracts with other companies that Avid may be involved in. I certainly could not understand and argued against this since Avid is NOT in the drug creation business. But she would not budge. My argument was it has nothing to do with their competitiveness and everything to do with the potential value that Bavi may hold to the company and its shareholders — which at the time of any potential low ball sale — will likely not even be mentioned. Not to say anything for any royalties Avid may accrue by meeting certain milestones. That is money that would certainly come in handy at this time.
I felt it important that everyone know this at this delicate time in Avid’s history. Again I am not presuming value of any kind. I’m just wondering why the company is going to such lengths to keep things quiet about any progress Bavi is making or any value Bavi may hold at this current time. And in my opinion I’m wondering why it’s taking so long for OncXerna to come to a decision on Bavi and progress it to phase 3 trials — or cut it altogether.
This deal, albeit not inked, likely came together verbally somewhere early Nov. when Catalent’s price was somewhere around $35. That’s when the price began its rise which was a bit confusing at the time. Catalent had significant issues and the entire biotech sector was underwater because financing had all but dried up. That’s how these deals are done. The buyers shareholders would never have accepted a deal at an 80% premium.
So really it’s a dam good deal for shareholders especially after all the issues Catalent had last year. $63.50 looks great to the buyer’s shareholders as well. And Catalent shareholders certainly can’t complain looking at where they were last Nov.
Yes this relationship will likely result in a marginal increase to the bottom line. But it’s not this one relationship that I applaud most. I generally applaud the concept of creating strategic relationships as a growth strategy that can seriously boost sales efforts when expanded as a mainstream approach. I hope to see more of this. I.E. Realtionships with biotech incubators, biotech angel investing groups, other complimentary grant groups, national cancer institute etc. I’m sure they know much better than I what relationships would reap the most benefit. Any relationship that by its very nature creates that win win relationship between Avid and the partnering entity. It’s much better than exclusively using the one off approach which, of course, is also a necessity.
As a reminder aldo last quarter Avid Bioservices Partners With California Institute for Regenerative Medicine (CIRM) to Provide CDMO Services for Cell and Gene Therapy (CGT) Programs. CIRM has 5.5 billion in funding from California. Under terms of the partnership, Avid has joined the CIRM Industry Resource Partner Program to provide development and CGMP manufacturing services to CIRM-funded programs. The company will assist CIRM’s partners in accelerating gene therapy development and manufacturing through its suite of CDMO services, which span process and analytical development, cell banking, virus banking, drug substance manufacturing, and fill-finish activities. CIRM-funded programs will be offered access to Avid’s services in order to reduce the timelines required to advance through clinical development. All partnership activities will be performed in Avid’s recently launched, world-class CGT CGMP manufacturing facility in Orange County, California.
This is all good stuff.
When they reported last quarter on Dec. 7th Nick said that he thought the last 2 quarters of 2024 would be similar in gross sales to the best 2 quarters in the company history — the last 2 quarters of 2023. The third quarter 2023 gross sales were 38 million. The fourth quarter gross sales were 39.8 million. He was pretty well into our next reporting quarter when he said that. I have to believe visibility was pretty good. He also stated they had 8 products up for PPQ which then will be submitted to the FDA for BLA. Of course each has a different profile — timeline — potential market size etc. but several of those approvals could really set them up nicely in the relative short term for the long term. As everyone knows they already have one approval. In pretty decent shape really. It’s the time that’s most frustrating.
Well put. Agreed wholeheartedly!
Yes there is some institutional selling. Probably should be expected. Bottom line they need a couple more drugs to be approved and come to market. That will change things significantly. They already have one. It would be interesting to know who these companies are and what the drugs are that they are seeking approval for. Not the sure thing it once seemed like but certainly not too bad either. With hard work, faith and a little luck they will get this back on track. Not a time to lose faith. They will win this game. AIMO
I believe an amended 13g is necessary whenever there is a change in ownership over 5%.
Any person who has filed a Schedule 13G must file an annual amendment to the Schedule within 45 days after the end of the calendar year, to report any changes in the information presented. (No Amendment is required if there have been no changes). This obligation is not limited to institutional investors.
https://app.quotemedia.com/data/downloadFiling?webmasterId=90423&ref=318012271&type=HTML&symbol=CDMO&cdn=ac5d2b7d84a0159f293913a248e6da06&companyName=Avid+Bioservices+Inc.&formType=SC+13G%2FA&formDescription=%5BAmend%5D+Statement+of+acquisition+of+beneficial+ownership+by+individuals&dateFiled=2024-01-26
https://app.quotemedia.com/data/downloadFiling?webmasterId=90423&ref=318005391&type=HTML&symbol=CDMO&cdn=bdbb99239538fe0842be089f5f3a3d67&companyName=Avid+Bioservices+Inc.&formType=SC+13G%2FA&formDescription=%5BAmend%5D+Statement+of+acquisition+of+beneficial+ownership+by+individuals&dateFiled=2024-01-25
UCLA's New Research Center Could Be The Biotech Boost The LA Area Needs.
https://www.bisnow.com/los-angeles/news/life-sciences/ucla-biotech-center-impact-122292?utm_source=outbound_pub_6&utm_campaign=outbound_issue_73629&utm_content=outbound_link_1&utm_medium=email
I suppose it wouldn’t be bad if they were concerned with both. It’s all good business and environmentally it’s good for the youngest generation. Nothing bad about it.
It appears to me that Israel A. Englander owns both Integrated Core Strategies (US) LLC and Millennium Management LLC and therefore his hedge fund has taken a $7,795,757 stake in CDMO or approx. a 12% stake. AIMO
Bottom line this is tough if we focus on how far the share price has fallen. But I see this as a reset. I see this company in a much stronger situation today than it was in when the share price peaked. And had they not gone through multiple expansions could you imagine where the company would have been currently. Yes their debt incurred through such expansions would be wiped out but their backlog would have suffered greatly. Their potential would be limited. Their attraction to new companies would be non existent. Those companies with later stage products that recently contracted with Avid would not even have looked their way. The current BLA they are enjoying would likely benefit some other company. Their contracts would primarily be early stage where the money had all but dried up. Their equipment would be dated and they likely would have been in a downward spiral to — at best — long term mediocrity with little hope to change business dynamics.
The market forced them to change course and seek out later stage product accounts that can only grow the business more efficiently over time. They are refining their tactics and gaining win win partnerships that will only deliver new business to them far into the future. Because of that their product mix is more diversified with greater potential for growth. They now have new state of the art equipment and greater technical expertise that will benefit them well into the future. The market is beginning to loosen up and funding is finding new products once again.
Yes I too wish the biotech industry did not go through tough times as the Avid expansions were being completed. But it seems Avid management met the challenge by changing strategy and making the best of a very tough situation. That is what winning companies do! They change course when necessary and poise themselves for significant growth as market conditions improve.
Yes we are at square one again but much stronger with a significantly more attractive story to tell new potential customers in a market that is turning positive once again. I believe those that hold or increase their positions will be greatly rewarded in the hopefully not too distant future and we will look back on this day as a positive turning point for everyone who stayed the course. I can believe it. I can see it. Hopefully you can too.
It was more the guidance for this fiscal year that contributed to the decline imo. The numbers were pretty decent.
Right on. Good analysis imo.
Highlights from 1st quarter
Highlights from the Quarter Ended July 31, 2023, and Other Events:
"The first quarter was a continuation of the trajectory established during fiscal 2023. During the period, we continued to successfully navigate what has been a challenging financing environment for our customers, as our revenues and backlog remained strong, and our commercial team continued to win new projects. Fortunately, Avid has continued to attract and sign later clinical stage and commercial business during the period, which has the potential to add significant upside in the medium to longer term,” stated Nick Green, president and CEO of Avid Bioservices.
Backlog increased to 189M. Not all will be realized this fiscal year.
This makes sense. Signing contracts further out. Customers mitigating any risk due to potential missed deadlines with expansions and of course the complexity that comes with any new operation because of new employees and equipment that is untested.
Patience will pay off. They should be getting strong footing with new accounts now that expansions are complete.
We may see a slow melt up without news as the market is poised for improvement. But once they prove they have what it takes to begin filling capacity and improving margins the move up will be dramatic. Possibly even more dramatic than the move down we have all witnessed. It will happen.
From Roger Lias concerning the CPHI Annual Report 2023 — link shared in an earlier post by djohn.
The report confirms my belief that the global CRO/CDMO marketplace remains strong. The USA continues to dominate in most survey rankings, but it is fascinating to continue to watch the globalization of the market. With respect to "overall competitiveness" we see the USA leading (in order) India, China, Korea, Germany and the UK, with Saudi Arabia emerging in the Middle East.
When looking more specifically at "Bio innovation" it is USA, Germany, UK, India, Japan, France. For "Bio growth potential" it is USA, Germany, India, UK, France China and for "Quality of Bioprocessing" USA, Germany, UK, Japan, Switzerland, India.
Overall, India is seen as very strong in the CDMO space and as having weathered recent storms better than others. Biologics CDMOs in India continue to report EBITA margins of up to 35% compared to 20% in the west. There is also a strong transition from traditionally strong generics players to innovative drugs driven by a "tremendously strong" domestic manufacturing base; rising levels of innovation and returning scientists; the spectre of inflation and marginal pressures in western markets and the continued desire for diversified supply chains. Continuing advances in the global biosimilar marketplace also have an impact.
Brian Scanlan reports little evidence of on-shoring initiatives positively impacting CRO/CDMOs in the US and EU, with COVID and geopolitical supply chain considerations being balanced by funding and cash management concerns.
Capacity constraints at biologics and CGT CDMOs are still broadly seen as a concern and we will likely see sustainability being an increasingly important decision driver for companies outsourcing work - even to the point of being a contractual necessity.
It's a fascinating time in the CDMO marketplace even before we take into account advances in Cell & Gene Therapy, mRNA and so on!
I’m hoping for a good call in Dec. but I do believe the spring call will be the call that provides the stimulus for our ascent once again. AIMO
What’s obvious is the timing for expansion completion couldn’t be worse in terms of market demand. Yes it’s a tough market but not critical with things looking up in the second half of 2023 and all of 2024.
Strategically Avid is focusing on winning later stage business where investment resources have been focused and where accounts are more robust with higher volume demand and more immediate possibilities for large scale commercialization. And of course they have dabbled in the strategic partnering approach with their latest deal being with CIRM. Personally I would like to see them expand this approach in the Biologics division and create win win relationships that help fill their capacity coffers more quickly and more efficiently.
Bottom line is many successful larger companies faced similar challenges at different times of their business cycle. It’s never a clean process. What’s critical is Avid’s What’s Important Now strategic approach that shows they have what it takes to overcome these challenges and become stronger — not only in spite of — but because of the adversity.
As far as the stock price the market is definitely pricing in worse case scenario — at least short term. Personally I’m taking advantage of these deflated prices — something each investor must decide for themselves. I envision Avid becoming an attractive mid sized firm poised for buyout within the next couple years. Time to place your bets?
The initial Schedule 13G is due within 45 calendar days after the calendar year in which the person becomes obligated to file and amendments are due within 45 calendar days after the end of each calendar year thereafter to report any change in the information contained in the Schedule 13G.
Creating such strategic relationships is a critical strategy to efficiently increasing market share through strategic partnering. As an example Budweiser created a strategic relationship with NASCAR that helped them increase their market share by an astounding 5% at the time. Huge for a business that already owned over 40% of the market. It’s smart business and taught by some of the best thought leaders in the world. Good move!
It’s what they said in the last quarterly call that caused this decline. They projected sales to be flat this fiscal year. Their reason was funding drying up for biotech start-ups. Thus they changed strategy focusing more on later stage products where funding is far more abundant and opportunity is found with Biotech companies which have contracted with smaller CDMO’s that don’t have the capacity to bring a product to market. They will still pursue start-ups where opportunity exists but now they are hitting the market on 2 fronts. I believe it to be a necessary change in strategy.
This focus on later stage products was confusing to me since Nick has described drug manufacturing as a sticky business. Sticky in the sense that it is hard to transfer drug manufacturing to another CDMO once you are established with your original CDMO. I did some research to help me understand this strategy. There are a % of drugs manufactured by smaller CDMO’s that don’t have the capability to handle the higher volume demands of products moving to phase 3 and beyond to commercialization. We now have that capability and are actively pursuing these opportunities. Now it makes sense. Seems like a viable strategy. Bigger volume opportunities to fill capacity quicker.
I totally agree with the focus of these articles indicating this being the most challenging time short term for Avid with the longer term looking bright. I do believe it will be less than 4 years to fill capacity but there are a lot of variables in that prediction so time will tell. He talks about multiples of 20 to 30 times free cash flow. With margins projected to be 30% that would provide us 120M (400M X .3) free cash flow annually. With 65M in stock outstanding and a 25 multiple that would provide us a projected stock price of approx. $46. Now I do believe we will get a premium payout of >/= to $60 per share when Avid is sold assuming full capacity and 30% margins. So yes the future is bright but a lot depends on the timeline and of course execution. I believe once they gain momentum closing business again that capacity will fill fairly quickly —especially if they manufacture a few drugs approved for market. Scary time for a lot a stockholders but also an exciting time as a reset of the share price — beginning to climb again — hopefully soon.
It’s amazing how these articles come out just before the shareholders meeting. Certainly not crazy about that approach. I hope they understand the importance of protecting the share price year round with facts concerning the winning of new business. There is still one person dictating this less than transparent approach and he worked for Peregrine. Ziebell is very conservative when it comes to transparency. He’s sharp therefore not illegal — just conservative. But maybe there is a need for this. It certainly isn’t obvious to me.
Yes. I encourage everyone to send in emails requesting an an answer to whether they will take questions at the shareholders meeting. It’s common courtesy to supply answers and it is professional to at least answer requests by shareholders. I support this company. Show some simple reciprocation.
West have you heard whether they are going to take questions at the shareholder meeting? I’m not getting any response.
I agree that they are not and have not been retail shareholder friendly. That’s why we resort to doing our own research. I don’t understand it.
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.