Avid Bioservices Inc (CDMO)

[Protector]

JL, you know PPS quoting to make the point on a Small Cap Biotech like PPHM has never influenced me and never will. All know that most, if not all, Small Cap Biotech are either over valued for what they have or undervalued.

Mostly the undervalued ones have something and hence the lid is kept on them to try to force them into some BP's arms or accumulate before the boom. The over valued ones nobody cares. they drop on the day of the verdict just like the under valued ones, and we have plenty of examples, jump up the day of the crucial event.

At least PPHM has no creditors which protects it against bankruptcy treats, a weapon often used against those small caps because it moves them to give in. PPHM owns its pipelines and IP unencumbered which is another area in which small caps are often hollowed out so that when all the work is done someone else's shareholders profit of the leverage after approval. This on its own makes PPHM different from many other small caps.

And then there is the funding. We've seen in 2012 how bankers, without any reserves, retract loans suddenly and without waiting. PPHM's loan at the time was based on getting PIII design approved and they did. Yet the banker moved out before they could provide any result of an investigation. So the ATM and PPHMP may have their disadvantages but at least they don't hold surprises. I think that between dilution and bankruptcy most will prefer dilutions.

But PPHM's cards are better. They invest the raised ATM/PPHMP money in growing the Avid manufacturing, in clinical trials and IP that all one day bring in revenue that will cancel out that dilution. Avid already contributes in a VERY profitable way to the funding of PPHM and this FY we are in for a 50 to 100% increase of what we saw before and that around 50% gross margin and improving with the new facilities.

Only the TAX credits that PPHM has build up over the years (about 1/2 billion) are worth about 1$.

And with AstraZeneca taking the major cost of the upcoming I-O in Durvalumab+Bavituximab on them (they provide Durvalumab world-wide and for free which would otherwise according CEO King represent about 50% of the trial cost), with NO PPHM own PII/PIII trials but letting others run them, with optimized clinical trial cost management thanks to PPHM collaboration agreement with NCCN and an extra pre-clinical and possibly soon also clinical boost of Memorial Sloan Kettering (MSK) on top of UTSW and Dr. Brekken's Lab, PPHM is coming in a fairly good position to:

1) Build out its multiple award winning biologics cGMP compliant forward process and single use reactor facility to become an important player in a market that is extensively growing due to high demand now the medical word is clearly shifting towards Immuno-Therapy and biologics will be in unseen demand compared to the older chemical drugs.

2) Generate solid revenue from Bavituximab, and later BetaBodies, by controlling the substance that all I-O players will need to condition the tumour environment for their OWN drugs to work. We are talking about a HUGE field of things that will be tried. PI clinical trials to show parties (BP's) what the combo for a given condition does, then sell research access and clinical trial access to Bavituximab WHICH makes the manufacturing run. Nobody except PPHM can currently make the molecule because that is not disclosed.

3) The strategy in #2 will bring UPFRONT payments to get in, manufacturing revenue to provide Bavituximab in sufficient amounts (And I think Avid III construction that was announced lately fits in that plan more then we think), and licensing. And that does NOT have to take 2 or 5 years. As PI results are rolling of the band, they typically have small numbers of patients, parties (BP's) will be played against each other. AstraZeneca may have a 'preferred position' in this.

4) If that would happen after a RS then the PPS will react accordingly given the low volume of shares. The more that it will more easily reach the 2$ and 5$ limits needed for all firms (IIs/Funds incl) to invest in them and with the lower liquidity the PPS will react faster.

5) There are plenty of other things because except oncology PPHM can work on the viral, vaccine and infection/inflammation side of things, push further on digital imaging, correctly lay-out a plan for BetaBodies, set-up and expand an Avid Consultancy Department (and they did the right hiring recently to have people with reputation and book publishing background in that team).

So quoting 0.46$ PPHM PPS on me makes me smile. As if someone believed that PPHM is worth only 0.46$ with all the above.