Avid Bioservices Inc (CDMO)

[Dragon Lady]

Quote, "By the wording here and other places, a third facility will be needed to get through the future already contracted orders.

It is realistic that dilution will be severely reduced even within the next 6 months. Within the next year, dilution could be a thing of the past.
"

OR, OR, OR, they could lose just ONE, ONE, ONE key customer, a highly speculative, high risk start-up in and of themselves, and they'd be close to ZERO revenues and no backlog and have a facility sitting empty with a bloated staff sucking down cash, looking to mop the floors one more time or send an email to someone.

When a company can count their entire "customer base" on one's fingers, w/o even having to take off their socks and use the toes for extra help in counting, they got mega big-risk problems IMO.

THAT is the PPHM reality. The eggs are, as usual, nearly ALL in one very high risk basket per everything I can see from their own SEC filings.

This is craps, at best. The odds on a Vegas craps table are actually likely slightly better, long term IMO.

https://www.sec.gov/Archives/edgar/data/704562/000101968716006937/peregrine_10k-043016.htm

REALITY from the most recent SEC filed 10-K, PAGE 2/3, 9,

"Avid Bioservices, Inc. (“Avid”) is a contract development and manufacturing organization (“CDMO”) and a wholly-owned subsidiary of Peregrine Pharmaceuticals, Inc. (“Peregrine”). In June 2016, we announced a new corporate strategy to achieve profitability within two (2) years (during the quarter ending July 31, 2018), and at the same time, refocus our internal drug development efforts on small, early stage clinical trials designed to attract partnering interest in our investigational products.

Customers

Contract manufacturing revenue has historically been derived from a small customer base. These third-party customers typically do not enter into long-term commitments because their need for product supply depends on a variety of factors, including the products stage of development, their financial resources, and, the market demand with respect to commercial products. Our future results of operations could be adversely affected if revenue from any one of our primary customers is significantly reduced or eliminated. During fiscal years 2016, 2015 and 2014, Avid’s total revenue generated from third-party customers amounted to $44,357,000, $26,744,000, and $22,294,000, respectively, of which 69%, 79% and 91%, respectively, was derived from Halozyme Therapeutics, Inc. In addition, contract manufacturing from third-party customers outside the United States represented less than 1% of the contract manufacturing revenue recognized during fiscal years 2016, 2015 and 2014. Refer to Note 10, “Segment Reporting” to the accompanying consolidated financial statements for additional financial information regarding Avid’s customer concentration and geographic areas of its customers.


Competition

The CDMO and pharmaceutical and biotechnology industries are intensely competitive. Our competition in the CDMO market includes full-service contract manufacturers and large pharmaceutical companies offering third-party manufacturing services to fill their excess capacity. Also, large pharmaceutical companies have been seeking to divest portions of their manufacturing capacity, and any such divested businesses may compete with us in the future. In addition, most of our competitors may have substantially greater financial, marketing, technical or other resources than we do. Moreover, additional competition may emerge and may, among other things, result in a decrease in the fees paid for our services, which would affect our results of operations and financial condition.
"

Great drone pic someone posted of the "facilities" too, to bad PPHM DOES NOT OWN their facilities (i.e. no real estate, hard assets owned)- that pic is just a good ole, run of the mill So-Cal "tilt up" industrial park, where PPHM leases space, like 10,000's of other businesses from West of L.A. to as far East/South as San Diego. Tilt-ups as far as one can see in the So-Cal, and PPHM doesn't even own the building or the "dirt", where the real value would be.

I was familiar years ago with a So-Cal medical company (big one), who was bought by a Euro based firm. And one of the reasons the Euro firm bought it, was that the city-block, enormous sized facility was on land that was owned by the company, going clear back to the 70's, when a place like Tustin was strawberry fields and a Marine Corps air base and not much else. When the Euro firm bought the manufacturing site, they laid off/dumped all unneeded components and consolidated them to their "rust belt" facilities where they operate at a fraction of a cost, then they sold off all the surrounding un-needed parking lot space and unused land around the main building, and they made all their "purchase price" back on the freaking real estate deal. As shrewd a move as I've ever seen. The area around what they still operate as the plant- is now low rise medical buildings leased to doctors and dentists and stuff like that, then a corner retail/eatery mini-mall strip center and now a high rise condo/apartment tower kidi-corner to that, all parked on some of the most valuable "dirt" in the So-Cal area. The Euro buyer did their freaking homework and knew the "dirt" under and around the old manufacturing plant, was better than gold if one knew how to spin it off.

PPHM, they don't hold much at all in terms of "hard" assets. Just high risk gambles and a lot of long term hopes and pipe dreams. Nothing to even sell or dump in real hard times if needed. If/when their cash line evaporates, PPHM's "asset" category of their balance sheet goes to almost ZERO in short order. Old lab equipment and office cubicle partitions and desktop computers fetch about 2 CENTS on the dollar in fire sales of companies that got over-bloated and often shed um later on.

NOT GOOD IMO. HIGH RISK.