9-10-18 Qtly CC-Transcript, PR(Q1FY19/qe7-31-18), Avid Revs History Table
*Revs Guidance (FY’19 fye 4-30-19): $51-55mm. 7-31-18 Backlog=$39M (If non-ASC606=$60M)
*Cash: 7-31-18: $37.5mm
*As of Sept 5, 2018: 56,001,456 shares o/s.
*10Q/7-31-18 iss. 9-10-18: https://tinyurl.com/ycfrgsjm
*Avid Total Revs May03-Jul18: $308.1mm
*Avid’s website: https://avidbio.com
This large post has 4 sections:
I. 9-10-18 Qtly. Earnings Conf. Call TRANSCRIPT (FY19/Q1 q/e 7-31-18)
II. 9-10-18 CDMO Press Release: Q1/FY19 Earnings & Developments
IV. Updated Table of Avid Revenues By Quarter (May’06-Current)
III. Updated O/S Shares History Table – 2006-curr.
…Recall: Avid’s FY runs May-Apr, so FY’19 = May’18-Apr’19.
((( Orig. transcript from SeekingAlpha.com [https://tinyurl.com/yddyjejs ] with numerous corrections made. )))
Link to webcast replay: http://ir.avidbio.com/events-and-presentations => https://edge.media-server.com/m6/p/8bpi6kui
TRANSCRIPT… 9-10-18 FY’19/Q1 Earnings Conf. Call (q/e 7-31-18) (Lias/Hart)
WELCOME & FWD-LOOKING STATEMENTS: Tim Brons, Vida Strategic Partners (IR)
ROGER LIAS (CEO) – OPENING COMMENTS:
Thanks Tim, and thank you to all of you who've dialed in or are participating via webcast today. It's been only 2 months since we last reported results, but it's been a very busy and productive 8 weeks as we continue to execute to plan. FY2019 is a transition year for Avid as we align our organization & operations with our new business model and direction and implement improvements designed to drive growth and profitability to deliver exceptional customer service and to ultimately meet the needs of our client-patient populations. During the quarter, we advanced the projects of our existing active clients and continue to engage with numerous potential new customers. This increasing activity is driven by our aggressive business development efforts, our newly client focused project manage team and our enhanced capabilities in process development, all of which position Avid well for growth and the achievement of positive cash flows. I will provide more details on each of these topics and provide an update on the biologic CDMO market following a review of our Q1/FY2019 financial results by Avid Bioservices new CFO Dan Hart. Dan officially joined us on August 1, and I'm delighted to be able to report that he has settled in extremely quickly and is already contributing his expertise and experience to our business. I can say without fear of contradiction that Dan is a great asset to our team. So with that I'll turn it over to him to provide a financial overview.
DANIEL HART (CFO) – OPENING COMMENTS:
Thanks Roger. Hello everyone. I'd like to first say that I'm very happy to join the Avid team at this important time of the company's development. With the transformational period behind us and the transition ongoing during FY2019, it's exciting to be part of an organization with such promising growth potential. And I also look forward to building a strong relationship with the investment community that has been so supportive of the company to date.
I'll now discuss our financial results from continuing operations for Q1 ended July 31, 2018 starting with revenue. During the Q1/FY2019 Avid recognized revenue of $12.6M a decrease of 54% as compared to $27.1M in Q1/FY2018. Excluding the impact of adopting the new revenue standard ASC 606 which is revenues from contracts with customers, revenue decreased 89%. The decline as compared to the same prior year period is primarily attributed to a previously disclosed shipping delay which resulted in $9.9M of revenue recognized in Q1/FY2018 for mfg. runs completed but not shipped during Q4/FY2017. Another factor contributing to the decline and the decreased demand from our 2 lead customers, which we anticipated and have previously disclosed. Offset by the adoption of ASC 606 which accelerated revenue recognition for a portion of Avid's projects enabling revenue for certain products to be recognized over time rather than upon delivery to the customer. Despite the decline, our Q1/FY2019 revenues put us on track to meet our annual projected revenue.
As stated during our year-end call in July, Avid is projecting revenues between $51-55M for FY2019 under ASC606 and we maintain this guidance. As a reminder, we adopted this new standard on a modified retrospective basis. As result of our adoption of ASC606 $10.8M of revenue that may have been recognized during FY2019 under the previous revenue recognition standard ASC605 has been moved to retained earnings. Our backlog as of July 31, 2018 was $39M, the majority of which we expect to recognize in FY2019. Excluding the impact of adopting ASC606, backlog was $60M, an increase of 3.6% from our Q4 backlog of $58M. Gross margins for Q1 was 9%, a 15% decrease compared to the prior year period. Excluding the impact of adoption ASC606, gross margins were negative 73%. The decrease in gross margin was primarily attributed to the $9.9M recognized in Q1/FY2018 due to the shipping delay discussed previously. Also fewer mfg. runs during the period contributed to an increase in idle capacity during the qtr, combined with the variability mfg. costs from product to product. While we are pleased that projects were successfully on boarding during the qtr, we recognize the importance of building our backlog and our customer base as well as improving our margins by increasing capacity utilization. During Q1 we made important advances to support each of these objectives and Roger will provide more color on those achievements in his comments.
Turning now to operating expenses, total SG&A expenses for the Q1/FY2019 were $3.2M, a 17% decrease compared to the $3.9M for Q1/FY2018. The decrease in the qtr was driven primarily by the company’s previous efforts to align the cost structure to match the needs of our current CDMO operations by reducing costs and the streamlining of our operations. For the Q1/FY2019, the company recorded consolidated net loss attributable to common stockholders of $3.4M, or $.06 per share, compared to a consolidated net loss attributable to common stockholders of $2.6M, or $.06 per share, for the same prior period quarter. Excluding the impact of adopting ASC606, diluted EPS from continuing operations was a net loss of $.11 per share. Cash & cash equivalents as of July 31, 2018 was $37.5M compared to the $42.3M at FY2018 ended April 30, 2018. Not reflected in our qtr-end cash balances receipt of the 3rd and final upfront payment on Sept. 6th from Oncologie of $2M for the assignment of the company's legacy R&D assets. This concludes my financial overview. I will now turn the call back over to Roger to address Avid Bioservices' key activities & achievements during the Q1/FY2019.
ROGER LIAS (CEO) – Q1/FY19 RECAP:
As I stated in our opening comments, FY2019 is a transition year for Avid Bioservices as we position the company for strong growth and success within the attractive global bio manufacturing marketplace. We continue to make changes and improvements across the organization. Today I will address the current CDMO market and provide an update on Avid's business development activities and enhancements to our process development service offering. So I'll start with a brief update on the biologic CDMO landscape.
Recent market research conducted by BioPlan Associates which was published in April shows that the demand for biologics production remains robust. BioPlan's findings show that the global biopharmaceutical market is currently valued at over $250B a year with a market for products that we manufacture at Avid being major contributors to that number. Recombinant proteins now contribute about $150B a year and the market for recombinant monoclonal antibodies is now greater than $80B. This market continues to grow at a compound annual growth rate of 12-15% and drives growth and demand for the services offered by Avid Bioservices. Future growth is expected to be fueled by increasing R&D spend on biopharmaceuticals and the more than 950 identified biosimilar products currently in development. Given the demand the availability of approx. capacity on a product by product basis remains a significant hurdle across every stage of bio processing from early stage clinical work to commercial manufacturing. When considering the worldwide pharmaceutical manufacturing capacity is now estimated at over 16M liters across all mfg. platforms, Avid needs only to capture a very small fraction of this demand to be at full utilization. Avid is focused on development & manufacture products derived from mammalian cell culture and as mentioned this manufacturing platform continues to dominate the biopharmaceutical manufacturing market, driven by highly complex recombinant proteins and monoclonal antibodies and their derivative products. When looking specifically at production of products derived from the manufacturing platforms and technologies that we offer at Avid, the figures become increasingly interesting. According to the findings, 54% of biopharmaceutical drug developers are currently outsourcing up to 50% of their production or 16% are outsourcing over 50% of their production. On this topic BioPlan Associates concluded that there is a continuing trend toward greater outsourcing of mammalian cell culture with 72% of users projecting at least some outsourcing by 2023. Researchers also noted that they believe that continued robust demand will extend to ancillary services also offered by Avid including analytical development, cell line development, stability studies and so on. Market report from Future Market Insights published just last Thursday, estimated that the global biopharmaceutical contract mfg.g market was valued at $5.6B at the end of 2017 and is expected to increase to $15.5B by the end of 2027 registering a compound annual growth rate of 10.6% over the forecast period. Within these numbers, mammalian cell culture is the largest segment by platform and estimated to represent a 68.6% share of the total market in 2017 and is projected to reach 81% share by the end of 2027 expanding at a compound annual growth rate of 12.5%. The U.S.A. is anticipated to remain the dominant market space although Asia-Pacific market excluding Japan is growing at a slightly higher rate. Given this growing demand and the current limited capacity for predominant themes in the industry revolve around productivity and cost reduction, continued adoption of single use technologies where incidentally Avid can be considered a market leader having been releasing GMP batches from single-use bio reactors for more than a decade and continuous bio processing. Avid has an expertise in single-use technologies and is actively developing relationships with key vendors and industry experts positioning the company as an innovator and leader within the biologic CDMO space.
With this backdrop, I'd now like to address our expanding business development activities and achievements. During Q1, our highly experienced new Eastern & Western U.S. business development leads became fully operational and we are currently receiving high quality requests for proposal from both territories. This represents the first time in Avid Bioservices' history that the company has had full CDMO targeted business development reach across North America. Despite the fact that there is a traditional summer lull in the biologic CDMO space, we are processing requests for proposals on a rate that we've never encountered before at Avid and our team is working diligently to issue high quality proposals and to meet deadlines. In an effort this RFP price line rapid pipeline and continue to expand our customer base and diversify our project mix, our team is executing a broad reaching targeted marketing and promotion campaign. With the trade show season now upon us we have recently exhibited at the Bioprocessing Summit 2018 and the 2018 Bioprocessing Intl. Conference and Exhibition, both in Boston. We also plan to exhibit or have other commercial presence at numerous industry events during the fall. These events generate visibility with customers and other stakeholders as we grow the Avid Bioservices brand and increase awareness among emerging and growing biotechnology companies and multinational pharmaceutical companies alike. We consider these conferences and trade events to be key opportunities to reach new clients and to generate future demand.
Of at least equal importance to on-boarding new projects is growth generated from our existing clients. I am very pleased to announce that each project governed by the Master Service Agreements executed by Avid in Calendar 2018 is now generating revenue. Almost all of our existing relationships have expanded since initial engagement either by progress against the originally scoped work program or by project expansion and extension. Such growth represents an important contributor to our revenue stream and we look forward to supporting the continued success of our client programs and accommodating increased demand as these programs progress through clinical development and inter global markets.
Another area of critical importance for us is enhancement of our process development service capabilities and work in this area has continued during Q1/FY2019. As we've discussed on prior calls, we believe process development to be a vital component of our success. Process development, or PDE, is typically broken down into 3 core functions; saline and cell culture development or upstream development where we persuade cells to express the desired protein and to grow efficiently, purification development or downstream development where we isolate the target protein from a vast soup of other proteins, cell debris, growth medium components and so on. And finally analytical development, where we develop the analytical methods needed to characterize the manufactured biopharmaceutical and to demonstrate that it is of sufficient quality and purity. Our process development scientists are also critically important for transferring process and methods that have been developed outside of Avid into our facilities. These functions which typically contribute around 1/3 of revenue for biologic CDMOs are vital for on-boarding new programs and securing a pipeline of mfg. opportunities. Prior to establishing Avid Bioservices within the dedicated CDMO, I think it is fair to say that the company's process development function was underserved and we are now investing in the enhancement of these capabilities in order to continue to support our existing clients and to attract new customers. Today, our process development group is contributing immediate and meaningful revenues and for the first time operating as a standalone unit. Process development will support both revenue growth and profitability during the FY2019 and beyond.
We've made progress in recent months with the previously announced laboratory expansion and improvement project. We've taken great care to phase this work so as not to disrupt any ongoing processing and planning is further evolved to reflect business needs. As part of this expansion, our first refurbished laboratory which is for purification development has been completed and is now fully operational. In addition, we've commenced work on a major new upstream development laboratory and are continuing refurbishment work within our existing buildings. These new and/or updated laboratories are being outfitted with state-of-the-art equipment to facilitate the development of robust, scalable, and cost-effective manufacturing processes and we are working closely with our vendors and collaborators to pioneer and optimize innovative processing approaches.
I would now like to touch briefly on the importance of the efforts of our human resources team as they continue to support our organizational realignment and positioning for growth. The fast growing and extremely complex biopharmaceutical manufacturing field is highly reliant on qualified and trained workforce and critical shortages are emerging in some areas. 28% of respondents in the recent BioPlan Associates' industry survey identified the inability to hire new experienced technical and production staff as a factor likely to create biopharmaceutical production capacity constraints by 2023 and it is known that companies in some bio manufacturing hubs are already being impacted by staff shortages. As we complete transition to our CDMO model and contemplate significant growth it is critically important that we maintain access to a qualified workforce and continue to focus on hiring, training, and retention.
In summary then, during the Q1/FY2019 Avid continued to successfully execute the plan we outlined during our year-end earnings call in July. As a result, we are reaffirming our revenue guidance for FY2019 of $51-55M. Our confidence in achieving this target is driven by the expected recognition of a significant portion of our confirmed backlog of $39M during the remainder of FY2019, combined with the anticipated extension and expansion of projects underway with existing clients and additional revenue expected from the numerous new client proposals that are currently in progress. To support this effort we have built an exceptional business development team with a cumulative 60+ years of successful and direct industry experience. We are aggressively pursuing new opportunities and successfully building awareness for the business within the industry. We have high visibility on customer orders for the balance of the FY and are actively and successfully on-boarding recently awarded projects. We are significantly enhancing our process development capabilities that best serve the growing demands of our customers. The Master Service Agreements that we've executed in calendar 2018 are all now contributing to revenue and our process development service is generating meaningful revenue also. While there is some business to secure to achieve our top line guidance, hitting our revenue targets for FY2019 will largely be about operational execution. Much work remains to be done during this transition year, but the advances made during Q1 puts us on track to achieve each of our primary goals. To grow & stabilize revenues through an expanded customer base, to improve margins, to increase capacity utilization and to position the company to achieve positive cash flow. With that in place, and the vital important business operations and process development CDMO functions now established and properly functioning for the first time in the company's history, we are on-boarding new revenue generating programs and expanding and extending existing projects. Focus will now shift towards operations during remainder of FY2019 as we work towards efficient conversion of backlog into revenue.
Q&A: [beg. 20:14]
1. Joe Pantginis - H.C. Wainwright
JP: ”Is there a potential why your backlog number could be could be potentially conservative and with that in mind, can you discuss maybe some general numbers as to the level of RFPs and proposals that you look at say a weekly or monthly basis?”
Roger Lias: I think it's fair to day that our backlog is a conservative number. This is business that is basically irrevocably contractually committed at this point. We have as we've discussed actually on some previous calls what I would describe as a trailing backlog which is work which is very highly likely to come in and this is continuing work on existing projects, but until that work is actually contractually committed we don’t add it to the backlog. So in addition to what I consider the hard backlog, we do have a very good window and runway of visibility to future opportunities from existing projects and we continue to execute those sort of in real time as we're going along and as the projects expand. So the projects expand both we get contractual commitments to current projects and then we also see growth within scopes almost inevitably, or I would say at least 9 times out of 10, once we sign a scope of work initially it grows over time as we realize the technical nuances of the project and additional work we need to be doing. And then of course it's very sticky business, so should a client meet perhaps one of its clinical milestones if they’re successful there is very, very low chance that they will go anywhere else for the next phase of work, so we tend to extend those projects as well. So I would say that backlog in general is conservative. With respect to proposals, we don't give out too much information. I think we can say a couple of weeks ago I think we were not struggling but working to get out 7 proposals in parallel to give you an idea of the magnitude of the work involved, we really are starting to generate a lot of RFP’s now. But it's not sheer numbers, it's really more important to me is the quality of those requests for proposals. Obviously we like to work with more established companies, we like realistic goals for the projects, but we have a very broad mix of opportunities right now.
JP: ”I appreciate the added details with regard to Q1 on gross margins. As the company matures, what is your ultimate goal with regard to gross margins? Obviously there's a lot of variability in it. And then the second part of that is with near term to moderate term impacts on gross margins based on your expansion needs and plans?”
Daniel Hart: Currently we have a growing product mix is what I'll say, and as we grow through our existing customers and move on to new customers with some follow-on work in signing some of these proposals, our gross margins will increase over time. But right now we have a little bit of a fluctuating gross margin based on the product mix and filling up the pipeline. So I think if you look at kind of our trajectories, as we start to fill that idle capacity, our margins will continue to improve over the rest of the year.
Roger Lias: If you look at some industry comparatives out there and unfortunately they are few and far between because obviously a lot of private companies out there, certainly we've seen in situations where mfg. facilities are extremely full or are full basically we've seen certainly gross margins in excess of 40%. But I must stress that that is, it’s really an occupancy business. So we have some ways to go before we get to those levels of facility occupancy right now.
2. Steve Schwartz - First Analysis
SS: ”With respect to the development revenue, is there a way to parse that out? I know you just list revenue as contract mfg., but Roger the way you described kind of the 3 categories of development work, there is revenue and there is project work that doesn’t necessarily hit your production floor per se right?”
Roger Lias: Yes, it's a complicated question to answer, because everything we do is custom. So we do everything from - we can bring in DNA sequence on a piece of paper and start with cell line development, or we can bring in partially developed processes or we can transfer in essentially fully-developed processes; even in that case we do some typically do some process development work to amend analytical techniques or on equipment and things like this. So I can understand that it's a difficult one to get a head around, so similarly on the same stage well not all process developments are created equally from the point of view of revenue, timing also comes into it. We only take on projects at the moment which are means to an end. Every project we bring in process development, the end goal is to be in mfg. of some sort. Now there's plenty of standalone process development as well out there, but right now based on available resources, we don't consider those projects. So you could have a process development project take 6 months before it starts to generate mfg. Revenue; you could have a process development project that takes 24 months before we start to generate meaningful mfg. revenue. So it's a difficult question to answer because it quite simply isn't the one size fits all and I realize that is probably not helping you much, but this is the fact of the matter.
SS: ”Ok, well you understand the nature of the question and certainly it's on my mind and I'm sure it's on others. So if you could just keep that in mind as you talk about the business.”
Roger Lias: Yes, certainly. We're trying very hard with this is new to certainly our company if you like to be dedicated in reporting standalone contract development and manufacturing results, so we're working on hard on how we can make things more granular going forward, it's a very inexact science. As soon as you put out an example of one project and apply it to a model, immediately that model is in essence incorrect because of the inherent variability in all these projects. But we are working very hard to make things as granular and transparent as we can going forward.
SS: ”Yes, now along those lines of just your revenue development with the new process development labs coming online, was there a backlog if you will of projects waiting for that facility, so in other words is there going to be like a secular step up if you will in revenue with that or are you going to have to build revenue into the newly available operations?”
Roger Lias: To answer another way, at the moment as soon as we have more space equipment people available they are revenue generating and busy. So we are - I won’t say we are struggling to keep up by any means, but it’s a balance at the moment between new business coming in and available resources to execute those projects.
SS: ”My last question and perhaps this one is for Dan, is on the ASC606. I think you mentioned in your prepared remarks that it basically was a benefit to revenue in Q1. And if that's the case, if we try to understand the flow of revenue does that essentially mean that on a % of completion basis, you took more revenue from Q2/FY2019 than you would have gained from 4Q 2018 under % of completion? How did you run that calculation on Q1 and how can we read that information with respect to revenue through the year?”
Daniel Hart: I can understand the complexity of moving from a point in time to an overtime type model from 605 to 606 essentially the revenues for 606 contributed to increasing revenues in Q1 because it's not based on the delivery of the product where the delivery of the product will happen during Q2 or Q3 sometime during FY2019, we set forth effort during Q1 which we can recognize revenue on a % of completion.
SS: ”Yes. And so it was a net benefit…”
Daniel Hart: Correct.
SS: ”And when you do the numbers behind that statement, a net benefit, you're also factoring in revenue booked on order shipment vs. % of completion for Q4/FY2018 too, right?”
Daniel Hart: Anything that was delivered in Q4 of 2018 and/or work done during Q4 of 2018 is essentially either was recorded in 2018 or was booked to the beginning balance retained earnings which was included in that $10.8M of revenue shifted back. So we started at a clean line in the sand on May 5th going forward.
ROGER LIAS (CEO) – CLOSING COMMENTS:
Thank you for your time today everybody and your interest in Avid Bioservices. I wish in closing to thank our board, our employees, and our investors for your continued support of the company as we pursue our goals for growth and value creation. We look forward to the next quarter call and with that we’ll conclude this one. Thank you and have a great afternoon.
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9-10-18: Avid Bioservices Reports Financial Results for First Quarter FY2019 Ended July 31, 2018 and Recent Developments
GlobalNewsWire: https://tinyurl.com/y9bok66v
-- FY2019 Projected Revenue of $51 to $55 Million Reaffired
-- Multiple Projects Advanced During the Quarter
-- Initiated Operations of New Process Development Laboratories
TUSTIN, Sept. 10, 2018 (GLOBE NEWSWIRE): Avid Bioservices, Inc. (NASDAQ:CDMO/CDMOP), a dedicated biologics contract development and manufacturing organization (CDMO) working to improve patient lives by providing high quality development and manufacturing services to biotechnology and pharmaceutical companies, today announced financial results for the first quarter of fiscal year (FY) 2019 ended July 31, 2018, and provided an update on its contract manufacturing operations, and other corporate highlights.
Highlights Since April 30, 2018
“During the first quarter of FY 2019, Avid continued to successfully execute the plan we outlined during our year-end earnings call in July. As a result, we are reaffirming our revenue guidance for FY 2019 of $51 to $55 million. Our confidence in achieving this target is driven by the expected recognition of a significant portion of our confirmed backlog of $39 million during the remainder of FY 2019, and high visibility on customer orders for the balance of the year. This includes the anticipated expansion of multiple projects underway with existing clients and additional revenue from numerous issued new client proposals. To support this effort, we have built an exceptional business development team with a cumulative 60+ years of CDMO industry experience. We are aggressively pursuing new customers and building visibility for the business within the industry. We are actively and successfully on-boarding recently awarded projects and significantly enhancing our process development capabilities to best service the growing demands of our customers. The Master Service Agreements that we’ve executed in calendar 2018 are all now contributing to process development revenue. We believe the advances made during the first quarter through our business development efforts and process development enhancements have placed us on track to achieve each of our primary goals: to grow and stabilize revenues through an expanded customer base; to improve margins through increased capacity utilization; and to position the company to achieve positive cash flow,” said Roger Lias, Ph.D., Avid’s President and CEO.
RECENT CDMO DEVELOPMENTS
* Initiated operations in the first of our new process development laboratories during the quarter.
* Continued progress with ongoing expansion and optimization of our process development capabilities and laboratory space, including:
1. Expanding the total available process development laboratory space to more than 6,000 square feet;
2. Upgrading the infrastructure and equipment within the existing process development laboratories;
3. Implementing new state-of-the-art technologies and equipment designed to facilitate efficient, high-throughput development of upstream and downstream manufacturing processes.
* Signed project extensions with existing clients in the amount of $4.1 million during the quarter. This $4.1 million is included in our current backlog.
RECENT CORPORATE DEVELOPMENTS
Received final payment of $2.0 million in September 2018 for a total of $8.0 million in upfront payments associated with the Asset Assignment and Purchase Agreement signed with Oncologie, Inc. in February 2018 for Avid's legacy phosphatidylserine (PS)-targeting program including bavituximab.
FINANCIAL HIGHLIGHTS AND GUIDANCE
The company is reaffirming revenue guidance for the full FY 2019 of $51-$55 million (ASC 606).
The current revenue backlog as of July 31, 2018 was $39 million, the majority of which we expect to recognize in FY 2019. Excluding the impact of adopting ASC 606, backlog was $60 million, an increase of 3.6% as compared to $58 million at the end of the fourth quarter of FY 2018.
Contract manufacturing revenue was $12.6 million for the first quarter of FY 2019 compared to $27.1 million for the first quarter of FY 2018. The decline as compared to the same prior year period is primarily attributed to a previously disclosed shipping delay which resulted in $9.9 million in revenue recognized in the first quarter of FY 2018 for manufacturing runs completed, but not shipped, from the fourth quarter of FY 2017. Another factor contributing to the decline is the decreased demand from our two lead customers as previously disclosed, offset by the adoption of ASC 606, which accelerated revenue recognition for a portion of Avid’s projects.
Gross margin for the first quarter of FY 2019 was 9%, a 15% decrease compared to the same prior year period. The decrease in gross margin was primarily attributed to the shipping delay discussed previously, fewer manufacturing runs during the period that contributed to an increase in idle capacity during the quarter, combined with the variability of manufacturing costs from product to product.
Selling, general and administrative expenses for the first quarter of FY 2019 were $3.2 million, a 17% decrease compared to $3.9 million for the first quarter of FY 2018. The decrease in the quarter was driven primarily by the company’s previous efforts to align the cost structure to match the needs of Avid’s current CDMO operations by reducing expenses and streamlining Avid’s operations.
For the first quarter of FY 2019, the company recorded consolidated net loss attributable to common stockholders of $3.4 million, or $0.06 per share, compared to a consolidated net loss attributable to common stockholders of $2.6 million, or $0.06 per share, for the same prior year quarter.
Avid reported $37.5 million in cash and cash equivalents as of July 31, 2018, compared to $42.3 million on April 30, 2018.
More detailed financial information and analysis may be found in Avid’s Quarterly Report on Form 10-Q, which will be filed with the SEC today. [ https://tinyurl.com/ycfrgsjm ]
CONFERENCE CALL
Avid will host a conference call and webcast this afternoon, September 10, 2018, at 4:30 PM EDT (1:30 PM PDT). To listen to the conference call, please dial (877) 312-5443 or (253) 237-1126 and request the Avid Bioservices conference call. To listen to the live webcast, or access the archived webcast, please visit: http://ir.avidbio.com/events.cfm .
ABOUT AVID BIOSERVICES, INC.
Avid Bioservices is a dedicated contract development and manufacturing organization (CDMO) focused on development and cGMP manufacturing of biopharmaceutical products derived from mammalian cell culture. The company provides a comprehensive range of process development, high quality cGMP clinical and commercial manufacturing services for the biotechnology and biopharmaceutical industries. With 25 years of experience producing monoclonal antibodies and recombinant proteins in batch, fed-batch and perfusion modes, Avid's services include cGMP clinical and commercial product manufacturing, purification, bulk packaging, stability testing and regulatory strategy, submission and support. The company also provides a variety of process development activities, including cell line development and optimization, cell culture and feed optimization, analytical methods development and product characterization. http://www.avidbio.com
Forward-Looking Statements *SNIP*
AVID BIOSERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
(in thousands, except share and per share information)
Three Months Ended
July 31, 2018 2017
Contract manufacturing revenue $ 12,589 $ 27,077
Cost of contract manufacturing 11,397 20,448
Gross profit 1,192 6,629
Operating expenses:
Selling, general and administrative expenses 3,215 3,853
Operating (loss) income (2,023 ) 2,776
Other income (expense):
Interest and other income 73 27
Interest and other expense (11 ) (3 )
(Loss) income from continuing operations $ (1,961 ) $ 2,800
Loss from discontinued operations — (4,005 )
Net loss $ (1,961 ) $ (1,205 )
Comprehensive loss $ (1,961 ) $ (1,205 )
Series E preferred stock accumulated dividends (1,442 ) (1,442 )
Net loss attributable to common stockholders $ (3,403 ) $ (2,647 )
Weighted average common shares outstanding:
Basic 55,770,108 44,773,727
Diluted 55,770,108 44,877,985
Net (loss) income per common share attributable to common stockholders, basic:
Continuing operations $ (0.06 ) $ 0.03
Discontinued operations $ — $ (0.09 )
Total $ (0.06 ) $ (0.06 )
Net (loss) income per common share attributable to common stockholders, diluted:
Continuing operations $ (0.06 ) $ 0.03
Discontinued operations $ — $ (0.09 )
Total $ (0.06 ) $ (0.06 )
ASSETS
Current assets:
Cash and cash equivalents $ 37,484 $ 42,265
Trade and other receivables 2,951 3,754
Contract assets 4,775 —
Inventories 9,168 16,129
Prepaid expenses 528 679
Assets of discontinued operations 2,014 5,000
Total current assets 56,920 67,827
Property and equipment, net 26,336 26,479
Restricted cash 1,150 1,150
Other assets 302 304
Total assets $ 84,708 $ 95,760
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 3,122 $ 1,909
Accrued payroll and related costs 2,030 2,564
Contract liabilities 17,994 27,935
Other current liabilities 609 905
Liabilities of discontinued operations 1,969 4,550
Total current liabilities 25,724 37,863
Deferred rent, less current portion 2,145 2,159
Capital lease, less current portion 93 —
Commitments and contingencies
Stockholders’ equity:
Preferred stock—$0.001 par value; authorized 5,000,000 shares; 1,647,760
shares issued and outstanding at July 31, 2018 and April 30, 2018,
respectively
Common stock—$0.001 par value; authorized 500,000,000 shares;
55,990,274 and 55,689,222 shares issued and outstanding at July 31, 2018
and April 30, 2018, respectively 55 55
Additional paid-in capital 615,040 614,810
Accumulated deficit (558,351 ) (559,129 )
Total stockholders’ equity 56,746 55,738
Total liabilities and stockholders’ equity $ 84,708 $ 95,760
CONTACTS:
• Stephanie Diaz (Investors) Vida Strategic Partners 415-675-7401 sdiaz@vidasp.com
• Tim Brons (Media) Vida Strategic Partners 415-675-7402 tbrons@vidasp.com
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From 10-Q header: “As of Sept 5, 2018, there were 56,001,456 shares outstanding.”
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Latest 10K 4-30-18 iss. 7-16-18 https://tinyurl.com/ydc8vew5 PR: https://tinyurl.com/y93fux9h (Cash 4-30-18=$42.3mm)
Latest 10Q 7-31-18 iss. 9-10-18 https://tinyurl.com/ycfrgsjm PR: https://tinyurl.com/y9bok66v (Cash 7-31-18=$37.5mm)
ALL SEC filings for PPHM: http://tinyurl.com/6d4jw8
= = = = = = = = = = = = = = = = = = = = = = = = = = = =
Updated PPHM REVS-BY-QTR TABLE, now thru FY19'Q4(qe 7-31-18), per the 10-Q (https://tinyurl.com/ycfrgsjm ) issued 9-10-18.
• Total Avid Revs since May’03: $308.1mm
• 7-16-18: FY'19 (May'18-Apr'19) Avid revs guidance $51-55mm (committed B/L=$39M at 7-31-18).
• Inventories at 4-30-18 total $9.2mm, down from $16.1mm at 4-30-18.
Avid’s website: http://www.avidbio.com
AVID GROSS PROFITABILITY BY QTR: DEFER CUST
QTR (1000’s) Rev$ COGS$ Prof$ GP% REV$ INVEN$ DEP.
FY13Q1 7-31-12 4,135 2,024 2,111 51% 6,056 5,744 10,224
FY13Q2 10-31-12 6,061 3,703 2,358 39% 6,221 5,426 8,500
FY13Q3 1-31-13 6,961 3,651 3,310 47% 5,061 4,635 6,729
FY13Q4 4-30-13 4,176 3,217 959 23% 4,171 4,339 8,059
FY14Q1 7-31-13 4,581 2,670 1,911 42% 4,164 5,679 8,528
FY14Q2 10-31-13 7,354 4,195 3,159 43% 3,468 4,033 7,658
FY14Q3 1-31-14 3,885 2,416 1,469 38% 4,329 5,224 8,646
FY14Q4 4-30-14 6,474 3,829 2,645 41% 5,241 5,530 5,760
FY15Q1 7-31-14 5,496 3,583 1,913 35% 4,670 5,998 6,226
FY15Q2 10-31-14 6,263 4,139 2,124 34% 3,612 5,379 7,549
FY15Q3 1-31-15 5,677 3,113 2,564 45% 5,752 6,148 8,311
FY15Q4 4-30-15 9,308 4,758 4,550 49% 6,630 7,354 11,363
FY16Q1 7-31-15 9,379 4,608 4,771 51% 8,291 10,457 9,599
FY16Q2 10-31-15 9,523 4,741 4,782 50% 9,688 12,554 14,935
FY16Q3 1-31-16 6,672 3,896 2,776 42% 15,418 15,189 22,433
FY16Q4 4-30-16 18,783 9,721 9,062 48% 15,418 15,189 24,212
FY17Q1 7-31-16 5,609 3,062 2,547 45% 21,531 25,274 21,731
FY17Q2 10-31-16 23,370 15,441 7,929 34% 17,980 25,924 26,928
FY17Q3 1-31-17 10,747 7,974 2,773 26% 26,367 33,829 26,210
FY17Q4 4-30-17 17,904 11,782 6,122 34% 28,500 33,099 17,017
FY18Q1 7-31-17 27,077 20,448 6,629 24% 13,433 24,235 14,322
FY18Q2 10-31-17 12,782 16,242 -3,460 -27% 7,473 16,518 13,138
FY18Q3 1-31-18 6,819 10,951 -4,132 -61% 6,633 14,218 17,602
FY18Q4 4-30-18 6,943 8,904 -1,961 -28% 10,922 16,129 17,013
FY19Q1 7-31-18 12,589 11,397 1,192 9% --,--- 9,168 --,---*
*7-31-18 10Q: “certain prior-yr amts related to deferred revenue
& cust deposits have been reclass’d to contract liabilities.”
...a/o 7-31-18: contract-liabilities=17,994
...q/e 4-30-18: contract-liabilities=27,935 <=reclassified
FY13 TOTAL: 21,333 12,595 8,738 41%*
FY14 TOTAL: 22,294 13,110 9,184 41%*
FY15 TOTAL: 26,744 15,393 11,151 42%*
FY16 TOTAL: 44,357 22,966 21,391 48%*
FY17 TOTAL: 57,630 38,259 19,371 34%*
FY18 TOTAL: 53,621 56,545 -2,924 -5%*
*Avid Net-Profit(Selling/G&A) not split out from PPHM-Corp. in the fin’s.
AVID TOTAL REV’s BY YEAR):
FY04 4-30-04 3,039 (Avid-Revs didn’t incl. Avid’s Gov’t work)
FY05 4-30-05 4,684
FY06 4-30-06 3,005
FY07 4-30-07 3,492
FY08 4-30-08 5,897
FY09 4-30-09 12,963
FY10 4-30-10 13,204
FY11 4-30-11 8,502
FY12 4-30-12 14,783
FY13 4-30-13 21,333
FY14 4-30-14 22,294
FY15 4-30-15 26,744
FY16 4-30-16 44,357
FY17 4-30-17 57,630
FY18 4-30-18 53,621
**TOTAL: 295,548 (5/1/2003–4/30/18)
.
QTLY. NET PROFIT/LOSS BY QTR:
(“attributable to common stockholders”; ie, incl. PREF Div’s**)
**2-11-14: PPHM Raises $16.2M, 700k Pref. Shares w/10.5% DIV.
FY16Q1 7-31-15 -15,101,000
FY16Q2 10-31-15 -14,578,000
FY16Q3 1-31-16 -18,227,000
FY16Q4 4-30-16 -13,264,000
FY17Q1 7-31-16 -12,437,000
FY17Q2 10-31-16 -4,498,000
FY17Q3 1-31-17 -9,216,000
FY17Q4 4-30-17 -6,714,000
FY18Q1 7-31-17 -2,647,000
FY18Q2 10-31-17 -14,066,000
FY18Q3 1-31-18 -12,446,000
FY18Q4 4-30-18 +1,578,000 <=includes $9,154,000 income from disc. operations.
FY19Q1 7-31-18 -3,403,000
Period Halozyme Coherus-BioSci. Other-Custs
FYE 4-30-14 91% 8%
FYE 4-30-15 79% 9%
FYE 4-30-16 69% 26% 5%
FYE 4-30-17 58% 26% 16%
FYE 4-30-18 55% 22% 23%
...(cust. Splits not given in 7-31-18 10Q)
- - - - - - - - CDMO’s Fiscal Qtr’s (FY runs May – April):
FY’16-Q1 = q/e 7-31-15 – rep. 9-9-15 Wed (after mkt)
FY’16-Q2 = q/e 10-31-15 – rep. 12-10-15 Thu (after mkt)
FY’16-Q3 = q/e 1-31-16 – rep. 3-9-16 Wed (B4 mkt)
FY’16-Q4 = q/e 4-30-16 – rep. 7-14-16 Thu (after mkt)
FY’17-Q1 = q/e 7-31-16 – rep. 9-8-16 Thu (after mkt)
FY’17-Q2 = q/e 10-31-16 – rep. 12-12-16 Mon (after mkt)
FY’17-Q3 = q/e 1-31-17 – rep. 3-13-17 Mon (after mkt)
FY’17-Q4 = q/e 4-30-17 – rep. 7-14-17 Fri (after mkt)
FY’18-Q1 = q/e 7-31-17 – rep. 9-11-17 Mon (after mkt)
FY’18-Q2 = q/e 10-31-17 – rep. 12-11-17 Mon (after mkt)
FY’18-Q3 = q/e 1-31-18 – rep. 3-12-18 Mon (after mkt)
FY’18-Q4 = q/e 4-30-18 – rep. 7-16-18 Mon (after mkt)
FY’19-Q1 = q/e 7-31-18 – rep. 9-10-18 Mon (after mkt)
= = = = = = = = = = = =
“Going Concern” stmt. ELIMINATED from 10-K pub. 7-11-13; RE-INSTATED in 10-K pub. 7-14-17…
2012: 4-30-12 10-K iss. 7-16-12 Pg.68: “As more fully described in Note 2, the Company’s recurring losses from operations & recurring neg. cash flows from operating activities raise substantial doubt about its ability to continue as a going concern.” http://tinyurl.com/79o57b2
2013 & 2014 & 2015 & 2016 10-K's: http://tinyurl.com/p58jcbw etc...=> (((NO GOING CONCERN STATEMENT INCLUDED.)))
2017 7-14-17: “Going Concern” re-instated in the 4-30-17 10-K (pg.13) http://tinyurl.com/ycxu4l5n
CASH a/o 1-31-14: $63.2mm
CASH a/o 2-15-14: $79.7mm
CASH a/o 4-30-14: $77.5mm
CASH a/o 6-30-14: $78.3mm
CASH a/o 7-31-14: $73.3mm
CASH a/o 10-31-14: $64.4mm
CASH a/o 1-31-15: $55.2mm
CASH a/o 4-30-15: $68.0mm
CASH a/o 7-31-15: $59.0mm
CASH a/o 10-31-15: $72.0mm
CASH a/o 1-31-16: $67.5mm
CASH a/o 4-30-16: $61.4mm
CASH a/o 7-31-16: $44.2mm
CASH a/o 10-31-16: $49.5mm
CASH a/o 1-31-17: $41.5mm
CASH a/o 4-30-17: $46.8mm
CASH a/o 7-31-17: $37.3mm
CASH a/o 10-31-17: $27.7mm
CASH a/o 1-31-18: $17.9mm
CASH a/o 2-28-18: $41.7mm
CASH a/o 4-30-18: $42.3mm
CASH a/o 7-31-18: $37.5mm
CDMO - O/S Shares History (’06–curr.)
Click here for 4/30/06–12/8/16 Peregrine Pharm. share history: https://tinyurl.com/y76cbyt5
**PPHM shares were 1:5 R/S eff. 10-19-09 (~237mm/$.64=>~47.4mm/$3.20) http://tinyurl.com/ykuw588
**PPHM shares were 1:7 R/S eff. 7-10-17 (315mm/$.606=>45mm/$4.24) http://tinyurl.com/ycohqn6j
1-31-17: 271,068,464 +13,926,930 (1-31-17 10Q iss. 3-13-17)
3-10-17: 297,709,478 +26,641,014 (“ “ “)
4-30-17: 44,014,040(x7)=308,098,280 +10,388,802 (4-30-17 10K iss. 7-14-17)
7-10-17: 45,069,188 +1,055,148 (“ “ “)
7-31-16: 45,094,154 +24,966 (7-31-17 10Q iss. 9-11-17)
8-25-17: 45,096,081 +1,927 (8-25-17 Amended 10K http://tinyurl.com/yb5jq7vc )
9-6-17: 45,096,081 nochg (7-31-17 10Q iss. 9-11-17)
10-31-16: 45,172,632 +76,551 (10-31-17 10Q iss. 12-11-17)
11-27-17: 45,210,608 +37,976 (14A/Proxy iss. 12-7-17 https://tinyurl.com/y7qprpg9 )
12-6-17: 45,212,760 +2,152 (10-31-17 10Q iss. 12-11-17)
1-8-18: 45,253,038 +40,278 (2-8-18 13D https://tinyurl.com/ya43sc3r )
1-31-18: 45,257,180 +4,142 (1-31-18 10Q iss. 3-12-18)
...2-20-18: Avid Raises ~$21.8M net, selling 10,294,445sh.@$2.25 (underwriter: Wells Fargo)
…... 8-K: https://tinyurl.com/ya3nenth 424B5: https://tinyurl.com/ycpshgxl
3-7-18: 55,552,233 +10,295,053 (1-31-18 10Q)
4-30-18: 55,689,222 +133,989 (4-30-18 10K)
7-10-18: 55,793,107 +103,885 (4-30-18 10K)
9-5-18: 56,001,456 +208,349 (7-31-18 10Q)
