OK, Here is the first of 2 (probably) posts that I'm providing from the ASM. I won't go over the information from the webcast in any detail since you all should have listened to it at least once. Realize that some of the "progress" presented is acually covering the time since the last ASM so you may have seen it before. But I will note some things that I think you should have taken away, imo.
CDMO Notes from ASM
Process Development Lab Open house on 10/7 was well attended by existing and potential customers.
Franklin facility now has the ultra-clean water facility to supply us rather purchasing that water as in the past.
40,000 sqf buildout will probably be done in stages such that bottlenecks can be eliminated or avoided.
3 Process Performance Qualifications (PPQ) have been completed since the last ASM –qualifying the manufacturing process and parameters. This will be part of the submittal to the FDA for approval and ties the drug to this facility.
“Going concern” eliminated and we are now cash-flow positive from operations and moving to sustainable cash-flow positive.
Orange County unemployment rate is around 2% but CDMO workforce is stabilized and the necessary talent has been acquired.
Customers are choosing CDMO’s on quality, track record, capacity, and schedule. Price is not the deciding factor.
The Avid advantage is about track record and nimbleness, along with state-of-the-art facilities. Being independent, Avid can make decisions and move quickly, whether it is an RFI, a process development, a PPQ, or a manufacturing work order.
Richard gave the Process Development Lab presentation. 2000L reactors are million-dollar runs so the micro-reactors in this lab are necessary to work out the process before the big production runs. The micro-reactors (30 new bench scale controllers standardizing with a 3L micro-reactor) in 8000 sqf in the Franklin building allow the development timelines to be greatly compressed. It also has a 50L and 200L pilot plant (mid-range/intermediate scale). The bench scale allows results of many runs (usually 3L) to be over-laid to show consistency and to set parameters and ranges for the process. The lab also lets the filtration process get worked out and scaled up.
Q&A
How many stockholders? 327 stockholders of record and approx. 3000 beneficial owners.
Are you designing the new space for the new 5000L reactors? We have 3 x 2000L in the existing space now. New space may have 6 x 2000L but the dimensions of the room will be looking forward to accommodate those new reactors.
How will the new space be funded (because we stockholders would not like to see more shares sold)? There are a lot of models and we are discussing them. We have money in the bank now which is allowing us to pay for the incremental improvements that we are making now to increase throughput and efficiency. It is anticipated to cost around $30 million for a full buildout but we may do it in steps since we already have much infrastructure in place. We are looking at collaborations with our clients, which is increasingly being used in biologics. Clients may participate in a low/no-interest loan. They may pay for their own equipment for us to create their product. If they participate in financing, then they have dedicated capacity. Vendors may give help via discounts and other incentives. We are VERY sensitive to dilution and would not do that unless we had an acquisition that would be a game-changer or had a very significant adding of capacity.
Milestones from Oncologie coming due soon? A milestone would be attached to a registrational trial and none are happening right now. A couple of the trials listed on the Clinical Trials.gov were IST and not included in the Oncology contract. Any milestone will be coming “down the road” and stockholders will be informed when they are paid. The other great thing about the oncology agreement is that we are doing the manufacturing as they advance the drug.
Can we assume you are making runs for them now? We are having ongoing discussions. We have manufactured some material, they have some to do their clinical programs, but they will need more material in the future.
With the ongoing political environment to reduce health care costs and drug prices, are your customers bringing that up to you in your negotiations? The price we get for manufacturing the drug is such a small part of the overall patient costs for the drug that we are not feeling any pressure from that. It is not coming up as a critical part of the discussions so far.
Why did you do away with the poison pill at this time? Since 2017 when we had a transition of the board, a primary focus has been on better governance. Having a rights plan that was not approved by shareholders is not viewed as good governance. We took a deeper look recently. The Delaware law has a section 203 whereby anyone who purchases 15% or more is precluded from participating in a hostile takeover for 3 years. We felt like this was providing a similar protection as the poison pill. The pill is becoming outdated and other companies are not adopting it anymore.
We know the facts so your FUD (Fear Uncertainty and Doubt) is useless here.
