Avid Bioservices Inc (CDMO)

[Protector]

Amrsto1000, I posted my opinion on the subject here

HALO is among the candidates and a merger would be the preferred way to go.

The resulting company would have:

- A running production grade drug with established licensing, and approved clinical trials.

- A common portfolio with clinical programs that don't cost anything but could yield income. And potentially at 15+% of sales profits + 90 Milj$ milestone, Bavi is a serious contribution. HALO itself made deals to disengage from its other clinical programs and understands what this is about.

- Manufacturing autonomy for own HALO drugs and sold-out clinical program drugs (e.g. Bavi).

- 3rd party manufacturing and CDMO's 100+ Milj$ signed orders in back log . Fast increasing demand for Enhance SC (e.g. Darzalex, etc). Sub-C competitor would be Merck, so those BP's with no own SC program will end up with Enhanze. Given the big advantages of SC drug administration the HALO/CDMO combined entity would be a WAY MORE interesting acquisition target.

- CDM's Bleeding edge Viral/Gene labs and manufacturing.

- Direct increase in profits due to CDMO's tax advantages and HALO's fixed income to write it down on, starting immediately. This would yield millions of available cash that can be used for capacity extensions.

- Proximity & History, both companies are in SoCal and have a good NO PROBLEM history. They also have a trust relationship (HALO depended on CDMO/PPHM and Cook for their complete Enhanze business) and CDMO is the preferred production partner.

- HALO can move some production from Cook to CDMO, which will increase profits because Cook's profit will be with the new merger. BUT HALO, in view of patent protection loss in some years, could ALSO compete with the generics by pricing the product at that moment as such that the investment for generics would have a to large return on investment period. They can only do that if they produce themselves and by merging they can. They would also strategically get better grip on their production continuity.

- HALO vs CDMO
PPS: 39,43$ vs 33,86$
MAR.CAP: 6,6 Bilj$ vs 2,1 Bilj$.
SHARES: 167,868,575 vs 63,147,574
Inst.Inv: 125.18% vs 102.94%

So, in a simple 1 HALO for 1 CDMO exchange, the shareprice would be 37,9$
HALO shareholders would win, because for 1,5$ a share (39,43-37,9) they get themselves one of worlds most advanced CDMO's and control over their own future. CDMO shareholders would win, because all production for Darzalex and other SC Enhanze applications would FOR SURE end up in the new entity. The merger would have a SOLID backbone for further, less encumbered - hence less profit bleeding in interests - , growth.

For HALO investors there would be an approx. 33% of 600Milj (say 200Milj$) tax benefit over the coming years that CDMO brings in. That alone sponsors the 1,5$ per share (200Milj$/167Milj HALO share currently outstanding). HALO's outstanding debit is, by memory, bigger then CDMO's 125Milj Notes obligations.

Furthermore, the part in the cost for revenue (45Milj$ in 2020) will partially have gone to CDMO and CDMO also takes a profit on production that is in sync. with the increase of licenses at HALO. And, they KNOW what they merge with, no surprises, no death bodies in the closet.

CDMO isn't the requesting party for a merger, since we are expanding, have business signed, have the cash & funding and are at the top of the technology of our industry with expansion ongoing. So we also offer time-to-market. But a merger can be lucrative for CDMO because HALO has more revenue NOW which the CDMO business part could grow on tremendously in such merger.

Helen is in search for new platforms BUT she never disclosed what a platform means for her!

Does a production platform cover the flag 'platform'? It would in all cases be a no brainer, direct revenue generating platform, with back-log business outstanding for 100+Milj$. So technically, she could even do better then 1 HALO for 1 CDMO.

I only fear that if HALO would make an offer for merger, there will be other parties that will try to shoot a torpedo in it.

AIMO