Avid Bioservices Inc (CDMO)

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Avid Bioservices Reports Financial Results for Fourth Quarter and Full Fiscal Year Ended April 30, 2022 and Recent Developments

June 29, 2022 at 4:05 PM EDT
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-- Recorded Fourth Quarter and Full Fiscal Year Revenue of $31 Million and $120 Million, Respectively --
-- Signed $44 Million in Net New Business Orders and Ended the Quarter with a Record High Backlog of $153 Million --
-- New Cell and Gene Therapy Analytical and Process Development Suites Now Operational and CGMP Manufacturing Suites Continue On Schedule; Myford South Facility Construction On Schedule --
-- Project Fiscal 2023 Revenue of $140 to $145 Million, Representing 17% - 21% Growth Over Fiscal 2022 --
TUSTIN, Calif., June 29, 2022 (GLOBE NEWSWIRE) -- Avid Bioservices, Inc. (NASDAQ:CDMO), 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 fourth quarter and full fiscal year, ended April 30, 2022.
Highlights from the Quarter and Fiscal Year Ended April 30, 2022, and Other Events:
“We made considerable progress during fiscal 2022. During the year, we achieved revenue of $120 million, representing a doubling of revenues recorded in fiscal 2020. Notably, Q4 fiscal 2022 was the eighth consecutive quarter of operational profitability for the company. The company signed net new project orders for $155 million in fiscal 2022, leading to a backlog of $153 million; Avid’s largest backlog to-date. Supporting this growth, as well as that which we anticipate in the coming years, our facilities and service expansions continue to proceed according to plan,” stated Nick Green, president and chief executive officer of Avid Bioservices.
“Our momentum in fiscal 2022 was driven in part by the exceptional performance of our enhanced commercial team. Over the last six months, we expanded the sales teams for both our mammalian and our cell and gene therapy businesses. We also expanded our business operations team to best support our growing project pipeline. This new organization has had great success, highlighted by the fact that it signed the same number of new projects in the second half of fiscal 2022 as signed in all of fiscal 2021.
“During the period, our facilities and service expansions continued to advance on a timeline that will allow us to meet the demand of existing customers that are expanding their manufacturing work with us as well as our newest and prospective customers. With respect to our 53,000 square foot cell and gene therapy facility, we recently completed the first phase of a two-phase construction plan, opening our new analytical and process development laboratories eight months to the day after we announced our intention to expand into the cell and gene therapy business. Construction of the CGMP suites for our cell and gene therapy facility, the second phase of this expansion, remains on track and those manufacturing suites are expected to come online in mid-calendar 2023. The expansion of our Myford facility, which houses our mammalian operations, is also being constructed in a two-phase process. As reported last quarter, the company completed the first phase with the opening of a new downstream suite. The second phase of this project is focused on the Myford South facility and is on track to come online at the beginning of calendar year 2023, which at our current growth rate will be ideally timed to provide much needed capacity for fiscal 2024.
“Finally, we are delighted to announce a further expansion of our process development capacity for our mammalian cell business. Once complete at the end of this calendar year, these new suites will double our current process development capacity which came online in October of 2019. This new line will significantly increase capacity at the front-end of our mammalian cell business, which is critical to the efficient on-boarding of new clients. It is expected that this expansion will cost approximately $6 million, and upon completion, will have the potential to generate approximately $20 million in additional revenue capacity.
“Given the growth momentum achieved during fiscal 2022, our significant year-end backlog, and the increase in demand anticipated during fiscal 2023, we are pleased to announce revenue guidance for fiscal 2023 of between $140 and $145 million.”
Financial Highlights and Guidance
The company is providing revenue guidance for fiscal 2023 of $140 million to $145 million, a 17% - 21% increase over fiscal 2022.

Revenues for the fourth quarter of fiscal 2022 were $31.2 million, representing a 13% increase compared to $27.6 million recorded in the prior year period. The increase in revenues for the quarter can primarily be attributed to an increase in the scope of in-process and completed manufacturing runs and an increase in process development revenues primarily associated with services provided to new customers as compared to the prior year period. For the 2022 full fiscal year, revenues were $119.6 million, a 25% increase compared to $95.9 million in the prior year period. The increase in revenues for the 2022 full fiscal year, as compared to the prior year period can primarily be attributed to an increase in the number and scope of in-process and completed manufacturing runs, unutilized reserved capacity fees, and process development revenues.

As of April 30, 2022, revenue backlog was $153 million, representing a net increase of 30% compared to $118 million at the end of fiscal 2021. The company expects to recognize the majority of this backlog during fiscal 2023.

Gross margin for the fourth quarter of fiscal 2022 was 22%, compared to a gross margin of 29% for the fourth quarter of fiscal 2021. Factors impacting the gross margin for the quarter were primarily from increases in costs associated with the growth of our business and our facility expansions including compensation and benefit expenses as well as increases in facility and related expenses, partially offset by higher revenues during the period. Gross margin for the 2022 full fiscal year was 31%, consistent with 31% for the prior year period.

Selling, general and administrative expenses (“SG&A”) for the fourth quarter of fiscal 2022 were $5.9 million, an increase of 17% as compared to $5.1 million recorded for the fourth quarter of fiscal 2021. The increase in SG&A for the fourth quarter was primarily due to higher compensation and benefit expenses as well as increased facility and related expenses. For the 2022 full fiscal year, SG&A expenses were $21.2 million as compared to $17.1 million for the prior year. The increase in SG&A during the 2022 full fiscal year was primarily due to compensation and benefit expenses, facility and related expenses, advertising costs and legal and accounting fees.

During the fourth quarter of fiscal 2022 we recorded a non-cash income tax benefit of $115 million, or $1.63 per diluted share, due to release of our valuation allowance recorded against the company's deferred tax assets (DTAs). The company previously maintained a valuation allowance on its DTAs until there is sufficient evidence to support the reversal of all or some portion of these allowances. On a periodic basis, the company reassesses the valuation allowance of its DTAs, weighing all positive and negative evidence, to assess if it is more-likely-than-not that some or all of the company's DTAs will be realized. As of the fourth quarter of fiscal 2022, the company has demonstrated profitability and cumulative pretax income as well as forecasting revenue growth. After assessing both the positive and negative evidence, the company determined that it was more-likely-than-not that its DTAs would be realized and released the valuation allowance related to federal and state DTAs as of April 30, 2022.

For the fourth quarter of fiscal 2022, the company recorded net income attributable to common stockholders of $115.6 million or $1.87 per basic and $1.65 per diluted share, as compared to a net loss attributable to common stockholders of $2.7 million or $0.04 per basic and diluted share, for the fourth quarter of fiscal 2021. For the 2022 full fiscal year, the company recorded net income attributable to common stockholders of $127.7 million or $2.08 per basic and $1.84 per diluted share, compared to net income attributable to common stockholders of $3.3 million or $0.06 per basic and diluted share, for the 2021 full fiscal year. Excluding the non-cash income tax benefit of $115.0 million recorded during the fourth quarter of fiscal 2022, the company’s net income attributable to common stockholders was approximately $600 thousand or $0.01 per basic and diluted share for the quarter, and $12.7 million or $0.21 per basic and diluted share for the full fiscal year 2022.

The company reported $126.2 million in cash and cash equivalents as of April 30, 2022 compared to $169.9 million as of the prior fiscal year ended April 30, 2021.
More detailed financial information and analysis may be found in Avid Bioservices’ Annual Report on Form 10-K, which will be filed with the Securities and Exchange Commission today.
Recent Corporate Developments
The company’s commercial team signed multiple new project orders during the fourth quarter, totaling approximately net $44 million. For the 2022 full fiscal year, the company signed new project orders totaling approximately net $155 million. These projects span all areas of the business, from process development to commercial manufacturing.

The company continues to make progress with both the Myford South expansion, as well as the construction of its new dedicated cell and gene therapy facility. The company currently expects to complete the second phase of its Myford South expansion, which includes both upstream and downstream CGMP manufacturing suites, during the first quarter of calendar 2023. With respect to the cell and gene therapy business, the company brought its process and analytical development capacity online in mid-June 2022. The company remains on track to bring the CGMP manufacturing suites online in mid-calendar 2023. Please visit the Avid website Facilities page for more information about the company’s expansions and videos documenting progress (https://avidbio.com/expansion-updates/).