Replies to post #240260 on Avid Bioservices Inc (CDMO)

[Krakonos]

Thank you RRdog, now I will be up all night.

[biopharm]

nice post RRdog and thanks! I remember on one of the conference calls that Avid II was remarked to be work about $40M and Avid I was increased to about $30M so I took that as $70M with Avid I + Avid II. Since SK has been conservative lately with numbers, and we use your 5x projection in sales that would give Avid I/II $70M x 5 = $350 Million

If we use your upper end $200M for Avid I and Avid II x5 = $1B

Thanks for the input regarding Raymond Birge at NYAS with Dr. Phil Thorpe and I hope that Dr. Birge speaks of the late Dr. Thorpe during his speech, because the late Dr. Phil Thorpe and his many years of research with Bavituximab is truly what is bringing many into the PS Targeting focus at this time, with Dr. Birge one of the first ones to publicly mention PS this upcoming week.

Interesting times ahead...

There is no reason manufacturing can not become a 100-200 million dollar business over the next couple of years. Also too conservatively stated was PL valuation of Avid at 2-4 times sales. A growing specialty manufacturing business like Avid with high gross profitability and sales backlog visibility is worth at least 5 times sales.

[Protector]

RRDog, I agree Avid III is more then just rumour.

[101Theory]

BRAVO BRAVO I refer back Avid $100M minimum no less not including Avid offshoot : Top Secret :

[masshysteria]

Great post RRdog - thanks for the balanced and informative perspective.

Definitely exciting times ahead.

Best,

MH

[stoneroad]

Absolutely NO reason PPHM can't craft an eloquent PR tying RB's presentation to their patent portfolio, Sunrise and collaborations with MSK and AZ. Time to let the investment community understand the story.

[eb0783]

RRdog we all highly respect your input and opinions.

Avid II is also represented way too conservatively as a "doubling" of capacity when IMO it is closer to a tripling of capacity. Avid II is also designed to operate 24/7 if necessary which potentially makes its capacity way more than a triple of current capacity. Not only can it operate longer hours but the new replaceable reactor liners make it a much more efficient operation with much less down time between batches.

I was going to mention this a day or two earlier but this is a good time. Avid II’s single use reactors can be replaced in about an hour and back in service in about two hours! That is compared to the standard stainless steel tanks, and associated plumbing, that take about a week to sterilize, test, and put back in service. The batches take around 20 -21 days to cook, I believe. So the single used reactors not only have almost no downtime, in comparison, but save a lot in labor. On top of that they increase quality by reducing the possibility of contamination, and other errors.

Avid III is more than a gleam in their eye, and if they actually move on it, will most likely be considerably larger than Avid II. imo So I agree with your estimates in that Avid could soon be financing most interim needs.

A growing specialty manufacturing business like Avid with high gross profitability and sales backlog visibility is worth at least 5 times sales. I would value Avid currently at 150 - 200mm and rising. If all else were to fail, Avid should give investors a profitable exit

[md1225]

Thank you RRdog I will take your recommendation when to submit article seriously. As I noted I joined SA Pro not a small investment in time and money but one I expect to pay off dearly.

[cjgaddy]

“Avid with high-gross-profitability & sales-backlog” => For latest Qtr(7-31-15), Avid ran GP%=51 on Sales of $9.4mm; for last 3 qtrs, GP%=49/GP$=$11.9mm on Sales of $24.1mm. Avid's “committed backlog” = $42mm at 9/2015.

Updated PPHM REVS-BY-QTR TABLE, now thru FY16/Q1 (q/e 7-31-15), per the 7-31-15 10-Q (http://tinyurl.com/pemub47 ) issued 9-9-15.
• Total Revs since May’06: ($138.6mm/Avid + $24.1mm/Govt + $2.4mm/Lic.) = $165.2mm
• Deferred-Revs at 7-31-15, going fwd into FY’16/Q2 (q/e 10-31-15), total $8.3mm, UP from the $6.6mm of Deferred-Revs at 4-30-15 that drove into FY’16/Q1.
• Avid’s Gross-Profit over last 3 qtrs: $12.5mm on revs of $24.4mm (GP% = 49%)
• Recall, Avid Rev$ from Gov’t DTRA Contract work (6/30/08 – 4/15/11, totaling $24.15mm), went into GOVT-REVS, not AVID-REVS, in the Financials.
Avid’s website: http://www.avidbio.com

AVID PROFITABILITY (GROSS*) BY QTR:
QTR Avid-Rev$ CostofMfg$ Gross-Profit$ GP%
FY14Q1 7-31-13 4,581,000 2,670,000 1,911,000 42%
FY14Q2 10-31-13 7,354,000 4,195,000 3,159,000 43%
FY14Q3 1-31-14 3,885,000 2,416,000 1,469,000 38%
FY14Q4 4-30-14 6,474,000 3,829,000 2,645,000 41%
FY14 TOTAL: 22,294,000 13,110,000 9,184,000 41%*
FY15Q1 7-31-14 5,496,000 3,583,000 1,913,000 35%
FY15Q2 10-31-14 6,263,000 4,139,000 2,124,000 34%
FY15Q3 1-31-15 5,677,000 3,113,000 2,564,000 45%
FY15Q4 4-30-15 9,308,000 4,758,000 4,550,000 49%
FY15 TOTAL: 26,744,000 15,393,000 11,151,000 42%*
FY16Q1 7-31-15 9,379,000 4,608,000 4,771,000 51%
*Avid Net-Profit (ie, incl. Selling, G&A) not split out from PPHM-Corp. in the financials.





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9-10-15/OutsourcingPharma: “Avid Revs Likely to Grow Substantially”

9-10-15: “Peregrine Up on CMO Q1 Sales & Backlog, as New Plant Set to Go Online”
By Dan Stanton, Outsourcing-Pharma
http://www.outsourcing-pharma.com/Contract-Manufacturing/Peregrine-up-on-CMO-sales-and-backlog-as-new-plant-set-to-go-online
Manufacturing backlog at Avid Bioservices has reached $42mm as the firm books up space at a new facility currently undergoing its first internal pilot run. For Q1/FY2016, Peregrine Pharmaceuticals reported record revenue from its contact mfg. business Avid Bioservices of $9.4mm, up 71% year-on-year. But revenues are likely to grow substantially, the firm said, as there is a $42mm committed backlog from existing customers which will be carried-out in part once a new mammalian cell culture mfg. facility in Tustin, CA comes online.

“The new manufacturing suite is fully built and the first internal pilot run is currently underway to verify all systems and equipment are properly functioning,” Peregrine CFO Paul Lytle said during an investor call yesterday. ”Our strategic investment in the Avid Bioservices business is already starting to pay dividends. Our clients are reserving mfg. slots in the new facility which has increased our revenue backlog to approximately $42mm.”

A large proportion of the firm’s revenues come from its major client, Halozyme Therapeutics, servicing monoclonal antibody development projects with Roche & Baxter. While the company hopes the new facility will attract new customers, it is the current customer base showing the most interest.

“In the new facility, a lot of the interest comes from the existing client base, even as much as we've had new potential customers coming through,” said CEO Steven King. “It's exciting, it's a real nice showpiece and it's really showing in the interest that it's generated from again the existing client base.”

The site, first announced last year, more than doubles Avid’s mfg. capacity, though some of the space has been reserved to service its parent company’s lead product bavituximab, a chimeric mAb in Phase III trials for non-squamous NSCLC. END



6-17-15: Avid’s John Haney (ex-Genentech/Pfizer) speaking at BIO-INTL’5/Philly http://tinyurl.com/pnlquu3 & http://tinyurl.com/nl4vbgk
...”Designing & Implementing Avid’s New State-of-the-Art Single-Use Facility for Late Ph.3 & Commercial Prod.” - SK: "We've seen tremendous interest for production in the new facility, both from new & existing clients"
12-10-14: Avid to Double Mfg. Capacity (“expanding client roster; potential commercial launch of bavituximab”) http://tinyurl.com/mmc3qgy & http://tinyurl.com/kmdgq8t
3-24-15: Avid Receives CMO Leadership Awards for Its Commitment to Innovation & Reliability http://tinyurl.com/psep47f
3-12-13: Avid Q3'FY13 GP=$3.3mm; S.King 3-2012, "We have a profitable CMO, Avid Bioservices" http://tinyurl.com/l97rzm8

[until2000]

Thank you RRdog for your contributions. I always appreciate your analysis. You add so much to this narrative. I am not a scientist, and struggle to keep up, but I do have enough business background to recognize that public companies are not all valued the same.

I had the thought recently that what Peregrine is doing, combining Bavituximab with chemotherapy drugs in the hopeful attempt to increase their effectiveness at the present seems to work. We will certainly know better when Sunrise sets, but let's just say for now that it works as a combination therapy.

If this is indeed the case, then if I am a large biotech, why not just wait for final approval and then buy bavituximab on the open market? The drug, not the company. No need to hurry, no need to buy the company, just wait for the product to be approved and buy it?

This limits any risk, only thing left to do is convince the FDA that it works with your drug. I assume that if we get to that stage, the FDA will have made determinations about it's effectiveness as a combination drug and will agree to stepped up phase trials with other chemo drugs and allow compassionate use wherever possible.

This is probably a minor point, but I am still grappling with the lack of enthusiasm by investors for peregrine stock, and I think part of it may be coming from a perceived lack of enthusiasm by big pharma to open their check books. Last time I looked their were no outstanding bids to buy the company.

PS I do agree with you that the value of the stock right now is a reflection of the value of Avid. Bavituximab doesn't even enter the picture when it comes to ascribed value. I hope to see this change in the next 6 months.

Good luck to all.

[cheynew]

Your posts are always thought provoking, thanks. I wish you would use your influence to suggest they hire a real CFO and put Lytle in as an accounts payable clerk. He is a real weak link IMO.