3-12-18 Qtly CC-Transcript, PR(Fin’s Q3FY18/qe1-31-18), Avid Revs History Table
=> Avid Total Revs May03-Jan18: $288.6mm
*Revs Guidance (FY’18 fye 4-30-18): $50-55mm. Committed B/L=$39mm at 1-31-18.
*Cash: 1-31-18: $17.9mm; 2-28-18: $41.7mm
*As of Mar. 7, 2018, 55,552,233 shares o/s.
*10Q/1-31-18 iss. 3-12-18: https://tinyurl.com/yd4orsg7
*Avid’s website: https://avidbio.com
**Upcoming Roger Lias WEBCAST(ROTH) 3-13-18 2pmPT/5pmET: https://tinyurl.com/y9keay3u
This large post has 4 sections:
I. 3-12-18 Q3/FY18 Qtly. Earnings Conf. Call TRANSCRIPT (q/e 1-31-18)
II. 3-12-18 CDMO Press Release: Q3/FY18 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’18 = May’17-Apr’18.
((( Orig. transcript from SeekingAlpha.com [https://tinyurl.com/yckfrhxs ], with numerous corrections made. )))
Link to webcast replay: http://ir.avidbio.com/events.cfm => https://edge.media-server.com/m6/p/mnzedx6d
FULL TRANSCRIPT… 3-12-18 FY’18/Q3 Earnings Conf. Call (q/e 1-31-18) (Lias/Kinjerski/Lytle)
WELCOME & FWD-LOOKING STATEMENTS: Tim Brons, Vida Strategic Partners (IR)
ROGER LIAS (CEO) – OPENING COMMENTS:
Thank you, Tim, and thanks to all of you who've dialed in and all of you who are participating today via webcast. During our Q2 earnings call back in December, I outlined a number of ambitious objectives, all designed to transition Peregrine Pharmaceuticals into a dedicated CDMO business. Three months later, I am very pleased to announce that Avid has completed these key objectives.
First, in January, we changed the name of the company from Peregrine Pharmaceuticals to Avid Bioservices, and also changed our NASDAQ ticker symbol to CDMO. We successfully divested the company's lead immuno-oncology assets to an organization with the financial resources & expertise to further develop them. We have established a new operational structure that will allow our business to take full advantage of the substantial & growing demand for biologics manufacturing. And lastly, we executed a financing round, raising gross proceeds of more than $23mm. These funds will be used to grow and enhance our CDMO business, including the strengthening of our process development capabilities. Not only does process development work represent an attractive and profitable business opportunity in its own right, but it is crucial for on-boarding new projects that we anticipate will generate a pipeline of future cGMP mfg. opportunities.
I would like now to discuss the R&D asset divestiture. Last month, Avid successfully entered into an asset assignment and purchase agreement with Oncologie Inc. for the company's PS-targeting program [2-12-18: https://tinyurl.com/yam8gb3h ] . In addition to bavituximab, the deal included Avid's other PS-targeting antibody derivates, including beta bodies and certain other assets and licenses useful for the potential commercialization of bavituximab. Not included in the deal is the PS-targeting Exosome technology, which is being returned to UTSW. Under the terms of the Oncologie agreement, Avid will receive an aggregate of $8mm in upfront payments. These will be made over a period of 6mos. from the execution date of the agreement, and we expect to receive our initial payment of $3mm within the next few days. The deal also makes Avid eligible to receive up to $95mm in development, regulatory, and commercialization milestones. Oncologie will be responsible for all future research, development, and commercialization costs and activities, including intellectual property costs, and with Avid receiving royalties on net sales that are upward tiering into the mid-teens. The deal also requires Oncologie to enter into an agreement with Avid for future contract dev. & mfg. activities in support of bavituximab. We are very pleased to have reached this important agreement with Oncologie. This deal places Avid’s legacy R&D assets in very capable hands, while providing additional capital, both upfront and potentially downstream, to support our CDMO business. Importantly, the Oncologie deal marks the completion of Avid's transition to a dedicated CDMO business, and our team is now fully engaged in the work of expanding and diversifying our customer base and enhancing our services.
Following my comments, Tracy will discuss the very rapid progress we have made in this effort. But first, I’d like to provide a brief overview of the biologics mfg. market that drives our optimism for the future of Avid Bioservices. By 2022, the biologics drug market is anticipated to increase to approx. $326B annually, and biologics are predicted to comprise more than half of the top 100 drug sales worldwide. Growth is anticipated to continue at a compound annual growth rate of 10%. Within this market, protein drugs, such as monoclonal antibodies, continue to dominate, and mammalian cell culture base manufacturing, of the types that we provide at Avid, has become the preeminent technology used in the manufacturing of these highly complex biopharmaceutical products. In 2016, biologics based on mammalian cell culture technology represented 87% of sales of marketed products, as compared to those based on microbial fermentation technology. And this percentage is forecast to further increase to 92% by 2020. Given its backdrop, the CDMO industry has also experienced substantial growth over the past few years, with a predicted compound annual growth rate of 13% from 2015 to 2020. Growth projected from mammalian biologics manufacturing is particularly strong. Demand for commercial mfg. capacity for biologics derived from mammalian systems, including biosimilars, is expected to rise from 2 million liters in 2016 to approx. 3.5 million liters in 2020. The availability of facilities offering this production capacity is limited. While many organizations would like to take advantage of current market demand, the lengthy process of designing, constructing, equipping and validating these facilities requires significant expertise and capital investment which function as formidable barriers to entry into the CDMO market.
For all of these reasons, we believe that Avid is exceptionally well positioned to address the market, with numerous strongly differentiating advantages, which include a virtually unmatched 25 years of expertise & experience in developing a manufacturing biologics, a comprehensive range of services to support customers from early stage development through to commercialization, our customer-centric approach, our agile manufacturing & development capabilities, which include comprehensive analytical and characterization services, and our cost effective solutions which are facilitated by state-of-the-art facilities which feature modular clean room design, single-use bioreactors, and other disposable technologies employed throughout the production cycle.
It is Avid's excellent regulatory track record, however, that is perhaps our strongest advantage & differentiator. Historically, developing the expertise to comply with stringent regulatory audits and validation requirements has been a challenge for both biopharmaceutical companies and CDMOs alike. Customers place a premium on working with CDMOs that can ensure high degree of regulatory compliance, which decreases execution risk. This applies not only to customers approaching the typically large scale commercial manufacture, but also to those in process development or earlier clinical manufacturing stages who want to avoid the need for an expensive and technically risky future transfer to more experienced CDMO to support their pre-approval inspections and market supply. In my experience in this industry, I believe our track record to be virtually unparalleled, which consists of 15 years history of inspection by global regulatory authorities with no significant impact on our business or that of our customers. In addition, between 2005 and 2017, we completed 6 successful pre-approval inspections, and between 2013 and the present, we've also hosted 4 routine FDA inspections, including the latest unannounced inspection which was completed last month. None of these resulted in any Form 483 observations, and indeed the most recent inspection resulted in no observations of any kind. In addition to the FDA, we've also completed inspections by the European EMA, Brazil's ANVISA, Health Canada, The California Dept. of Health, the Australian Dept. of Health, and Turkish authorities. And finally, we regularly successfully comply with audits from large pharmaceutical companies, which are often more rigorous than those of the regulatory agencies. Given this track record & landscape, we believe Avid has a significant opportunity to drive organic growth by leveraging our strengths, broadening our capabilities, increasing our capacity, and improving our market visibility and reach. To this end, we have taken, and continue to take steps, to diversify and expand our customer base. We are executing marketing and sales strategies designed to drive new client acquisitions, while also continuing to pursue addl. collaborations with our existing customers.
I'm pleased to be able to report that in a very short period of time we've generated significant interest from both emerging and growth biopharmaceutical players and from pharmaceutical multinationals. I'm confident that the plan we're executing will drive a considerable increase in backlog and the opportunity to further enhance capacity utilization in the future. So with that background, I'd like to hand over the call to Tracy Kinjerski for an overview of the specific steps we've taken during and subsequent to Q3 FY’18 on our pathway to achieving our growth & operational objectives.
TRACY KINJERSKI (VP/Bus.Operations) – OPENING COMMENTS:
Thank you, Roger. Since joining the company in November [11-29-17: https://tinyurl.com/yc4zenkc ], I've had the pleasure of meeting and speaking with a number of our investors, and I'm pleased to be participating in my first earnings call for Avid. As Roger outlined, the market opportunity for biologics manufacturing is significant and growing. And our expertise, facilities, and regulatory track record position Avid for leadership in this landscape.
Since coming on board, my priority has been to strengthen our business systems and to expand and diversify our customer base in order to meet our revenue goals. As we ramp up our efforts to attract new business to Avid, it is critical that we strengthen our operational processes and systems to ensure that the company is capable of providing customers with an optimal experience at every stage of their interaction with our team. Specifically, we have taken steps to coordinate business development and project mfg. functions with our teams working closely together in order to best manage and advance all client-basing activities. For example, this includes the issuing of proposals and negotiating contracts. We have also implemented additional procedures across the organization, spanning all stages of work, to ensure that each functional team has full visibility regarding the status of existing projects and new projects in the queue. For example, these efforts have resulted in customized site visits designed to optimize technical discussions and the tour experience for each potential new customer, with smooth and efficient transfer of newly signed projects from the business development team to the assigned project manager and a tight alignment between marketing, BD, and project mgt. groups in order to best promote our progress and successes to the outside industry. This last effort is particularly important as our marketing group is in the first interface with the new customer and their close coordination with both business development and project management facilitates more accurate and comprehensive interactions. Also critically important are the multiple changes we've made with respect to our customer contracts & legal engagements. Going forward, our master service agreements will commit clients to longer term project scopes with industry standard reservation fees and cancellation provisions. This will, in time, provide a more complete forward-looking financial picture for the company.
We also have modified our approach to passing through material cost to clients to include deposits paid against lead times that equitably balance cash flow. These contractual changes enable improved security & assurance for our clients and provide multiple benefits to Avid. For Avid, our new contract & work statement documentation allows the company to provide a more comprehensive backlog, improved resource allocation, and gains the visibility we need to project revenues and project expansion needs. From the client perspective, in addition to reducing administrate burden, the system provides assurances that capacity will be available when needed and offers long-term visibility & security for their mfg. projects.
With our internal systems strengthened, we are actively ramping up our business development effort and building visibility in the industry. Concurrent with our announcement of Avid as an independent CDMO at the J.P. Morgan Healthcare Conference in January, we launched our new logo and new tagline with other initiatives that are creating brand awareness and driving demand. Renewed marketing efforts have successfully brought new inquiries to Avid, and it is clear that our efforts are having the desired impact in our market. In fact, in the first 3 months of 2018, we've received more than 10 new RFPs from potential clients as a result of new discussions & meetings. These represented all project phases, early and late, and include commercial manufacture. The client demographics range from biotechnology companies to multinational pharmaceutical companies. Furthermore, in the last 2 months, Avid has been notified that we have been awarded projects by multiple clients, and I'm happy to announce that within the past week, two additional new clients have announced their intent to execute master service agreements with Avid.
Two other clients, in particular, recently allowed us to announce specific details of the projects we're undertaking on their behalf. I'd like to provide a little more detail on these customer relationships. First, I'd like to comment on the Enzyvant project. Enzyvant, a subsidiary of Roivant Sciences, selected Avid as the commercial drug substance manufacturer for RVT-801, its a recombinant enzyme replacement therapy for Farbers disease. Though it was only recently announced, successful technology transfer and clinical manufacturing have been underway since mid-2017. Avid is undertaking process characterization and optimization in support of Enzyvant's ongoing developments and regulatory activities for RVT-801. Because of this molecule’s indication, it’s expected to progress very rapidly to process validation in support of pivotal trials and commercial launch. In addition, last month Acumen Pharmaceuticals selected Avid to provide process development and clinical mfg. services in support of ACU193, being developed for the treatment of Alzheimer's disease. Avid and Acumen will immediately commence process development work, with the goal of creating a robust cost-effective and scalable process to support cGMP manufacture. The Acumen contract represents in earlier stage project which supports our near-term revenue and profitability goals, as well potentially advancing to larger scale, later-stage manufacturing opportunities in the future.
We also continue to engage with multiple potential customers regarding their later-stage and commercial mfg. needs. It is standard that the due diligence surrounding later-stage contracts encompasses a larger but longer decision cycle on the part of the client than early stage projects. We are qualified and well-positioned to win a number of these later stage projects for which we're currently in discussions. While we are not in a position to publicly disclose such potential partners at this time, we believe it's important to communicate the scale of our efforts.
2018 is off to a great start with a very positive market feedback. From a business dev. perspective, we continue to focus our efforts proactively on the North America client base, but have, without dedicated effort, also attracted the attention of global companies, as well as smaller biotechnology companies outside of the North American region. Our business dev. will include one West Coast and one East coast representative, with Roger and myself continuing to actively support the recruitment of new clients.
In closing, I believe our business development activities and operational improvements have positioned us well to take full advantage of the growing demand in the biologics mfg. market. We are confident that our growing book of new, and potential new, business positions us on the path to leadership in the industry, as well as substantial and sustainable revenue growth. With that, I'll turn the call over to Paul to discuss our recent corp. achievements and financial highlights.
PAUL LYTLE (CFO): [1-31-18 10Q iss. 3-12-18: https://tinyurl.com/yd4orsg7 ]
I'll now discuss our financial results for Q3/FY18, starting with revenues. As discussed in the last call, we expected to generate $10-15mm in aggregate revenue during Q3 & Q4 of FY’18, currently due to lower demand for services from our two largest customers. During Q3/FY’18, we recognized $6.8mm in revenue, and we remain on track to achieve $50-55mm revenue for the full FY18. Though Q3 revenue was down compared to the same prior year period, the team is making important progress and diversifying and expanding our customer base, as Tracy just discussed. And our current revenue backlog has increased to $39mm representing signed commitments from our customers.
While we have these signed commitments, it's important to discuss that the way we recognize revenue from this backlog is going to change in FY’19 [May’18-Apr’19]. On May 1, 2018, the beg. of FY’19, we will be adopting the new revenue recognition standards, commonly referred to as ASC606, and this new standard will have a significant impact on the timing of revenue recognition going forward. As a backdrop, today we recognize 100% of our revenue at a single point in time, and in general that point in time represents the date when all deliverables are completed. As an example, revenue from a mfg. run is recognized when the drug substance is shipped from our facility and all other deliverables have been completed. Starting May 1, 2018, the new revenue recognition standard will require us to recognize revenue over a period of time for the majority of services we provide, including mfg. Services. For that same example mentioned above, during FY'19 revenue will be recognized over the entire mfg. process which is typically a 4-mo. Period, and the amount of revenue we recognize will be based on a percentage of completion at the end of each period.
There are a few important points I'd like to discuss regarding the adoption of ASC606. First, we plan to adopt this standard on a modified retrospective basis. For FY'19, our statement of operations will report revenue under the new standard based on a percentage of completion from the majority of our revenue, and we will separately disclose the amount of revenue we would have recognized during FY'19 under the current point-in-time method. In addition, on May 1, 2018, we will analyze all partially-completed and in-process customer projects and the amount of revenue we can recognize in FY'19 will only include the percentage of revenue not completed as of April 30, 2018. As an example, if we are 40% complete with $1mm mfg. project as of April 30, 2018, then the amount of revenue we can recognize in FY'19 would be equal to 60% of $1mm or $600,000 under ASC606. The amount of revenue and related cost of goods allocated to the period prior to May 1, 2018, will be reported as a one-time adjustment to retained earnings on May 1, 2018.
Let me shift gears now to discuss our gross margins on contract mfg. revenue. During Q3, gross margin declined to a negative 61%. This was mostly driven by idle capacity during the quarter in the amount of $5.3mm. When we exclude this idle capacity from our gross margin calculations, gross margin for the quarter improved to 17%. While this margin is well below our expectations for the business going forward, our margins are highly dependent on manufacturing capacity utilization. We have looked to improve our gross margins, in addition to focusing and growing our customer base and backlog to enhance capacity utilization, we continue to evaluate our overall cost structure to better match it with the future needs of the business. Now turning to expenses; total SG&A expenses for Q3 FY’18 were $4.8mm, compared to $4.4mm for Q3 FY’17. The current qtr increase was mostly driven by increases in legal and other related fees associated with the settlement agreement reached in November regarding the composition of the Board of Directors and the sale of PS-targeting assets.
With are recent sale of the PS-targeting assets, we have now fully transitioned to a dedicated CDMO. Accordingly, the operating results of our R&D business are now reported separately as a loss and discontinued operations for all periods presented in the statement of operations. Company's consolidated net loss attributable to common stockholders was $12.4mm or $.28/share for the Q3 FY’18, compared to $9.2mm or $.25/share for the same prior year qtr. Cash & cash equivalents as of Jan. 31, 2018 were $17.9mm, compared to $46.8mm at the FY end 4-30-17. Following the completion of the public offering last month, cash & cash equivalents increased to $41.7mm as of Feb. 28, 2018. In closing, I would like to suggest that all participants review our close of report on Form 10-Q [https://tinyurl.com/yd4orsg7 ], which was filed today, for addl. details on the company's financial payments and its result of operations. This concluded my financial overview. I will now open the call up for questions.
Q&A: [beg. 24:26]
1. Caroline Palomeque - Noble Life Science Partners http://noblelsp.com/research
CP: ”With all your new contracts in place, do you expect the cost of contract mfg. to increase and then level out, or are you expecting to sort of create synergies and have that decrease overall? And I mean as a percentage of revenue.”
Paul Lytle: I think our overall capacity can handle a significant addl. amount of revenue based on our current operations. So we don’t anticipate the cost of contract mfg. to go up as our business increases. We have sufficient infrastructure right now to maintain a significant amount of revenue, including we had about $58m in revenue we recorded in last FY, and I think we can get there with the current operations and headcount that we have currently. With that said, there will always be an increase in the cost related to raw materials from our customers, but that’s a pass-through cost, but our overall operating expenses should be relatively consistent from yr-to-yr to support increased mfg. revenue.
CP: ”Re: Cash, could talk a little bit about your runway and what you expect that to go up to?”
Paul Lytle: As we mentioned in the 10-Q, we believe we have sufficient cash on hand right now to operate our business for at least 12mos., based on the current cash on hand, and then that does not include bringing in any new business or any other sources of capital. So, we think we have a strong balance sheet right now to fund the business going forward.
CP: ”I know you've been expanding your customer base and it seems to be going really well, just wondering what some of the outside markets were, and I think Roger, you mentioned the few ex-U.S. countries, and I was just wondering if you could just elaborate on that. And do you see any trends in certain areas vs. others?”
Roger Lias: I don't think we have sufficient interest from outside the U.S. at the moment to really be able to declare any trends, but certainly we're getting interest from both Europe and Southeast Asia. There have been a few that have been sort of unsolicited, some of these are driven by previous contacts that both Tracy and I have in the industry. I think we are a long away from both places, but there are always good reasons to manufacture in certain territories. So, in one particular case, we know we have a client that needs specifically U.S. manufacturer for their product; I'm not entirely sure of the reasoning. So, we certainly can't declare any trends, but I think we can anticipate further interest from both Europe and Southeast Asia.
DR. LIAS’S CLOSING COMMENTS:
I'd like to thank you all for participating in today's call. And as always, I'd like to thank all of our stockholders both long-term and new for your continued support. And before signing off, I'd like to acknowledge, Paul Lytle, who has recently announced his resignation, as many of you know, effective in mid-May. Paul was instrumental in the founding of Avid as a subsidiary of Peregrine way back in 2002. We certainly wish to thank him for his more than 20 years of service to the organization. I know Paul is tough to replace, but a search has been commenced for his successor, and we look forward to providing news on that soon. So with that, we will conclude the call. Thank you all for dialing-in, or listening in on the webcast, and have a good afternoon. Thank you.
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3-12-18/PR: Avid Bioservices Reports Financial Results for Q3/FY2018 and Recent Developments
* Company Remains on Target for Full Year Revenue of $50-55 Million [FY18: fye 4-30-18]
* Intensified Business Development Effort Results in New Customer Contract and Strengthened Backlog
http://ir.avidbio.com/releasedetail.cfm?ReleaseID=1060611
TUSTIN, March 12, 2018: Avid Bioservices, Inc. (NASDAQ:CDMO/CDMOP), a dedicated 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 third quarter of fiscal year (FY) 2018 ended January 31, 2018, and provided an update on its contract manufacturing operations, and other corporate highlights.
HIGHLIGHTS SINCE OCTOBER 31, 2017
“During and subsequent to our Q3/FY18, Avid completed two primary objectives. We successfully divested the company’s lead immuno-oncology assets to an organization with the financial resources and expertise to advance them, and we established a new operational structure that will allow our business to take full advantage of the substantial and growing demand for biologics manufacturing,” said Roger Lias, PhD, President/CEO of Avid Bioservices. “With the divestiture of our lead R&D assets, our transition to a dedicated CDMO business is complete, and our team is entirely focused on expanding and diversifying our customer base, as well as strengthening our process development capabilities. At present, we are in late-stage negotiations with several potential new customers and expect to announce the executed agreements before the end of the fiscal year [4-30-18]. In recent weeks, we also completed a financing raising $23.2 million in gross proceeds. These funds are essential as they will support our operations, including upgrading our process development capabilities to ensure that we are fully capable of servicing our customers with the highest quality standards and equipment. We made rapid progress during the third quarter that we believe will allow us to build backlog and achieve sustainable growth in the future.”
RECENT CDMO DEVELOPMENTS
Advanced 8 current clients, some with multiple projects, through various stages of development.
Selected by Acumen Pharmaceuticals, Inc. to provide process development and clinical manufacturing services in support of ACU193, which is being developed for the treatment of Alzheimer’s disease.
° Avid and Acumen will immediately commence process development work with the goal of creating a robust, cost-effective and scalable process to support cGMP manufacture of ACU193.
RECENT CORPORATE DEVELOPMENTS AND FINANCIAL HIGHLIGHTS
Changed company name from Peregrine Pharmaceuticals, Inc. to Avid Bioservices, Inc.
° As the Avid name is recognized in the industry for CDMO excellence and biologics manufacturing expertise, the brand is an important asset in the company’s transition to a dedicated CDMO business. The company also adopted the new NASDAQ ticker symbol, "CDMO" (NASDAQ:CDMO).
Reconstituted board of directors including 6 independent directors, all with significant CDMO experience.
Entered into an Asset Assignment and Purchase Agreement with Oncologie, Inc. for Avid's phosphatidylserine (PS)-targeting program including bavituximab.
° Avid expects to receive an aggregate of $8.0 million in upfront payments over a period of 6 months and will be eligible to receive up to $95.0 million in development, regulatory and commercialization milestones.
° Oncologie, Inc. will be responsible for all future research, development and commercialization of bavituximab, and related intellectual property costs.
° Avid will receive royalties on net sales that are upward tiering into the mid-teens.
° Oncologie will enter into an agreement with Avid for future contract development and manufacturing activities in support of bavituximab.
Completed a public offering of 10,294,445 shares of common stock raising gross proceeds of approximately $23.2 million.
° Avid intends to use the net proceeds from the offering to support the growth of its contract manufacturing business and general corporate purposes.
The company maintains its manufacturing revenue guidance for the full FY 2018 of $50-55.0 million.
The current manufacturing revenue backlog has increased to $39 million.
Contract manufacturing revenue from Avid's clinical and commercial biomanufacturing services was $6.8 million for the third quarter of FY 2018 compared to $10.7 million for the third quarter of FY 2017. The decline was primarily due to lower demand from one of our largest customers.
Cost of contract manufacturing increased to $11.0 million in the third quarter of FY 2018 compared to $8.0 million for the third quarter of FY 2017. The current period increase in cost of manufacturing is primarily attributed to idle capacity costs of $5.3 million due to lower facility and personnel utilization compared to no idle capacity costs reported in the same prior year quarter.
Selling, general and administrative expenses for the third quarter of FY 2018 were $4.8 million, compared to $4.4 million for the third quarter of FY 2017. The current period increase in costs was primarily due to legal and other related fees associated with the settlement agreement with certain investors regarding the composition of the company’s board of directors and legal and advisory fees associated with the Asset Assignment and Purchase Agreement with Oncologie, Inc.
As of January 31, 2018, the company's research and development segment met all the conditions to be classified as a discontinued operation. Accordingly, the operating results of our research and development segment are reported as a loss from discontinued operations for all periods presented.
Avid's consolidated net loss attributable to common stockholders was $12.4 million or $0.28 per share, for the third quarter of FY 2018, compared to a net loss attributable to common stockholders of $9.2 million, or $0.25 per share, for the same prior year quarter.
Avid reported $17.9 million in cash and cash equivalents as of January 31, 2018, compared to $46.8 million at fiscal year ended April 30, 2017. Following the completion of a public offering during February 2018, the company had cash and cash equivalents of $41.7 million as of February 28, 2018.
More detailed financial information and analysis may be found in Avid’s Quarterly Report on Form 10-Q [ https://tinyurl.com/yd4orsg7 ], which will be filed with the SEC today.
CONFERENCE CALL
Avid will host a conference call and webcast this afternoon, March 12, 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 nearly 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. For more information, please visit http://www.avidbio.com .
AVID BIOSERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
Three Months Ended
January 31, Nine Months Ended
January 31, 2018 2017 2018 2017
Contract manufacturing revenue $ 6,819,000 $ 10,747,000 $ 46,678,000 $ 39,726,000
Cost of contract manufacturing 10,951,000 7,974,000 47,641,000 26,477,000
Gross profit (loss) (4,132,000 ) 2,773,000 (963,000 ) 13,249,000
Operating expenses:
Selling, general and administrative 4,824,000 4,365,000 12,273,000 13,602,000
Restructuring charges — — 1,258,000 —
Total operating expenses 4,824,000 4,365,000 13,531,000 13,602,000
Operating loss (8,956,000 ) (1,592,000 ) (14,494,000 ) (353,000 )
Other income (expense):
Interest and other income 42,000 25,000 83,000 71,000
Interest and other expense (14,000 ) (2,000 ) (18,000 ) (2,000 )
Loss from continuing operations $ (8,928,000 ) $ (1,569,000 ) $ (14,429,000 ) $ (284,000 )
Loss from discontinued operations (2,076,000 ) (6,205,000 ) (10,404,000 ) (22,603,000 )
Net loss $ (11,004,000 ) $ (7,774,000 ) $ (24,833,000 ) $ (22,887,000 )
Comprehensive loss $ (11,004,000 ) $ (7,774,000 ) $ (24,833,000 ) $ (22,887,000 )
Series E preferred stock accumulated dividends (1,442,000 ) (1,442,000 ) (3,604,000 ) (3,558,000 )
Net loss attributable to common stockholders $(12,446,000) $ (9,216,000) $(28,437,000) $(26,445,000)
Basic & diluted weighted average common shares outstanding(1):
45,225,804 37,258,794 45,032,335 35,486,782
Basic and diluted net loss per common share attributable to common stockholders (1):
Continuing operations $ (0.23 ) $ (0.08 ) $ (0.40 ) $ (0.11 )
Discontinued operations $ (0.05) $ (0.17 ) $ (0.23 ) $ (0.64 )
Net loss per share attributable to common stockholders $ (0.28) $ (0.25 ) $ (0.63 ) $ (0.75 )
(1) All share and per share amounts of our common stock for all prior fiscal year periods presented have been retroactively adjusted to reflect the one-for-seven reverse stock split of our issued and outstanding common stock, which took effect on July 10, 2017.
AVID BIOSERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
January 31, 2018 April 30, 2017 Unaudited
ASSETS
Current assets:
Cash and cash equivalents $ 17,938,000 $ 46,799,000
Trade and other receivables 7,967,000 7,742,000
Inventories 14,218,000 33,099,000
Prepaid expenses 906,000 1,460,000
Total current assets 41,029,000 89,100,000
Property and equipment, net 26,325,000 26,515,000
Restricted cash 1,150,000 1,150,000
Other assets ,353,000 1,347,000
Total assets $ 69,857,000 $ 118,112,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 1,911,000 $ 5,779,000
Accrued clinical trial and related fees 5,503,000 4,558,000
Accrued payroll and related costs 3,876,000 6,084,000
Deferred revenue 6,633,000 28,500,000
Customer deposits 17,602,000 17,017,000
Other current liabilities 749,000 993,000
Total current liabilities 36,274,000 62,931,000
Deferred rent, less current portion 2,064,000 1,599,000
Commitments and contingencies
Stockholders’ equity:
Preferred stock—$0.001 par value; authorized 5,000,000 shares; 1,647,760 issued and outstanding at January 31, 2018 and April 30, 2017, respectively 2,000 2,000
Common stock—$0.001 par value; authorized 500,000,000 shares;
45,257,180 and 44,014,040 issued and outstanding at January 31, 2018 and April 30, 2017, respectively 45,000 44,000
Additional paid-in capital 593,621,000 590,971,000
Accumulated deficit (562,149,000) (537,435,000 )
Total stockholders’ equity 31,519,000 53,582,000
Total liabilities and stockholders’ equity $ 69,857,000 $ 118,112,000
Safe Harbor *snip*
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
- - - - - - - -
From 10-Q header: “As of Mar. 7, 2018, there were 55,552,233 shares outstanding.”
- - - - - - - - - - - - - - - - -
Latest 10K 4-30-17 iss. 7-14-17 http://tinyurl.com/ycxu4l5n PR: http://tinyurl.com/yb4wulvu (Cash 4-30-17=$46.8mm); Amended 8-25-17: http://tinyurl.com/yb5jq7vc
Latest 10Q 1-31-18 iss. 3-12-18 https://tinyurl.com/yd4orsg7 PR: http://ir.avidbio.com/releasedetail.cfm?ReleaseID=1060611 (Cash 1-31-18=$17.9mm; 2-28-18=$41.7mm)
ALL SEC filings for PPHM: http://tinyurl.com/6d4jw8
= = = = = = = = = = = = = = = = = = = = = = = = = = = =
Updated PPHM REVS-BY-QTR TABLE, now thru FY18'Q3(qe 1-31-18), per the 10-Q (https://tinyurl.com/yd4orsg7 ) issued 3-12-18.
• Total Avid Revs since May’03: $288.6mm
• 3-12-18: FY'18 (May'17-Apr'18) Avid revs guidance $50-55mm (committed B/L=$39mm at 1-31-18).
• Deferred-Revs at 1-31-18 total $6.6mm, DOWN from $7.5mm at 10-31-17.
• Cust.Deposits at 1-31-18 total $17.6mm, UP from $13.1mm at 10-31-17.
• Inventories at 1-31-18 total $14.2mm, DOWN from $16.5mm at 10-31-17.
• Avid’s Gross-Profit over last 4 qtrs: $5.2mm on revs of $64.6mm (GP%=8.0)
**1-31-18 10Q/p.6:
“Based on our current commitments for mfg. services from our 2 largest customers [HALO & ???], we expect our future results of operations to be adversely affected until we are able to further expand & diversify our customer base.”
Avid’s website: http://www.avidbio.com
AVID GROSS PROFITABILITY BY QTR: DEFER CUST
QTR (1000’s) Rev$ 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
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 YTD(Q1+2+3) 46,678 47,641 -963 -2%*
*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
YTD 4-30-18 46,678 (thru 3 qtrs)
**TOTAL: 288,605 (5/1/2003–1/31/18)
.
QTLY. NET 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
Period Halozyme Cust-A Other-Custs
FYE 4-30-14 91% 1% 8%
FYE 4-30-15 79% 12% 9%
FYE 4-30-16 69% 26% 5%
Q/E 7-31-16 65% 29% 6%
Q/E 10-31-16 77% 10% 13%
Q/E 1-31-17 29% 56% 15%
FYE 4-30-17 58% 26% 16%
Q/E 7-31-17 78% 16% 16%
Q/E 10-31-17 Cust%’s section not in this 10-Q.
Q/E 1-31-18 Cust%’s section not in this 10-Q.
- - - - - - - - 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)
= = = = = = = = = = = =
“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: $41.7mm
CDMO - O/S Shares History (’06–curr.)
Click here for 4/30/06–12/8/16 Peregrine Pharm. share history: https://tinyurl.com/y76cbyt5
**PPHM shares were 1:5 R/S eff. 10-19-09 (~237mm/$.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)
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