6-27-19 Qtly CC-Transcript, PR(Q4FY19/fye4-30-19), Avid Revs History Table
*Revs Guidance (FY’20 fye 4-30-20): $64-67M. 4-30-19 Backlog=$46M
*Cash: 4-30-19: $32.4M
*As of 6-14-19: 56,137,724 shares o/s.
*10K/4-30-19 iss. 6-27-19: http://tinyurl.com/yxukx6t4
*Avid Total Revs May03-Apr19: $349.2M
*Avid’s website: https://avidbio.com
This large post has 4 sections:
I. 6-27-19 Qtly. Earnings Conf. Call TRANSCRIPT (FY19/Q4 fy/e 4-30-19)
II. 6-27-19 CDMO Press Release: Q4/FY19 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’20 = May’19-Apr’20.
((( Orig. transcript from SeekingAlpha.com [http://tinyurl.com/y3yhke8q ] with numerous corrections made. )))
Link to webcast replay: http://ir.avidbio.com/events-and-presentations => https://edge.media-server.com/mmc/p/hquga2x5
TRANSCRIPT 6-27-19 FY’19/Q4 Earnings Conf. Call (fy/e 4-30-19) (Hancock/Hart/Kinjerski)
RICK HANCOCK (CEO) – OPENING COMMENTS:
Thank you to all of you who've dialed in and to those who are participating today via the webcast. Since this is my first earnings call in this role with Avid, I would like to say that I'm very pleased to be working closely with our team as we continue to transition the business and build upon the accomplishments of my predecessor, Roger Lias. I am particularly pleased to have the opportunity to discuss the achievements of Q4 FY2019, Avid's strongest quarter since becoming a dedicated CDMO. With respect to our financial performance, Q4 2019 results beat industry estimates for both revenue & EPS. Most importantly, during Q4, the Company achieved positive income, generating cash from development & mfg. operations for the 1st time since the beginning of the transition. The growth realized during the quarter was reflected in other metrics as well, and Dan will provide more details regarding our financial performance in a moment. Multiple successes on the business development front drove the quarter's strong financial performance. In Q4, our BD team advanced new business opportunities and won multiple new projects with existing customers. Though these new projects are with existing customers, many are for the development and manufacture of additional molecules, which were not part of the initial contract. Each of these programs represents a new opportunity for commercial production down the road. Tracy will provide more color on these developments shortly. With that, I'll turn the call over to Dan to provide a financial overview.
DANIEL HART (CFO) – OPENING COMMENTS:
Before I begin, I'd like to recommend that everyone participating today refer to our 10-K filing with the SEC, which we filed today for additional details. [10-K: http://tinyurl.com/yxukx6t4 ] I will now discuss our financial results from continuing operations for Q4 ended April 30, 2019, starting with revenue. As Rick stated, Q4 was our strongest to-date since officially beginning the transition to a dedicated CDMO. Revenue for Q4 of 2019 was $17.1M, an increase of 146% as compared to $6.9M for the same period of the prior year. This increase was primarily the result of the growing in the number and scope of customer projects. Revenue for the full FY 2019 was $53.6M. And while that was flat compared to FY2018, it exceeded our guidance, which we had expected to come in within the lower half of the range of $51-55M. For both Q4 and the full FY 2019, margins increased significantly as compared to prior year period. Gross margin for Q4 was 21% and gross margin for the full FY 2019 was 13%. These margins are compared to a negative -28% for Q4 of 2018 and a negative -5% for FY2018. These increases reflect the growth in customer projects, the increased utility of our existing capacity, a judicious management of expenses, and increasing operational efficiencies.
Turning now to operating expenses. Total SG&A expenses for Q4 of FY2019 were $3.6M compared to $4.2M for Q4/FY2018. For the full FY 2019, total SG&A expenses were $12.8M or 24% of revenue compared to $16.5M or 31% of revenue for the full FY 2018. It's important to note that SG&A results for the prior year included non-recurring expenses of approx. $4.4M related to the transition of our business to a pure-play CDMO. These prior year expenses included reductions in payroll & related costs, legal fees and other professional consulting fees, administrative costs, and the write-off related to a deposit of capital equipment. Excluding these non-recurring charges, SG&A increased $.8M, primarily due to increases in bonuses related to achievement levels of corporate goals and stock-based compensation.
During Q4/2019, we generated income from continuing operations of $.2M compared to a loss from continuing operations of $6.1M for Q4 of FY2018. This marks the 1st qtr. of positive income from continuing operations since announcing our transition to a dedicated CDMO back in January of 2018. FY 2019 loss from continuing operations was $5.1M compared to a prior year loss from continuing operations of $20.6M. The decrease during the full FY was partially driven by reduction in both costs of revenues and SG&A resulting in higher profitability margins. For Q4 of FY2019, the Company recorded consolidated net loss attributable to common stockholders of $1.1M or $.02 per share compared to a consolidated net income attributable to common stockholders of $1.6M or $.03 per share for the same prior year quarter. For the full year FY2019, the Company recorded a consolidated net loss attributable to common stockholders of $8.9M or $.16 per share compared to a consolidated net loss attributable to common stockholders of $26.5M or $.56 per share for full year FY2018. Both the prior Q4 and the full FY 2018, net income and loss were favorably impacted by the sale of Avid's legacy R&D assets to Oncologie, Inc. for $8M and the associated discontinued operations.
Our backlog at the end of Q4 2019 [4-30-19] was approx. $46M, an increase compared to backlog of $43M at the end of Q3 2019. We are pleased to maintain the strong backlog that will continue to contribute to our growth trend, and we expect to recognize the majority of this balance in FY2020. Lastly, during Q4 of FY2019, we generated $5.6M in operating cash flow, thus, increasing our cash & cash equivalents as of April 30, 2019 to $32.4M. Cash & cash equivalents were $42.3M as of the prior FY ended April 30, 2018. As we stated consistently throughout the last year, achieving positive income from continuing operations has been a major milestone for the Company. By aggressively pursuing and winning new business from existing clients, carefully managing cash and expenses, and consistently incorporating new efficiencies into our processes, we have successfully delivered on this goal. Based on our current backlog, as well as our forecast for typical expansion of ongoing projects, we believe the Company has reached the very important position from which they expect to achieve sustainable growth and continued profitability. This concludes my financial overview. I will now turn the call over to Tracy for an update on business activities and achievements for the quarter.
TRACY KINJERSKI (VP, BUSINESS OPERATIONS) - OPENING COMMENTS:
During Q4, Avid's increased visibility in industry and our aggressive work to expand both our client base, as well as our project pipeline, yielded great dividends. During the quarter, we had a strong presence at several of the industry's best attended events & conferences, including but not limited to, DCAT Week and Interfax. As the quarter was coming to an end, we were heavily focused on our preparation for the 2019 BIO Intl. Convention, which commenced subsequent to quarter end. Part of this conference was to further build our brand awareness and messaging in the bio therapeutics industry, while also meeting with current and potential new customers and sponsoring and supporting key industry organizations, such as DCAT and Women In Bio. As a result of this continuous exposure, as well as our customer outreach efforts, our log of new business discussions continues to grow. As evidenced by the high number of key meetings and conferences and subsequent influx of new request for proposals, we are gaining important traction with potential for customers and industry partners. Equally important, as we believe today's financial results have demonstrated, is the new business we continue to win with the existing customers. While some of these business results from the expansion of a current project, many of these projects are completely new, requiring development and or manufacture of new molecules. These wins are incredibly valuable for several reasons. First, the earlier phase projects represent opportunities for both early stage, as well as commercial production as the program advances through the various regulatory stages. Other follow-on molecules from existing customers may be later phase, leading to validation and commercial stage with more certainty and providing assurance of need for long-term manufacturing. Second, as we already have a working relationship with these companies, on-boarding and other aspects of the process are much more efficient and less costly, making these projects more profitable for Avid. And finally, the repeat business is a great testimonial for Avid. The fact that many of our clients have come back from multiple projects speaks to the collaborative relationships we established with our clients, the expertise of our team, the state-of-the-art nature of our facilities and processes and most importantly, the quality of our product.
I would now like to provide an update with respect to one of our largest customers. Halozyme Therapeutics continues to increase demand for manufacture of the recombinant human hyaluronidase enzyme, supporting their ENHANZE technology platform. Avid currently manufactures product not only for Halozyme's collaboration products, but also for collaboration product candidates currently in development. We believe that the strengthened forecasts are partially due to a key Halozyme partner for whom Avid is the exclusive supplier depleting their inventories. More importantly, this demand is also driven by new development projects and new product launches by Halozyme's partners, as well as market growth for their commercial products. We anticipate that this trend will continue into FY 2020 as Halozyme's partners advance their clinical dev. program and begin preparing for commercialization. As we discussed last quarter, Avid recently completed a process validation campaign for a new scaled up mfg. process on behalf of Halozyme in anticipation of future commercial manufacturing. In addition, we have recently completed a 2nd process validation campaign of FY2019, with another campaign in progress. Once the process validation is completed, the associated specifications for that process represents a key part of global regulatory filings. The mfg. process becomes part of the product approval and the consumers required to manufacture in specified facility using the specified process. Of course clinical trials & regulatory reviews take years, and there's no guarantee of a drug approval at the end of the process. However, for those products approved using processes validated at Avid, it’s likely that the commercial manufacturing will be conducted at Avid. To move the business to another CDMO at that point would require a new process validation and re-filing with the regulatory agency, which are highly risky, expensive and time consuming propositions. For these reasons, we see each process validation completed today as a great opportunity to build commercial business in the future.
We remain very excited about the demand in the biopharmaceutical community in general, and with our regulatory history, we believe we are uniquely positioned to serve clients who are developing products with accelerated approval time lines. Importantly, the strategy allows us to support rare-disease product development partners. As a CDMO, our aim is to support our clients to ensure availability of medicines for all regardless of the size of the patient population. The flexibility is built into our facility configuration and design, combined with the mindset of our leadership continues to foster this goal. During the year, our business dev. and project mgt. team members set and met the high standards essential to our customer-centric approach. Looking forward, we are excited by the new and expanding opportunities that we expect to fuel continued growth and increasing capacity utilization in FY2020. This concludes my business overview. And I'll now hand the call back to Rick.
RICK HANCOCK (CEO) – Q4/FY19 OPERATIONAL & COMMERCIAL UPDATE:
Thank you, Tracy. I would also like to congratulate the business operations team on its accomplishments during FY2019. The new business won in the past year has put Avid in a stronger position to continue its growth trajectory. I'd now like to provide a brief update regarding operations at Avid. We continue to make progress with the expansion of the Franklin process dev. lab, which will primarily house upstream processing. It is currently our expectation that this work will be completed in the fall. Concurrent with this work, we are evaluating all of our facilities, equipment, and processes as part of a 3-year plan in an effort to incorporate additional efficiencies where possible and new technologies where applicable. This ongoing process is essential in ensuring that Avid's processes remain at the forefront of development and manufacturing, and that our facilities represent the state-of-the-art among CDMOs. All these enhancements are taking place to improve our existing Franklin & Myford facilities. We have significant room to expand our operations and anticipate doing so as demand for our services continues to increase. Until then, we will remain focused on filling and optimizing our existing capacity.
I'll now turn to leadership at Avid. I recently stepped into serve as Avid's Interim President & CEO, following the departure of Roger Lias last month. Given my 20 years of experience in the CDMO sector and my tenure on Avid's board, I am thrilled that the opportunity to assume temporary leadership at this exciting time of growth and transition. The Avid board has initiated a search for the Company's new permanent CEO. Having said that, we are being very deliberate in this crucial process, we recognize the significant progress that has been made to date at Avid. And we will take our time to find the ideal candidate to lead the Company to ongoing success. We do not have a timeline for this process. We'll update you as there is news to report.
In closing, I'd like to emphasize that during FY2019, the Avid team successfully achieved the most critical goals for the business. Most notably, we converted the losses and negative margins this FY2018 into a sustainable position of financial strength and operational profitability. And we expect to continue revenue growth, moving forward. With respect to business development, the 5 new clients signed in late FY2018, contributed significantly to revenue diversification in FY2019. These projects substantially increased capacity utilization, which drove a meaningful improvement in margins during the year. Avid is stronger today than it has been at any point in its history. For that, we offer our sincere thanks to Roger Lias who led the transition from a drug dev. company to a leading and profitable CDMO. Looking ahead, we will continue to execute according to plan with even higher goals for revenue and new customer projects. As in FY2019, we expect to continue to achieve great successes in the coming years. With that, I'm happy to announce that for FY2020, we expect to record revenue of $64-$67M, representing growth of approx. 20-25% over FY2019. And as we continue to achieve revenue growth, we expect the improvement in margins to track accordingly. Thank you to all of our investors, industry colleagues and friends who have continued to support Avid during its transition. But most importantly, I'd like to offer a big thank you to the entire Avid team. Our employees work tirelessly and diligently to make Avid the best CDMO it can be. It is because of their unwavering commitment to excellence that I am confident in Avid's growth potential and very excited about the successes that lie ahead.
Q&A: [beg. 20:01]
1. Joe Pantginis - H.C. Wainwright
JP: ”First, just curious with the 5 new clients that were signed in late FY2019. Can you talk about what the mix is? Are they all early stage for process dev. and early process development?”
Tracy Kinjerski: As you mentioned there, there are several projects that we signed and they vary. Some of those projects came in immediately from cell-line development stage, so they are very early on. And we also had at least one project that came in that was more at the Phase II stage. So that pretty much covers it. So, a pretty good range when you look at those customers. And yes, just to reiterate, those customers were signed in late FY2018.
JP: ”Re: backlog increasing and your prepared comments talking about the facilities that you already have with regard to Franklin & Myford. What is a trigger number, if you will, that will allow you to then actively extend your capacity?”
Dan Hart: Appreciate the question. The backlog is a little tricky, because as we've discussed in the past, the backlog is only the signed contractual firm relationship that we have with the clients. It's not the entirety of our opportunity pipeline and any work that we see from our customer forecast. So, it just depends on the overall operation and financial forecast that we're looking at from our customers, not necessarily just the backlog number that is reported.
JP: ”And, when you talk about the backlog number, you did remind us obviously that it's the signed contractual work. So what else does the number not include?”
Dan Hart: The programs that we're running for our clients, they run multiple months, multiple quarters, multiple years. And those forecasts that we have from our clients, we can see as to where that particular project or program is going. However, contractually, we may only sign up for some limited portion of that entire program.
JP: ”Understood. Thanks a lot for the extra detail.”
2. Paul Knight - Janney
PK: ”I think you were considering expanding the sales force. Where are you with those efforts? What do you want to do for starters on that?”
Rick Hancock: We do have one current opening for a sales rep, and Tracy and her team are continuing to evaluate where to put addl. resources. Tracy has built a very, very strong internal business operations team, and they hand some of the activities that might normally be handled by external sales reps. So, we don't feel that we need a tremendous number of field representatives at this time to cover our industry, but we are monitoring that, so looking for people, field representatives to be focused in the hubs of biotech activity.
PK: ”Dan, is there a change in the way you're recognizing or reporting backlog? You're talking about it being in the next 12mos. But is your recording of it any different than you've done in the past? Is it a more conservative approach or no change? And then secondly, how do you want us to think about rolling out revenue quarters in the new FY?”
Dan Hart: As far as your first question on backlog, there's no change into how we account for or report our backlog. So, the cadence of that backlog is merely a factor of, if you're looking at it period-over-period, the beginning balance, if you take out any revenue, you recognize in anything that we've signed yet back to it. There's no difference as far as the content of that backlog, it's all based on contractual relationships.
As far as your 2nd question, we're not necessarily giving a qtr-over-qtr guidance as far as what that revenues looks like. But as we've said in our prepared remarks, the guidance that we're providing for FY2020 is $64-$67M.
PK: ”And Rick, if you could talk to business conditions now, customer interest, customer inquiries. How was it now vs. one year ago? Is it better, expanded? What's the tone of customer and demand right now?”
Rick Hancock: Great question. It remains extremely strong. As Tracy mentioned, we were just at BIO2019 recently. And our customers and our potential customers, we had quite a number of meetings. They continue to be very healthy. They're able to access the funds that they need to bring innovative molecules to the market, and we continue to be in a sweet spot for where a lot of those drugs are being developed. So not really huge blockbuster products, but more niche orphan indications and follow-along biosimilars that really fit very well with our capacity. And as Tracy mentioned in her remarks, quite a number of those products move through the clinical dev. process very quickly. So having a CDMO with a commercial history is very critical. We see the industry as very, very strong at this point, a lot of antibodies and other mammalian derived proteins being developed from early research all the way through later clinical trials and moving towards approval.
PK: ”And then my last question, what are the 2 or 3 things that customers you think are finding most appealing about your offering? Is it you can do early-stage work? Is it your physical location? What do you think are the key touch points that customers are liking?”
Rick Hancock: I think first and foremost, it's our tremendous regulatory history. That's one of the key differentiators that makes Avid unique compared to a lot of other people who can develop mammalian proteins. So, the number of years that we've had a commercial experience, the number of countries that we have approval for, that really sets us apart. And then as you hit on, I think the ability to take projects from early phase dev. up through clinical trials and rapidly to commercialization is very attractive. The flexibility in our platforms and the expertise and process development, in regulatory, in quality and of course in manufacturing. In terms of geography, which you mentioned, that is just something that does help us with the Bay Area, Seattle, San Diego clients in the Los Angeles area. Certainly, being in the same time zone when we have a person in the plant and we're doing production, they can just fly down from San Francisco, be here for the day and fly back. So that is very attractive. We also do get quite a bit of work in the east coast as well, and those people love to come out to beautiful southern California, particularly in the winter. So, we use our geography as a strong advantage. So, I'd say it's a combination of those factors but really one of our keys I think is our regulatory history.
3. Steve Schwartz - First Analysis
SS: ”Re: backlog, in the press release, you note $19.7M from existing customers, and I think as you stated in one of your early responses, you’re back up to $17.1M in revenue book. It looks like you've added $2.6M to the backlog from existing customers with the $3M difference. Does that mean there's about $400,000 added to the backlog from new customers? Am I reading those numbers right?”
Dan Hart: No, Steve, I’ll help and clarify that. We began Q4 with backlog of $43M. And during the quarter, we recognized $17.1M of revenue. In addition, we signed addl. contractual relationships with existing customers of $19.7M. So, adding those 3 numbers together is where we end up at our $46M backlog at the end of April.
SS: ”But then that would suggest that the backlog add from $43M to $46M was all from existing customers?”
Dan Hart: That's right.
SS: ”Okay, that clarifies it. Now, re: roll out of revenues across the year; it would really be helpful. There is really no way you can tell us maybe what the H1 looks like vs. H2? Should we just presume like 50:50? Is it more like 40:60?”
Dan Hart: Steve, we're not giving quarterly guidance at this point. All that I can tell you is that our annual is $64-67M.
SS: ”In Tracy's prepared remarks talking about the validations. In FY19, you did 2 process validations. It sounds like the 1st one was for Halozyme and then the 2nd was not, or was that also a Halozyme process?”
Tracy Kinjerski: Yes, there was only one for Halozyme.
SS: ”And then the one that's underway for FY'20 is not Halozyme either. Is that correct?”
Tracy Kinjerski: It is not, that's correct.
SS: ”There's really no way for us to get a sense of when that might transform itself into revenue from validation to actual production. Is that correct?”
Tracy Kinjerski: To commercial, right. We really need to wait for the filings and the approval of the inspections, et cetera.
Rick Hancock: Right. Essentially all of those activities are beyond our control.
SS: ”Re: gross margins, there was a very nice improvement in FY'19 and in the release, you stated a couple of reasons behind that. I just want to make sure I understand with respect to product mix. You are starting to present these numbers in the filings, but if you could just talk about it. When you refer to mix, is it the mix between development work vs. production work? Is it a mix of what's going through actual production? Can you give us a little color around that?”
Dan Hart: It's all of the above. In addition to that, it's also the type of effort, whether it's just the service or service includes materials. And also based on the type of work that we're doing, if we're doing analytical development or if we're doing straight up manufacturing, in addition to the scale of the manufacturing is also different in that type of margin. So, it's all of the above.
SS: ”And then how was that you saw the reduction in direct mfg. cost? Is that sustainable? Or was it just within the quarter?”
Dan Hart: No, that overall reduction was essentially a change that we went through near the end of last year into this year. So going forward, we won't see significant reduction such as that, though, we'll continue to focus on cost control and looking at spending wisely, just anything that's affecting our gross profit margins, but that was as we transitioned into a pure-play CDMO.
SS: ”And then my last question is around SG&A. You saw significant reduction in FY'19. What should we expect going forward for FY'20? I mean, there's going to be $.5M in there paid out to Roger, right?, so there you're going to have like a double CEO salary that's going to be in there. But aside from that, is there anything else we need to be aware of, considering the big gap between FY'18 & FY'19?”
Dan Hart: Steve, what we've said in the past that still holds true is we don't see any significant increases in SG&A. We're not at a point where we need to add a bunch of headcount or any other type of operational costs within SG&A. We can fully leverage that. We'll see some growth as the business grows, but it's not going to be anywhere near the growth of the revenue rate or cost of sales.
SS: ”Yes, OK, fantastic. Well, very nice quarter everyone, nice to see the inflection coming through here.”
Dan Hart: Thank you, Steve.
RICK HANCOCK (CEO) – CLOSING COMMENTS:
Thank you, again for participating today. And thank you for your continued supportive of Avid Bioservices. We look forward to updating you again in the near future.
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6-27-19: Avid Bioservices Reports Financial Results for 4th Quarter and FY Ended April 30, 2019 and Recent Developments
GlobalNewsWire: http://tinyurl.com/y2k3tftn
-- Achieved Q4 Revenue of $17.1 Million, an Increase of 146% Compared to Prior Year Quarter
-- Generated Income From Continuing Operations During the Fourth Quarter of FY 2019
-- Increasing Demand from Customers Expected to Drive Continued Revenue Growth into 2020
TUSTIN, June 27, 2019 (GLOBE NEWSWIRE): Avid Bioservices, Inc. (NASDAQ:CDMO/CDMOP), 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 Q4 and full year of FY 2019 ended April 30, 2019.
HIGHLIGHTS SINCE JANUARY 31, 2019
“FY 2019 was a fundamentally transformative year for Avid, as the team successfully achieved a number of critical goals. Most notably, we converted the losses and negative margins in FY 2018 into a sustainable position of financial strength,” stated Rick Hancock, interim President and CEO. “Based on our current backlog as well as forecasts from our customers, we believe the company will achieve sustainable growth going forward. Avid is stronger today than it has been at any point in the past. With respect to business development, the 5 new clients signed in late FY 2018 contributed significantly to revenue diversification in FY 2019. These projects substantially increased capacity utilization, which drove a meaningful improvement in margins during the year. Of particular note is the new business we continue to win from existing customers. While some of this business results from the expansion of current projects, many of these projects are completely new, requiring development and/or manufacture of a new molecule. These ‘repeat business’ wins are particularly valuable to Avid as each offers the opportunity for later stage and commercial production, they generally onboard very efficiently and as a result are more profitable, and they provide strong testimonials as to the quality of our work and product.”
”Avid finished the year with a strong Q4, growing revenue to $17.1 million while increasing gross margins to 21%,” said Dan Hart, CFO. “During Q4 we generated $5.6 million in operating cash flow increasing our net cash and cash equivalents by $4.6 million to $32.4 million. Looking ahead, we are encouraged by the forecasted increase in demand which we expect to strengthen the company’s overall financial standing and position us for profitability.”
FINANCIAL HIGHLIGHTS AND GUIDANCE
* The company is providing revenue guidance for the full FY 2020 [May’19-Apr’20] of $64-67M (ASC 606).
* Revenue was $17.1 million for Q4 of FY 2019, a 146% increase compared to $6.9 million for Q4 of last fiscal year. This increase is primarily due to growing demand from a more diversified client base. Revenue for the full FY 2019 met guidance at $53.6 million, and was flat compared to full FY 2018.
* As of April 30, 2019, revenue backlog was approximately $46 million, the majority of which is expected to be recognized in FY 2020.
* Gross margin for Q4 of FY 2019 was +21%, and gross margin for full FY 2019 was +13%, both representing significant improvements compared to gross margins of negative -28% during Q4 of FY 2018 and negative -5% for full FY 2018. The improvements in gross margins for both FY 2019 periods were primarily attributed to our product mix, increased capacity utilization and a reduction in direct mfg. costs.
Selling, general and administrative expenses (“SG&A”) for Q4 of FY 2019 were $3.6 million, or 21% of revenue, compared to $4.2 million, or 60% of revenue, for Q4 of last year. For full FY 2019, total SG&A expenses were $12.8 million, or 24% of revenue compared to $16.5 million last fiscal year, or 31% of revenue. The decrease in SG&A was primarily due to a reduction in payroll and related costs, legal fees and other professional consulting fees, and facility costs, which were partially offset by increases in bonuses related to certain achievement levels of corporate goals and stock-based compensation.
During Q4 of FY 2019 we generated income from continuing operations of $.2 million compared to a net loss from continuing operations of $6.1 million for Q4 of FY 2018. FY 2019 loss from continuing operations was $5.1 million compared to a prior year loss from continuing operations of $20.6 million. The decrease during the full fiscal year was primarily due to reductions in both cost of revenues and SG&A resulting in higher profitability margins.
For Q4 of FY 2019, the company recorded consolidated net loss attributable to common stockholders of $1.1 million or $.02 per share, compared to a consolidated net income attributable to common stockholders of $1.6 million or $.03 per share, for Q4 of FY 2018. For full FY 2019, the company recorded a consolidated net loss attributable to common stockholders of $8.9 million or $.16 per share, compared to a consolidated net loss attributable to common stockholders of $26.5 million or $.56 per share, for full FY 2018. For both Q4 and full FY 2018, net income and loss were favorably impacted by the sale of the company’s legacy R&D assets to Oncologie, Inc. for $8.0 million and the associated discontinued operations.
Avid reported $32.4 million in cash and cash equivalents as of April 30, 2019, compared to $42.3 million on April 30, 2018.
More detailed financial information and analysis may be found in Avid Bioservices’ Annual Report on Form 10-K, which will be filed with the SEC today. [10-K: http://tinyurl.com/yxukx6t4 ]
RECENT DEVELOPMENTS
* Signed project expansion orders and new manufacturing projects related to new molecules with current clients during Q4 of FY 2019 representing future revenue in the amount of $19.7 million.
* Completed a second process validation campaign during FY 2019. Completion of a process validation campaign is a critical step in the regulatory product approval process, and is likely to result in future commercial production at Avid.
* The first process validation campaign of FY 2020 is in progress.
CONFERENCE CALL
Avid will host a conference call and webcast this afternoon, June 27, 2019, at 4:30PM EDT (1:30PM 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 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. http://www.avidbio.com
Forward-Looking *snip*
AVID BIOSERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, expect share and per share information)
Three Months Ended April 30, 2019 Twelve Months Ended April 30, 2018
2019 2018 2019 2018
Revenues $ 17,055 $ 6,943 $ 53,603 $ 53,621
Cost of revenues 13,407 8,904 46,379 56,545
Gross profit (loss) 3,648 (1,961) 7,224 (2,924)
Operating expenses:
Selling, general and administrative 3,573 4,183 12,846 16,456
Restructuring charges — — — 1,258
Total operating expenses 3,573 4,183 12,846 17,714
Operating income (loss) 75 (6,144) (5,622) (20,638)
Interest and other income, net 92 10 282 75
Income (loss) from continuing operations before income taxes $ 167 $ (6,134) $ (5,340) $ (20,563)
Income tax benefit 67 — 284 —
Income (loss) from continuing operations 234 (6,134) (5,056) (20,563)
Income (loss) from discontinued operations, net of tax 102 9,154 841 (1,250)
Net income (loss) $ 336 $ 3,020 $ (4,215) $ (21,813)
Comprehensive income (loss) $ 336 $ 3,020 $ (4,215) $ (21,813)
Series E preferred stock accumulated dividends (1,442) (1,442) (4,686) (4,686)
Net (loss) income attributable to common stockholders $ (1,106) $ 1,578 $ (8,901) $ (26,499)
Basic and diluted net (loss) income per common share attributable to common stockholders:
Continuing operations $ (0.02) $ (0.14) $ (0.17) $ (0.53)
Discontinued operations $ — $ 0.17 $ 0.01 $ (0.03)
Net (loss) income per share attributable to common stockholders $ (0.02) $ 0.03 $ (0.16) $ (0.56)
Weighted average basic and diluted shares outstanding: 56,079,970 53,360,424 55,981,060 47,063,020
(1) On May 1, 2018, the Company adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606), using the modified retrospective method applied to all contracts not completed as of May 1, 2018. Under the modified retrospective method, results for the reporting periods beginning on or after May 1, 2018 are presented in accordance with ASC 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards that were in effect prior to May 1, 2018.
AVID BIOSERVICES, INC.
CONSOLIDATED BALANCE SHEETS (in thousands, expect share information)
April 30, 2019 April 30, 2018
ASSETS
Current assets:
Cash and cash equivalents $ 32,351 $ 42,265
Accounts receivable 7,374 3,754
Contract assets 4,327 —
Inventories 6,557 16,129
Prepaid expenses 709 679
Assets of discontinued operations — 5,000
Total current assets 51,318 67,827
Property and equipment, net 25,625 26,479
Restricted cash 1,150 1,150
Other assets 302 304
Total assets $ 78,395 $ 95,760
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 4,352 $ 1,909
Accrued payroll and related costs 3,540 2,564
Contract liabilities 14,651 27,935
Other current liabilities 619 905
Liabilities of discontinued operations — 4,550
Total current liabilities 23,162 37,863
Deferred rent, less current portion 2,072 2,159
Capital lease, less current portion 93 —
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 1,647,760
shares issued and outstanding at respective dates 2 2
Common stock, $0.001 par value; 150,000,000 shares authorized; 56,135,697
and 55,689,222 shares issued and outstanding at respective dates 56 55
Additional paid-in-capital 613,615 614,810
Accumulated deficit (560,605) (559,129)
Total stockholders’ equity 53,068 55,738
Total liabilities and stockholders’ equity $ 78,395 $ 95,760
Forward-Looking *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-K header: “As of Jun 14, 2019, there were 56,137,724 shares outstanding.”
- - - - - - - - - - - - - - - - -
Latest 10K 4-30-19 iss. 6-27-19 http://tinyurl.com/yxukx6t4 PR: http://tinyurl.com/y2k3tftn (Cash 4-30-19=$32.4mm)
Latest 10Q 1-31-19 iss. 3-11-19 https://tinyurl.com/yxqjs7an PR: https://tinyurl.com/y2btdhqf (Cash 1-31-19=$27.8mm)
ALL SEC filings for PPHM: http://tinyurl.com/6d4jw8
= = = = = = = = = = = = = = = = = = = = = = = = = = = =
Updated PPHM REVS-BY-QTR TABLE, now thru FY19'Q4(qe 4-30-19), per the 10-K (http://tinyurl.com/yxukx6t4 ) issued 6-27-19.
• Total Avid Revs since May’03: $349.2M
• 6-27-19: FY'20 (May'19-Apr'20) Avid revs guidance $64-67M (committed B/L=$46 at 4-30-19).
• Inventories at 4-30-19 total $6.6M, DOWN from $8.7M at 1-31-19.
Avid’s website: http://www.avidbio.com
AVID GROSS PROFITABILITY BY QTR: DEFER CUST
QTR (1000’s) Rev$ 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
FY18Q4 4-30-18 6,943 8,904 -1,961 -28% 10,922 16,129 17,013
FY19Q1 7-31-18 12,589 11,397 1,192 9% --,--- 9,168 --,---*
FY19Q2 10-31-18 10,178 9,844 334 3% --,--- 9,736 --,---*
FY19Q3 1-31-19 13,781 11,731 2,050 15% --,--- 8,660 --,---*
FY19Q4 4-30-19 17,055 13,407 3,648 21% --,--- 6,557 --,---*
*7-31-18 10Q: “prior-yr amts related to deferred revenue
& cust deposits have been reclass’d to contract liabilities.”
...q/e 4-30-18: contract-liabilities=27,935 <=reclassified
...a/o 7-31-18: contract-liabilities=17,994
...a/o 10-31-18: contract-liabilities=17,307
...a/o 1-31-19: contract-liabilities=14,620
...a/o 4-30-19: contract-liabilities=14,651
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 TOTAL: 53,621 56,545 -2,924 -5%*
FY19 TOTAL: 53,603 46,379 7,224 13%*
*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
FY18 4-30-18 53,621
FY19 4-30-19 53,603
**TOTAL: 349,151 (5/1/2003–4/30/19)
.
QTLY. NET PROFIT/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
FY18Q4 4-30-18 +1,578,000 <=includes $9,154,000 income from disc. operations.
FY19Q1 7-31-18 -3,403,000
FY19Q2 10-31-18 -2,893,000
FY19Q3 1-31-19 -2,581,000
FY19Q4 4-30-19 -1,106,000
Period Halozyme ADC-Therap. Coherus-BioSci. Other-Custs
FYE 4-30-14 91% 8%
FYE 4-30-15 79% 9%
FYE 4-30-16 69% 26% 5%
FYE 4-30-17 58% 26% 16%
FYE 4-30-18 55% 9% 22% 14%
FYE 4-30-19 30% 21% 13% 36%
...(cust. splits not given in 7-31-18+ 10Q’s)
- - - - - - - - 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)
FY’18-Q4 = q/e 4-30-18 – rep. 7-16-18 Mon (after mkt)
FY’19-Q1 = q/e 7-31-18 – rep. 9-10-18 Mon (after mkt)
FY’19-Q2 = q/e 10-31-18 – rep. 12-10-18 Mon (after mkt)
FY’19-Q3 = q/e 1-31-19 – rep. 3-11-19 Mon (after mkt)
FY’19-Q4 = q/e 4-30-19 – rep. 6-27-19 Thu (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
CASH a/o 4-30-18: $42.3mm
CASH a/o 7-31-18: $37.5mm
CASH a/o 10-31-18: $32.7mm
CASH a/o 1-31-19: $27.8mm
CASH a/o 4-30-19: $32.4mm
CDMO - O/S Shares History (’06–curr.)
Click here for 4/30/06–12/8/16 Peregrine Pharm. share history: https://tinyurl.com/y76cbyt5
**PPHM shares were 1:5 R/S eff. 10-19-09 (~237mm/$.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)
4-30-18: 55,689,222 +133,989 (4-30-18 10K)
7-10-18: 55,793,107 +103,885 (4-30-18 10K)
9-5-18: 56,001,456 +208,349 (7-31-18 10Q)
10-31-18: 56,063,488 +62,032 (10-31-18 10Q)
12-3-18: 56,067,867 +4,379 (10-31-18 10Q)
1-31-19: 56,072,291 +4,424 (1-31-19 10Q)
3-4-19: 56,074,509 +2,218 (1-31-19 10Q)
6-14-19: 56,137,724 +63,215 (4-30-19 10Q)
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