Avid Bioservices, Inc. (NASDAQ:CDMO), a dedicated biologics
contract development and manufacturing organization (CDMO) working
to improve patient lives by providing high quality development and
manufacturing services to biotechnology and pharmaceutical
companies, today announced financial results for the second quarter
of fiscal 2022, ended October 31, 2021.
Highlights Since July 31,
2021
“The second quarter was highly productive and a
transformative time for Avid. The company’s financial status is
increasingly strong, supported by year-over-year revenue growth,
continued new business wins and a substantial backlog. Our business
development team continues to perform, signing $36 million in new
business during the quarter, and ending the period with a backlog
of $120 million,” stated Nicholas Green, president and chief
executive officer of Avid Bioservices.
“Leveraging the company’s strengths in quality
manufacturing, regulatory compliance and customer engagement, we
announced during the quarter our expansion into viral vector
development and manufacturing for the cell and gene therapy market.
We believe we are uniquely qualified to establish an
industry-leading viral vector CDMO business, and we are actively
building the team and facilities required to drive our success and
expand our revenue generating capacity. Regarding mammalian cell
operations, we have successfully completed our annual maintenance
shutdown, completed the build-out of our second downstream
processing suite in our Myford North facility, and initiated
construction for the new Myford South facility. Each of these steps
is an essential part of Avid’s strategy to meet the growing demand
of our expanding customer base, and we continue to execute this
expansion on time and on budget.
“Also during the quarter, we were pleased to
have our progress, as measured in the value created for
shareholders, recognized as the company’s stock was named for the
first time to the S&P SmallCap 600 Index. We are honored to
join this index and believe that it speaks to the collective effort
of everyone at Avid, while building greater visibility for the
company with investors and the industry alike. We are pleased with
our recent achievements, and believe that each of the
accomplishments during the quarter will facilitate growth and move
us toward our overarching goal of establishing Avid as a
best-in-class CDMO focused on biologics.”
Financial Highlights and
Guidance
- The company is confirming revenue
guidance for the full fiscal year 2022 of $115
million to $117 million.
- Revenues for the second quarter of
fiscal 2022 were $26.1 million, representing a 24% increase
compared to $21.1 million recorded in the prior year period. The
increase in revenues can primarily be attributed to fees received
from a customer during the current-year period for unutilized
reserved capacity combined with an increase in process development
revenues primarily associated with services provided to new
customers. For the first six months of fiscal 2022, revenues were
$56.9 million, a 22% increase compared to $46.5 million in the
prior year period. The increase in revenues for the first six
months of fiscal 2022 can primarily be attributed to an increase in
fees received from customers for unutilized reserved capacity
combined with an increase in process development revenues primarily
associated with services provided to new customers.
- As of October 31,
2021, revenue backlog was $120 million, an increase of 79%
compared to $67 million at the end of the same quarter last year.
The company expects to recognize the majority of this backlog over
the next twelve months.
- Gross margin for the second quarter
of fiscal 2022 was 35%, compared to a gross margin of 30% for the
second quarter of fiscal 2021. Gross margin for the first six
months of fiscal 2022 was 36% compared to 32% for the prior year
period. The increases in gross margin for the quarter and the first
six months were primarily from higher manufacturing and
process development revenues during the periods.
- Selling, general and administrative
expenses (“SG&A”) for the second quarter of fiscal 2022 were $5
million, an increase of 21% compared to $4.2 million recorded for
the second quarter of fiscal 2021. For the first six months of
fiscal 2022, SG&A expenses were $9.5 million as compared to $8
million for the prior year period. The increase in SG&A during
the quarter and six months was primarily due to increases in
stock-based compensation, facility and related expenses and
advertising costs, partially offset by a decrease in payroll and
benefit related expenses.
- For the second quarter of fiscal
2022, we recorded net income attributable to common stockholders of
approximately $3.5 million or $0.06 per basic and diluted share, as
compared to net income attributable to common stockholders of $0.8
million or $0.01 per basic and diluted share, for the second
quarter of fiscal 2021. For the first six months of fiscal 2022,
the company recorded a consolidated net income attributable to
common stockholders of $9.8
million or $0.16 and $0.15 per basic and
diluted share, respectively, compared to a consolidated net income
attributable to common stockholders of $4.5 million
or $0.08 per basic and diluted share, for the fiscal 2021
period.
- Avid reported $163.7
million in cash and cash equivalents as of October 31, 2021
compared to $169.9 million as of the prior fiscal year ended April
30, 2021.
More detailed financial information and analysis
may be found in Avid Bioservices’ Quarterly Report on Form 10-Q,
which will be filed with the Securities and Exchange
Commission today.
Recent Corporate
Developments
- The company announced the expansion
of its CDMO service offerings into the rapidly growing cell and
gene therapy market. This decision was driven by continued strong
growth in this market combined with the CDMO industry’s overall
lack of proven, high-quality CGMP manufacturing expertise and
capacity for viral vectors. The company believes that the addition
of viral vector services is a natural extension of its existing
traditional biologics offering and provides another attractive
avenue for growth.
- The company appointed Matthew
Kwietniak as chief commercial officer with responsibility for
continuing the current growth trajectory of Avid’s CDMO business
through the ongoing expansion of the company’s commercial and
clinical client base. Mr. Kwietniak most recently served as
head of drug product sales for the Americas within the
pharma services group at Thermo Fisher Scientific. In this role, he
led the North America team of sales leaders and business
development executives for the company’s pharmaceutical development
and commercial manufacturing business.
- The company appointed Drew Brennan,
an experienced CDMO business development executive, as general
manager of viral vector technologies to lead the company’s
expansion into the cell and gene therapy market. Mr.
Brennan will be responsible for overseeing all business
activities related to Avid’s expansion into this market. He most
recently spent more than a decade in senior sales and operations
positions at Novasep, a leading provider of viral vector
development and manufacturing services to the cell and gene therapy
market, as well as a provider of equipment and services in the
fields of both small molecule production and purification for the
life science and chemical industries.
- The company appointed Elie G.
Hanania, Ph.D., as vice president, process development, viral
vector technologies. Dr. Hanania is a seasoned life
science industry executive with more than 30 years of experience in
the field of cell and gene therapy. Prior to joining Avid, Dr.
Hanania most recently served as director, upstream process
development for Fujifilm Diosynth Biotechnologies, where he led the
process development team in charge of upstream production of all
viral vectors and therapeutic proteins.
- The company’s business development
team signed multiple new orders during the second quarter, totaling
approximately $36 million. These projects span all areas of
the business, from process development to commercial
manufacturing.
- The two-part expansion of
the Myford facility continues to progress according to
plan. The first phase of the expansion, which was initiated
during the second quarter of fiscal 2021, is mechanically complete,
adding a second downstream processing suite to the company’s
existing Myford North facility. The company expects to have this
equipment validated and operational in the coming months. The
second phase, which was initiated during the fourth
quarter of fiscal 2021, is designed to further expand
capacity through the build out of a second manufacturing train,
including both upstream and downstream processing suites
within Myford South. During the second quarter of fiscal
2022, the new construction phase of this expansion was
initiated.
Combined, the company estimates that the
first and second phases of this expansion will result in a total
revenue generating capacity of up to approximately $270
million for the mammalian cell business annually. It is anticipated
that total annual revenue generating capacity will increase to
approximately $350 million with the addition of the viral vector
business. While the company believes that these expansions are
critical to its ability to service the future needs of its
customers, Avid presently has adequate capacity to accommodate
current demand.
- The company’s stock (NASDAQ:CDMO),
was named to the S&P SmallCap 600 Index, effective, October 29,
2021.
Statement Regarding Use
of Non-GAAP Financial Measures
The company uses certain non-GAAP financial
measures such as non-GAAP adjusted net income, free cash flow, as
well as adjusted EBITDA. The company uses these non-GAAP financial
measures for financial and operational decision making and as a
means to evaluate period-to-period comparisons. The company
believes that they provide useful information about operating
results, enhance the overall understanding of our operating
performance and future prospects, and allow for greater
transparency with respect to key metrics used by management in our
financial and operational decision making. These non-GAAP financial
measures exclude amounts that the company does not consider part of
ongoing operating results when planning and forecasting and when
assessing the performance of the organization and our senior
management. The company computes non-GAAP financial measures using
the same consistent method from quarter to quarter and year to
year, and may consider whether other significant items that arise
in the future should be excluded from our non-GAAP financial
measures.
The company reports non-GAAP financial measures
in addition to, and not as a substitute for, or superior to,
measures of financial performance prepared in accordance with U.S.
generally accepted accounting principles (GAAP). These non-GAAP
financial measures are not based on any comprehensive set of
accounting rules or principles, differ from GAAP measures with the
same names, and may differ from non-GAAP financial measures with
the same or similar names that are used by other companies. The
company believes that non-GAAP financial measures should only be
used to evaluate our results of operations in conjunction with the
corresponding GAAP financial measures, and encourages investors to
carefully consider our results under GAAP, as well as the
supplemental non-GAAP information and the reconciliations between
these presentations, to more fully understand our business.
Non-GAAP net income excludes stock-based
compensation; business transition and related costs including
corporate initiatives into new business activities such as
consulting and other costs directly associated with such
activities, and severance and related expenses; and non-cash
interest expense on senior convertible notes for the accretion of
the debt issuance costs associated with our senior convertible
notes. Adjusted EBITDA excludes non-cash operating charges for
stock-based compensation, depreciation and amortization as well as
non-operating items such as interest income, interest expense, and
income tax expense or benefit. For the reasons explained above,
adjusted EBITDA also excludes certain business transition and
related costs. The company also uses measures such as free cash
flow, which represents cash flow from operations less cash used in
the acquisition and disposition of capital.
Additionally, non-GAAP net income and adjusted
EBITDA are key components of the financial metrics utilized by the
company’s compensation committee to measure, in part, management’s
performance and determine significant elements of management’s
compensation. The company encourages investors to carefully
consider its results under GAAP, as well as its supplemental
non-GAAP information and the reconciliation between these
presentations, to more fully understand its business.
Reconciliations between GAAP and non-GAAP financial measures
included at the end of this press release.
Conference Call
Avid will host a conference call and webcast
this afternoon, December 7, 2021, at 4:30 PM
EST (1:30 PM PST).
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: https://ir.avidbio.com/investor-events.
About Avid Bioservices, Inc.
Avid Bioservices (NASDAQ:CDMO), an S&P
SmallCap 600 company, is a dedicated contract development and
manufacturing organization (CDMO) focused on development and CGMP
manufacturing of biologics. The company provides a comprehensive
range of process development, CGMP clinical and commercial
manufacturing services for the biotechnology and biopharmaceutical
industries. With 28 years of experience producing monoclonal
antibodies and recombinant proteins, Avid's services include CGMP
clinical and commercial drug substance manufacturing, bulk
packaging, release and stability testing and regulatory submissions
support. For early-stage programs the company provides a variety of
process development activities, including upstream and downstream
development and optimization, analytical methods development,
testing and characterization. The scope of our services ranges
from standalone process development projects to full development
and manufacturing programs through
commercialization. www.avidbio.com
Forward-Looking Statements
Statements in this press release, which are not
purely historical, including statements regarding Avid
Bioservices' intentions, hopes, beliefs, expectations,
representations, projections, plans or predictions of the future,
are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The forward-looking
statements involve risks and uncertainties including, but not
limited to, the risk that the ongoing COVID-19
pandemic will adversely affect our or our customers’
business and operations, the risk the company may experience
delays in engaging new clients, the risk that the company may not
be successful in executing client projects, the risk that the
company may experience technical difficulties in completing client
projects due to unanticipated equipment and/or manufacturing
facility issues which could result in projects being
terminated or delay delivery of products to customers, revenue
recognition and receipt of payment or result in the loss
of the customer, the risk that one or more existing customers
terminates its contract prior to completion or reduces or delays
its demand for development or manufacturing services which could
adversely affect guided fiscal 2022 revenues, the risk that
the completion of one or both
phases the of the Myford expansion and/or the
viral vector facility may be delayed, may cost more than
anticipated or may not increase revenue generating
capacity by the amounts contemplated, the risk that expanding into
a new biologics manufacturing segment may distract senior
management’s focus on the company’s existing operations and/or its
current expansion of the Myford facility, the risk that the company
may experience delays in hiring qualified individuals into the
viral vector business, the risk that the company may experience
delays in engaging initial customers for the viral vector business,
and the risk that the viral vector business may not become
profitable for several years, if ever . Our business could be
affected by a number of other factors, including the risk factors
listed from time to time in our reports filed with
the Securities and Exchange Commission including, but not
limited to, our annual report on Form 10-K for the fiscal year
ended April 30, 2021, as well as any updates to these risk
factors filed from time to time in our other filings with
the Securities and Exchange Commission. We caution investors
not to place undue reliance on the forward-looking statements
contained in this press release, and we disclaim any obligation,
and do not undertake, to update or revise any forward-looking
statements in this press release except as may be required by
law.
AVID BIOSERVICES, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME(Unaudited) (In thousands, except per share
information)
|
|
Three Months Ended October
31, |
|
Six Months Ended October 31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
Revenues |
|
$26,109 |
|
$21,064 |
|
$56,863 |
|
$46,456 |
Cost of revenues |
|
16,923 |
|
14,646 |
|
36,286 |
|
31,494 |
Gross profit |
|
9,186 |
|
6,418 |
|
20,577 |
|
14,962 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
5,033 |
|
4,166 |
|
9,493 |
|
7,991 |
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
5,033 |
|
4,166 |
|
9,493 |
|
7,991 |
|
|
|
|
|
|
|
|
|
Operating income |
|
4,153 |
|
2,252 |
|
11,084 |
|
6,971 |
Interest and other income,
net |
|
73 |
|
32 |
|
149 |
|
47 |
Interest expense |
|
(704) |
|
— |
|
(1,407) |
|
(4) |
|
|
|
|
— |
|
|
|
|
Net income |
|
$3,522 |
|
$2,284 |
|
$9,826 |
|
$7,014 |
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$3,522 |
|
$2,284 |
|
$9,826 |
|
$7,014 |
|
|
|
|
|
|
|
|
|
Series E preferred stock
accumulated dividends |
|
— |
|
(1,442) |
|
— |
|
(2,523) |
|
|
|
|
|
|
|
|
|
Net income attributable to
common stockholders |
|
$3,522 |
|
$842 |
|
$9,826 |
|
$4,491 |
|
|
|
|
|
|
|
|
|
Net income per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
Basic |
|
$0.06 |
|
$0.01 |
|
$0.16 |
|
$0.08 |
Diluted |
|
$0.06 |
|
$0.01 |
|
$0.15 |
|
$0.08 |
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
61,414 |
|
56,660 |
|
61,276 |
|
56,592 |
Diluted |
|
63,602 |
|
57,248 |
|
63,606 |
|
57,073 |
AVID BIOSERVICES, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited) (In thousands,
except par value)
|
|
October 31,2021 |
|
April 30,2021 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$163,675 |
|
$169,915 |
Accounts receivable, net |
|
18,137 |
|
18,842 |
Contract assets |
|
3,420 |
|
6,112 |
Inventory |
|
20,310 |
|
11,871 |
Prepaid expenses |
|
1,377 |
|
1,064 |
Total current assets |
|
206,919 |
|
207,804 |
Property and equipment,
net |
|
52,496 |
|
37,455 |
Operating lease right-of-use
assets |
|
38,223 |
|
18,691 |
Other assets |
|
3,639 |
|
1,210 |
Restricted cash |
|
350 |
|
350 |
Total assets |
|
$301,627 |
|
$265,510 |
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$10,005 |
|
$9,257 |
Accrued payroll and related costs |
|
5,053 |
|
8,794 |
Contract liabilities |
|
51,865 |
|
50,769 |
Current portion of operating lease liabilities |
|
1,378 |
|
1,355 |
Other current liabilities |
|
1,227 |
|
761 |
Total current liabilities |
|
69,528 |
|
70,936 |
|
|
|
|
|
Convertible senior notes,
net |
|
139,066 |
|
96,949 |
Operating lease liabilities,
less current portion |
|
39,664 |
|
19,889 |
Finance lease liabilities,
less current portion |
|
2,264 |
|
— |
Total liabilities |
|
250,522 |
|
187,774 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Preferred stock, $0.001 par value; 5,000 shares authorized; no
shares issued and outstanding at October 31, 2021 and April 30,
2021, respectively |
|
— |
|
— |
Common stock, $0.001 par value; 150,000 shares authorized; 61,552
and 61,069 shares issued and outstanding at October 31, 2021 and
April 30, 2021, respectively |
|
62 |
|
61 |
Additional paid-in capital |
|
600,266 |
|
637,534 |
Accumulated deficit |
|
(549,223) |
|
(559,859) |
Total stockholders’ equity |
|
51,105 |
|
77,736 |
Total liabilities and stockholders’ equity |
|
$301,627 |
|
$265,510 |
AVID BIOSERVICES, INC.ITEMIZED
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL
MEASURES(Unaudited) (In thousands)
|
|
Three Months Ended October
31, |
|
Six Months Ended October 31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
GAAP net income
attributable to common stockholders |
|
$3,522 |
|
$842 |
|
$9,826 |
|
$4,491 |
Stock-based compensation |
|
1,942 |
|
1,025 |
|
3,241 |
|
1,755 |
Business transition and
related costs |
|
451 |
|
4 |
|
937 |
|
212 |
Non-cash interest expense |
|
255 |
|
— |
|
509 |
|
— |
Preferred stock accumulated
dividends |
|
— |
|
1,442 |
|
— |
|
2,523 |
|
|
|
|
|
|
|
|
|
Adjusted net income |
|
$6,170 |
|
$3,313 |
|
$14,513 |
|
$8,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
attributable to common stockholders |
|
$3,522 |
|
$842 |
|
$9,826 |
|
$4,491 |
Depreciation and
amortization |
|
1,027 |
|
854 |
|
2,036 |
|
1,684 |
Interest expense and interest
income |
|
631 |
|
(32) |
|
1,258 |
|
(43) |
Stock-based compensation |
|
1,942 |
|
1,025 |
|
3,241 |
|
1,755 |
Business transition and
related costs |
|
451 |
|
4 |
|
937 |
|
212 |
Preferred stock accumulated
dividends |
|
— |
|
1,442 |
|
— |
|
2,523 |
|
|
|
|
— |
|
|
|
|
Adjusted EBITDA |
|
$7,573 |
|
$4,135 |
|
$17,298 |
|
$10,622 |
|
|
|
|
|
|
|
|
|
GAAP net cash provided
by operating activities |
|
$10,603 |
|
$10,406 |
|
$3,661 |
|
$8,133 |
Purchase of property
and equipment |
|
(7,625) |
|
(2,491) |
|
(11,824) |
|
(2,980) |
|
|
|
|
|
|
|
|
|
Free cash flow |
|
$2,978 |
|
$7,915 |
|
$(8,163) |
|
$5,153 |
|
|
|
|
|
|
|
|
|
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
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