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 first quarter
of fiscal 2022, ended July 31, 2021.
Highlights Since April 30,
2021
“We are pleased to announce another strong
quarter. During the first quarter of fiscal 2022, we recorded
an increase in revenues compared to the prior year period.
Our margins significantly improved during the first quarter,
reflecting the efficiencies of our business model and our ability
to strategically leverage our existing fixed costs. In
business development, we continued to expand and diversify our
pipeline. And, as always, our business development team
remains highly engaged in pursuit of multiple new business
opportunities. Finally, with respect to operations, both
Phase 1 and Phase 2 of our buildout remain on track as work
continues to enhance our high throughput capabilities for upstream,
downstream and analytical services, and we expect the Phase 1
expansion to be online in January of 2022,” stated Nicholas Green,
president and chief executive officer of Avid Bioservices.
“As we now have the first quarter behind us, and
we are well into the second quarter, we believe we are on track to
achieve our stated full year fiscal 2022 revenue guidance of
between $115 million and $117 million. This represents a
year-over-year growth rate of between 20% and 22%. Multiple
factors contribute to our confidence in reaching this milestone,
including an increase in existing customer demand, a growing pool
of new customer projects, and our substantial backlog. Having
said that, we remain keenly aware of the supply chain challenges
that many companies continue to face due to the COVID-19
pandemic. While we have not experienced any material delays
or shortages to date, it is important to recognize that uncertainty
remains in the supply market, and we are cognizant of the impact it
may have on timing and pricing of materials. As of today, we
are aware of no supply related factors affecting our business.
“Having completed two successful fundraisings in
December 2020 and March 2021, the company is very well capitalized,
with approximately $160 million of cash on hand. These
proceeds support our expansion and enhancement efforts, and will
allow the company to explore value-creating opportunities for
organic and inorganic growth in the future.”
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 first quarter of fiscal 2022 were $30.8
million, representing a 21% increase compared to $25.4 million
recorded in the prior year period. The increase in revenues
can be attributed to an increase in process development revenues
primarily associated with services provided to new customers
combined with an increase in manufacturing revenues primarily due
to an increase in the number and scale of manufacturing runs
in-process and/or completed in the current year period compared to
the prior year period.
- As of July 31, 2021, revenue backlog was $110
million, an increase of 83% compared to $60 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 first quarter of fiscal 2022 was 37%
compared to a gross margin of 34% for the first quarter of fiscal
2021. The increase in gross margin was primarily due to
higher manufacturing and process development revenues
during the period, as well as the receipt of a $3.3 million fee for
unutilized reserved capacity from a customer during the quarter,
similar to the $3.1 million fee from a customer received during the
first quarter of fiscal 2021. The gross margin percentages
for both the current-year and the prior-year periods were
strengthened by approximately 7% and 9%, respectively, from these
unused reserved capacity fees. While we believe the positive
trend in our margins demonstrates the growing efficiencies of our
business model, we do expect to increase hiring in the coming
months to support our growing manufacturing capacity, and this may
impact margins in future quarters.
- Selling, general and administrative expenses (“SG&A”) for
the first quarter of fiscal 2022 were $4.5 million, an increase of
17% compared to $3.8 million recorded for the first quarter of
fiscal 2021. The increase in SG&A during the quarter was
primarily due to increases in stock-based compensation and
consulting fees, partially offset by a decrease in payroll and
benefit related expenses.
- For the first quarter of fiscal 2022, the company recorded net
income attributable to common stockholders of approximately $6.3
million or $0.10 per basic and diluted share, as compared to a
consolidated net income attributable to common stockholders of $3.3
million or $0.06 per basic and diluted share, for the first quarter
of fiscal 2021. The increase in net income attributable to
common stockholders during the fiscal 2022 period is partially due
to preferred stock accumulated dividends of $1.4 million included
during the prior year period.
- Avid reported $159.7 million in cash and cash
equivalents as of July 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
- Appointed Esther M. Alegria, Ph.D. to the Avid board of
directors. Dr. Alegria joins the Avid board bringing nearly
30 years of biopharmaceutical industry experience spanning research
and development, manufacturing, quality control, assurance and
compliance, technology transfer and regulatory submissions
supporting the development and commercialization of small and large
molecule therapeutics and vaccines.
- Signed multiple new orders during the first quarter, totaling
approximately $23 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, expands the production capacity
of the company’s existing Myford North
facility by adding a second downstream processing
suite. 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.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 annually. While the company believes that this
expansion is critical to its ability to service the future needs of
its customers, Avid presently has adequate capacity to accommodate
current demand.
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, September 8, 2021, 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: https://ir.avidbio.com/investor-events.
About Avid Bioservices, Inc.
Avid Bioservices is a dedicated contract
development and manufacturing organization (CDMO) focused on
development and CGMP manufacturing of biopharmaceutical
drug substances derived from mammalian cell culture. 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, and the risk that
the completion of one or both
phases the of the Myford expansion may be
delayed, may cost more than anticipated or may not
increase revenue generating capacity by the amounts contemplated.
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
July 31, |
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
Revenues |
|
$30,754 |
|
|
$25,392 |
|
Cost of revenues |
|
|
19,363 |
|
|
|
16,848 |
|
Gross profit |
|
|
11,391 |
|
|
|
8,544 |
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
Selling, general and administrative |
|
|
4,460 |
|
|
|
3,825 |
|
|
|
|
|
|
Operating income |
|
|
6,931 |
|
|
|
4,719 |
|
Interest income |
|
|
76 |
|
|
|
15 |
|
Interest expense |
|
|
(703 |
) |
|
|
(4 |
) |
|
|
|
|
|
Net income |
|
$6,304 |
|
|
$4,730 |
|
|
|
|
|
|
Comprehensive income |
|
$6,304 |
|
|
$4,730 |
|
|
|
|
|
|
Series E preferred stock
accumulated dividends |
|
|
— |
|
|
|
(1,442 |
) |
|
|
|
|
|
Net income attributable to common stockholders |
|
$6,304 |
|
|
$3,288 |
|
|
|
|
|
|
|
|
|
|
|
Net income per share
attributable to common stockholders: |
|
|
|
|
Basic |
|
$0.10 |
|
|
$0.06 |
|
Diluted |
|
$0.10 |
|
|
$0.06 |
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
Basic |
|
|
61,137 |
|
|
|
56,523 |
|
Diluted |
|
|
63,571 |
|
|
|
56,892 |
|
AVID BIOSERVICES, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited) (In thousands, except par value)
|
|
|
|
|
July 31,2021 |
|
April 30,2021 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$159,692 |
|
|
$169,915 |
|
Accounts receivable |
|
18,354 |
|
|
|
18,842 |
|
Contract assets |
|
5,956 |
|
|
|
6,112 |
|
Inventory |
|
15,242 |
|
|
|
11,871 |
|
Prepaid expenses |
|
1,536 |
|
|
|
1,064 |
|
Total current assets |
|
200,780 |
|
|
|
207,804 |
|
Property and equipment, net |
|
44,569 |
|
|
|
37,455 |
|
Operating lease right-of-use
assets |
|
22,877 |
|
|
|
18,691 |
|
Other assets |
|
1,955 |
|
|
|
1,210 |
|
Restricted cash |
|
350 |
|
|
|
350 |
|
Total assets |
$270,531 |
|
|
$265,510 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$9,611 |
|
|
$9,257 |
|
Accrued payroll and related costs |
|
4,114 |
|
|
|
8,794 |
|
Contract liabilities |
|
46,262 |
|
|
|
50,769 |
|
Current portion of operating lease liabilities |
|
1,630 |
|
|
|
1,355 |
|
Other current liabilities |
|
1,631 |
|
|
|
761 |
|
Total current liabilities |
|
63,248 |
|
|
|
70,936 |
|
|
|
|
|
Convertible senior notes,
net |
|
138,812 |
|
|
|
96,949 |
|
Operating lease liabilities, less
current portion |
|
23,835 |
|
|
|
19,889 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.001 par value; 5,000 shares authorized; no
shares issued and outstanding at July 31, 2021 and April 30, 2021,
respectively |
|
— |
|
|
|
— |
|
Common stock, $0.001 par value; 150,000 shares
authorized; 61,341 and 61,069 shares issued and outstanding at
July 31, 2021 and April 30, 2021, respectively |
|
61 |
|
|
|
61 |
|
Additional paid-in capital |
|
597,320 |
|
|
|
637,534 |
|
Accumulated deficit |
|
(552,745 |
) |
|
|
(559,859 |
) |
Total stockholders’ equity |
|
44,636 |
|
|
|
77,736 |
|
Total liabilities and stockholders’ equity |
$270,531 |
|
|
$265,510 |
|
AVID BIOSERVICES, INC.ITEMIZED
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL
MEASURES(Unaudited) (In thousands)
|
|
|
Three Months Ended July 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
GAAP net income
attributable to common stockholders |
$6,304 |
|
|
$3,288 |
|
Stock-based compensation |
|
1,299 |
|
|
|
730 |
|
Business transition and related
costs |
|
486 |
|
|
|
208 |
|
Non-cash interest expense |
|
254 |
|
|
|
— |
|
Preferred stock accumulated
dividends |
|
— |
|
|
|
1,442 |
|
Adjusted net income |
$8,343 |
|
|
$5,668 |
|
|
|
|
|
GAAP net income
attributable to common stockholders |
$6,304 |
|
|
$3,288 |
|
Depreciation and
amortization |
|
1,009 |
|
|
|
830 |
|
Interest expense and interest
income |
|
627 |
|
|
|
(11 |
) |
Stock-based compensation |
|
1,299 |
|
|
|
730 |
|
Business transition and related
costs |
|
486 |
|
|
|
208 |
|
Preferred stock accumulated
dividends |
|
— |
|
|
|
1,442 |
|
Adjusted EBITDA |
$9,725 |
|
|
$6,487 |
|
|
|
|
|
GAAP net cash used in
operating activities |
($6,942 |
) |
|
($2,273 |
) |
Purchase of property and
equipment |
|
(4,199 |
) |
|
|
(489 |
) |
Free cash flow |
($11,141 |
) |
|
($2,762 |
) |
|
|
|
|
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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