Avid Bioservices Reports Financial Results for Fourth Quarter and Fiscal Year Ended April 30, 2020 and Recent Developments
-- Recorded Fourth Quarter Revenue of
-- Project Fiscal 2021 Revenue of $76 to
Highlights Since January 31, 2020
“The fourth quarter of fiscal 2020 was a very productive period, generating higher than anticipated revenues,” said
“Avid also significantly strengthened its management team in recent weeks. First, we were pleased to announce the appointment of
“During the fourth quarter, the company also added two senior directors to our business development team with proven track records in growing CDMOs. They are responsible for driving business growth in
“To accommodate this anticipated increase in demand, during the fourth quarter, the company initiated the pre-engineering, design and permitting work required to allow us to break ground on a facility expansion at the appropriate time. While a specific kick-off date has not yet been established for this expansion, we believe that customer demand will require additional capacity and we are actively moving forward to prepare for this growth opportunity.
“Regarding the equipment issue and production interruption that we reported last quarter, I can confirm that the specific piece of equipment in question is now operational. However, this project is being executed in three phases: investigation, remediation, and confirmation. We are currently progressing though the confirmation stage during which we are running multiple revenue-generating production campaigns to confirm the successful remediation of the equipment issue. We expect this work to be completed in the coming months.
“While we faced a number of challenges in fiscal 2020, we are very encouraged by the events of, and subsequent to, the fourth quarter. In particular, we are pleased to welcome a new and highly experienced CEO to lead Avid into its next phase of growth. During the fourth quarter, we also significantly strengthened our business development team, signed multiple project expansion orders with existing customers, and finished the year with a record
Financial Highlights and Guidance
- The company is providing revenue guidance for the full fiscal year 2021 of $76 million to $81 million.
- Revenues for the fourth quarter of fiscal 2020 were
$12.6 million, a 26% decrease compared to revenues of $17.1 millionrecorded during the fourth quarter of fiscal 2019. The year-over-year decline in revenue was primarily attributable to the interruption of production which began during the third quarter and continued into the fourth quarter of fiscal 2020, as a result of a problem with a specific piece of equipment. Despite this decline, fourth quarter 2020 revenues were stronger than expected based on our revised guidance for the quarter due primarily to an increase in customer projects. For the full fiscal year 2020, revenues were $59.7 million, an 11% increase as compared to revenues of $53.6 millionin the prior year period. This increase was primarily the result of continued growth in the number and scope of customer projects.
- As of April 30, 2020, revenue backlog was
$65 million, an increase of 12% compared to $58 millionat the end of the third quarter of fiscal 2020, and an increase of 41% compared to $46 millionat the end of last fiscal year. The company expects to recognize the majority of this backlog during fiscal 2021.
- Gross margin for the fourth quarter of fiscal 2020 was a negative 10% compared to a gross margin of 21% for the fourth quarter of fiscal 2019. The decrease in gross margin for the 2020 quarter was primarily attributed to the costs associated with the production interruption described earlier, an increase in depreciation expense from the acquisition of new equipment, and a net decrease in revenue. Gross margin for the full fiscal year 2020 was 7%, a decrease compared to 13% in the prior year period. This decrease was primarily due to higher facility and equipment related costs primarily associated with the production interruption during the second half of fiscal 2020, the planned growth costs associated with payroll and related costs, and an increase in depreciation expense from the acquisition of new equipment.
- Selling, general and administrative expenses (“SG&A”) for the fourth quarter of fiscal 2020 were
$3.5 million, a slight decline compared to $3.6 millionrecorded for the fourth quarter of fiscal 2019. For the full fiscal year 2020, SG&A expenses were $14.5 million, a 13% increase compared to $12.8 millionfor the prior year. The increase in SG&A for the year was primarily attributed to employee separation-related expenses, recruiting fees and increased stock-based compensation. When excluding the separation-related expenses, SG&A increased 3% during fiscal 2020 as compared to the prior year.
- For the fourth quarter of fiscal 2020, the company recorded a consolidated net loss attributable to common stockholders of
$6.2 millionor $0.11per share, as compared to a consolidated net loss attributable to common stockholders of $1.1 millionor $0.02per share, for the fourth quarter of fiscal 2019. For the full fiscal year 2020, the company recorded a consolidated net loss attributable to common stockholders of $15.2 millionor $0.27per share, compared to a consolidated net loss attributable to common stockholders of $8.9 millionor $0.16per share, for fiscal 2019.
- Avid reported $36.3 million in cash and cash equivalents as of
April 30, 2020, a 12% increase as compared to $32.4 millionas of the prior fiscal year ended April 30, 2019. The company also achieved positive free cash flow, measured as the change in cash from operations net of capital expenditures, of $2.0 millionfor the full fiscal year 2020.
More detailed financial information and analysis may be found in Avid Bioservices’ Annual Report on Form 10-K, which will be filed with the Securities and Exchange Commission today.
Recent Corporate Developments
Nicholas (Nick) Greenas president and chief executive officer. Mr. Greenhas more than 30 years of experience in the industry. He has held a number of senior management roles, most recently serving as president and CEO of Therapure Biopharma, with prior positions as managing director of Nipa Laboratories Ltd., head of the Life Science Division of Clariant International Ltd.in the USA, president and CEO of Rhodia Pharma Solutions Ltd.and president of Codexis, Inc.’s Pharma Division. Mr. Greenholds a BSc (Hons) in Chemistry from Queen Mary Collegein Londonand an MBA from the University of Huddersfield.
- Significantly strengthened the business development team with the appointment of two senior directors with responsibility for driving CDMO business growth within North America, Europe and Asia. Jason
C. Brady, Ph.D. serves as senior director of business development for eastern North America, as well as Europe. Sylvia Hinds serves as senior director of business development for western North America in addition to the Asia Pacific region.
- Signed project expansion orders for
$23 millionduring the quarter with existing customers. During fiscal 2020, the company signed new business orders for $80 millionas compared to $55 millionduring fiscal 2019.
- Entered into a co-marketing agreement with Aragen Bioscience, a leading contract research organization (CRO) focused on accelerating pre-clinical biologics product development to provide clients with an integrated “sequence-to-manufacturing” service. Under terms of the non-exclusive agreement, the companies will offer customers Aragen’s cell line development expertise integrated with Avid’s upstream and downstream process development and analytical services to drive efficiencies and reduce overall timelines for delivering CGMP bulk drug substances.
- Avid was named a recipient of five 2020 Contract Manufacturing Organization (CMO) Leadership Awards in the following categories: Capabilities, Expertise, Reliability, Compatibility and Service. Presented by the industry publication Life Science Leader and based on market research and surveys conducted by Industry Standard Research (ISR), these awards are intended to honor those companies in the contract manufacturing space that provide their customers with the industry’s highest level of service.
- Restored operation of the specific piece of equipment that caused an interruption of production in the third and fourth quarters of fiscal 2020. This project is being executed in three phases: investigation; remediation; and, confirmation. To date, Avid believes it has successfully completed the first two stages by identifying and remediating the source of the problem. The company is currently progressing through the confirmation stage, during which it is running multiple revenue-generating production campaigns. The company will not be able to confirm a full resolution until it completes the confirmation stage. It is expected that this work will be completed in the coming months.
- Initiated the pre-engineering, design and permitting work required to allow the company to break ground on a facility expansion at the appropriate time. While a specific kick-off date has not yet been established for this expansion, the company believes that customer demand will require additional capacity and Avid is proactively working to prepare for this growth.
Avid will host a conference call and webcast this afternoon, June 30, 2020, at 4:30 PM EDT (
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/investor-events.
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 27 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
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 the company may not achieve positive cash flow or EBITDA, 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 production challenges experienced by the company during the third quarter of fiscal year 2020 were not be fully resolved during the fourth quarter of fiscal year 2020 or may reoccur in the future causing a negative impact on revenue and profits, 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, the risk that the company may need to raise additional capital to fund its contemplated expansion plans, and the risk that the commencement of such expansion plans may be delayed. 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, 2020, 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.
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS|
|(in thousands, except per share information)|
|Three Months Ended||Twelve Months Ended|
|Cost of revenues||13,849||13,407||55,770||46,379|
|Gross (loss) profit||(1,299||)||3,648||3,932||7,224|
|Selling, general and administrative||3,528||3,573||14,517||12,846|
|Loss on lease termination||—||—||355||—|
|Total operating expenses||3,528||3,573||14,872||12,846|
|Operating (loss) income||(4,827||)||75||(10,940||)||(5,622||)|
|Interest and other income, net||59||92||474||282|
|(Loss) income from continuing operations before income taxes||$||(4,768||)||$||167||$||(10,466||)||$||(5,340||)|
|Income tax benefit||—||67||—||284|
|(Loss) income from continuing operations, net of tax||(4,768||)||234||(10,466||)||(5,056||)|
|Income from discontinued operations, net of tax||—||102||—||841|
|Net (loss) income||$||(4,768||)||$||336||$||(10,466||)||$||(4,215||)|
|Comprehensive (loss) income||$||(4,768||)||$||336||$||(10,466||)||$||(4,215||)|
|Series E preferred stock accumulated dividends||(1,442||)||(1,442||)||(4,686||)||(4,686||)|
|Net loss attributable to common stockholders||$||(6,210||)||$||(1,106||)||$||(15,152||)||$||(8,901||)|
|Basic and diluted net (loss) income per common share attributable to common stockholders:|
|Net loss per share attributable to common stockholders||$||(0.11||)||$||(0.02||)||$||(0.27||)||$||(0.16||)|
|Weighted average basic and diluted shares outstanding||56,482||56,080||56,326||55,981|
|CONSOLIDATED BALANCE SHEETS|
|(In thousands, except par value)|
|Cash and cash equivalents||$||36,262||$||32,351|
|Total current assets||59,763||51,318|
|Property and equipment, net||27,105||25,625|
|Operating lease right-of-use assets||20,100||—|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Accrued payroll and related costs||3,019||3,540|
|Operating lease liabilities||1,228||—|
|Other current liabilities||808||619|
|Total current liabilities||44,480||23,162|
|Operating lease liabilities, less current portion||21,244||—|
|Deferred rent, less current portion||—||2,072|
|Other long-term liabilities||—||93|
|Commitments and contingencies|
|1,648 shares issued and outstanding at respective dates||2||2|
|56,483 and 56,135 shares issued and outstanding at respective dates||56||56|
|Additional paid-in capital||612,909||613,615|
|Total stockholders’ equity||41,896||53,068|
|Total liabilities and stockholders’ equity||$||107,620||$||78,395|
Stephanie Diaz(Investors) Vida Strategic Partners415-675-7401 firstname.lastname@example.org Tim Brons(Media) Vida Strategic Partners415-675-7402 email@example.com
Source: Avid Bioservices, Inc