0001683168-22-006214 | 10-Q | XBRL Viewer

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Cover - shares	3 Months Ended
Cover - shares	Jul. 31, 2022	Aug. 22, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jul. 31, 2022
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--04-30
Entity File Number	001-32839
Entity Registrant Name	AVID BIOSERVICES, INC.
Entity Central Index Key	0000704562
Entity Tax Identification Number	95-3698422
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	14191 Myford Road
Entity Address, City or Town	Tustin
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92780
City Area Code	(714)
Local Phone Number	508-6100
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	CDMO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		62,167,454

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jul. 31, 2022	Apr. 30, 2022
Current assets:
Cash and cash equivalents	$ 115,137	$ 126,166
Accounts receivable, net	25,945	20,547
Contract assets	7,078	5,369
Inventory	30,354	26,062
Prepaid expenses	2,121	1,879
Total current assets	180,635	180,023
Property and equipment, net	114,929	92,955
Operating lease right-of-use assets	36,093	36,806
Deferred tax assets	114,472	115,082
Other assets	4,740	4,627
Restricted cash	350	350
Total assets	451,219	429,843
Current liabilities:
Accounts payable	30,461	9,504
Accrued compensation and benefits	5,300	8,418
Contract liabilities	52,775	53,798
Current portion of operating lease liabilities	3,152	2,969
Other current liabilities	1,655	1,072
Total current liabilities	93,343	75,761
Convertible senior notes, net	139,837	139,577
Operating lease liabilities, less current portion	37,077	37,886
Finance lease liabilities, less current portion	1,963	2,093
Total liabilities	272,220	255,317
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued and outstanding at respective dates	0	0
Common stock, $0.001 par value; 150,000 shares authorized; 62,165 and 61,807 shares issued and outstanding at respective dates	62	62
Additional paid-in capital	608,750	605,841
Accumulated deficit	(429,813)	(431,377)
Total stockholders’ equity	178,999	174,526
Total liabilities and stockholders’ equity	$ 451,219	$ 429,843

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares shares in Thousands	Jul. 31, 2022	Apr. 30, 2022
Statement of Financial Position [Abstract]
Preferred stock par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	150,000	150,000
Common stock, shares issued	62,165	61,807
Common stock, shares outstanding	62,165	61,807

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Jul. 31, 2022	Jul. 31, 2021
Income Statement [Abstract]
Revenues	$ 36,692	$ 30,754
Cost of revenues	27,575	19,363
Gross profit	9,117	11,391
Operating expenses:
Selling, general and administrative	6,382	4,460
Total operating expenses	6,382	4,460
Operating income	2,735	6,931
Interest expense	(518)	(703)
Other income (expense), net	50	76
Net income before income taxes	2,267	6,304
Income tax expense	703	0
Net income	1,564	6,304
Comprehensive income	$ 1,564	$ 6,304
Net income per share:
Basic	$ 0.03	$ 0.10
Diluted	$ 0.02	$ 0.10
Weighted average common shares outstanding:
Basic	61,905	61,137
Diluted	63,333	63,571

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (Unaudited - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Apr. 30, 2021	$ 61	$ 637,534	$ (559,859)	$ 77,736
Beginning balance, shares at Apr. 30, 2021	61,069
Cumulative-effect adjustment from modified retrospective adoption of ASU 2020-06		(42,431)	810	(41,621)
Common stock issued under equity compensation plans		918		918
Common stock issued under equity compensation plans, shares	272
Stock-based compensation expense		1,299		1,299
Net income			6,304	6,304
Ending balance, value at Jul. 31, 2021	$ 61	597,320	(552,745)	44,636
Ending balance, shares at Jul. 31, 2021	61,341
Beginning balance, value at Apr. 30, 2022	$ 62	605,841	(431,377)	174,526
Beginning balance, shares at Apr. 30, 2022	61,807
Common stock issued under equity compensation plans		1,012		1,012
Common stock issued under equity compensation plans, shares	358
Stock-based compensation expense		1,897		1,897
Net income			1,564	1,564
Ending balance, value at Jul. 31, 2022	$ 62	$ 608,750	$ (429,813)	$ 178,999
Ending balance, shares at Jul. 31, 2022	62,165

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Jul. 31, 2022	Jul. 31, 2021
Cash flows from operating activities:
Net income	$ 1,564	$ 6,304
Adjustments to reconcile net income to net cash used in operating activities:
Stock-based compensation	1,897	1,299
Depreciation and amortization	1,590	1,009
Amortization of debt issuance costs	260	254
Deferred income taxes	610	0
Loss on disposal of property and equipment	34	0
Changes in operating assets and liabilities:
Accounts receivable, net	(5,398)	488
Contract assets	(1,709)	156
Inventory	(4,292)	(3,371)
Prepaid expenses and other assets	(355)	(1,217)
Accounts payable	4,242	(3,570)
Accrued compensation and benefits	(3,118)	(4,680)
Contract liabilities	(1,023)	(4,507)
Other accrued expenses and liabilities	664	893
Net cash used in operating activities	(5,034)	(6,942)
Cash flows from investing activities:
Purchase of property and equipment	(6,924)	(4,199)
Net cash used in investing activities	(6,924)	(4,199)
Cash flows from financing activities:
Proceeds from issuance of common stock under equity compensation plans	1,012	918
Principal payments on finance lease	(83)	0
Net cash provided by financing activities	929	918
Net decrease in cash, cash equivalents and restricted cash	(11,029)	(10,223)
Cash, cash equivalents and restricted cash, beginning of period	126,516	170,265
Cash, cash equivalents and restricted cash, end of period	115,487	160,042
Supplemental disclosures of cash flow information:
Cash paid for interest	23	0
Cash paid for income taxes	40	0
Supplemental disclosures of non-cash activities:
Unpaid purchases of property and equipment	16,674	3,924
Unpaid financial lease obligation	41	0
Right-of-use assets obtained upon operating lease modification, net	$ 0	$ 4,554

Description of Company and Basis of Presentation

3 Months Ended

Jul. 31, 2022

Accounting Policies [Abstract]

Description of Company and Basis of Presentation

Note 1 – Description of Company and Basis of Presentation

We are a dedicated contract development and manufacturing organization (“CDMO”) that provides a comprehensive range of services from process development to Current Good Manufacturing Practices (“CGMP”) clinical and commercial manufacturing of biologics for the biotechnology and biopharmaceutical industries.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) related to quarterly reports on Form 10-Q, and accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2022, as filed with the SEC on June 29, 2022. The unaudited financial information for the interim periods presented herein reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial condition and results of operations for the periods presented, with such adjustments consisting only of normal recurring adjustments. Results of operations for interim periods covered by this Quarterly Report on Form 10-Q may not necessarily be indicative of results of operations for the full fiscal year or any other interim period.

The unaudited condensed consolidated financial statements include the accounts of Avid Bioservices, Inc. and its subsidiary. All intercompany accounts and transactions among the consolidated entities have been eliminated in the unaudited condensed consolidated financial statements.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts, as well as disclosures of commitments and contingencies in the financial statements and accompanying notes. Actual results could differ materially from those estimates and assumptions.

Summary of Significant Accounting Policies

3 Months Ended

Jul. 31, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

Information regarding our significant accounting policies is contained in Note 2, “Summary of Significant Accounting Policies,” of the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended April 30, 2022.

Revenue Recognition

Revenue recognized from services provided under our customer contracts is disaggregated into manufacturing and process development revenue streams.

Manufacturing revenue

Manufacturing revenue generally represents revenue from the manufacturing of customer products recognized over time utilizing an input method that compares the cost of cumulative work-in-process to date to the most current estimates for the entire cost of the performance obligation. Under a manufacturing contract, a quantity of manufacturing runs are ordered at a specified scale with prescribed dates, where the product is manufactured according to the customer’s specifications and typically includes only one performance obligation. Each manufacturing run represents a distinct service that is sold separately and has stand-alone value to the customer. The products are manufactured exclusively for a specific customer and have no alternative use. The customer retains control of its product during the entire manufacturing process and can make changes to the process or specifications at its request. Under these agreements, we are entitled to consideration for progress to date that includes an element of profit margin.

Process development revenue

Process development revenue generally represents revenue from services associated with the custom development of a manufacturing process and analytical methods for a customer’s product. Process development revenue is recognized over time utilizing an input method that compares the cost of cumulative work-in-process to date to the most current estimates for the entire cost of the performance obligation. Under a process development contract, the customer owns the product details and process, which has no alternative use. These process development projects are customized to each customer to meet its specifications and typically includes only one performance obligation. Each process represents a distinct service that is sold separately and has stand-alone value to the customer. The customer also retains control of its product as the product is being created or enhanced by our services and can make changes to its process or specifications upon request. Under these agreements, we are entitled to consideration for progress to date that includes an element of profit margin.

The following table summarizes our manufacturing and process development revenue streams (in thousands):

Schedule of revenues
	Three Months Ended July 31,
	2022		2021
Manufacturing revenues	$	31,481	$	25,675
Process development revenues		5,211		5,079
Total revenues	$	36,692	$	30,754

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets (unbilled receivables), and contract liabilities (customer deposits and deferred revenue). Contract assets are recorded when our right to consideration is conditioned on something other than the passage of time. Contract assets are reclassified to accounts receivable on the consolidated balance sheet when our rights become unconditional. Contract liabilities represent customer deposits and deferred revenue billed and/or received in advance of our fulfillment of performance obligations. Contract liabilities convert to revenue as we perform our obligations under the contract.

During the three months ended July 31, 2022 and 2021, we recognized revenue of $18.6 million and $17.5 million, respectively, for which the contract liability was recorded in a prior period.

The transaction price for services provided under our customer contracts reflects our best estimates of the amount of consideration to which we are entitled in exchange for providing goods and services to our customers. For contracts with multiple performance obligations, we allocate transaction price to each performance obligation identified in a contract on a relative standalone selling price basis. We generally determine relative standalone selling prices based on the price observed in the customer contract for each distinct performance obligation. If observable standalone selling prices are not available, we may estimate the applicable standalone selling price based on the pricing of other comparable services or on a price that we believe the market is willing to pay for the applicable service.

In determining the transaction price, we also considered the different sources of variable consideration including, but not limited to, discounts, credits, refunds, price concessions or other similar items. We have included in the transaction price some or all of an amount of variable consideration, utilizing the most likely method, only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The actual amount of consideration ultimately received may differ.

In addition, our customer contracts generally include provisions entitling us to a cancellation or postponement fee when a customer cancels or postpones its commitments prior to our initiation of services, therefore not utilizing their reserved capacity. The determination of such cancellation and postponement fees are based on the terms stated in the related customer contract but are generally considered substantive for accounting purposes and create an enforceable right and obligation due to us when the cancellation or postponement occurs. Accordingly, we recognize such fees, subject to variable consideration, as revenue upon the cancellation or postponement date utilizing the most likely method.

Management may be required to exercise judgement in estimating revenue to be recognized. Judgement is required in identifying performance obligations, estimating the transaction price, estimating the stand-alone selling prices of identified performance obligations, estimating variable consideration, and estimating the progress towards the satisfaction of performance obligations. If actual results in the future vary from our estimates, the estimates will be adjusted, which will affect revenues in the period that such variances become known. There were no material adjustments in estimates for variable consideration for the three months ended July 31, 2022 and 2021.

We apply the practical expedient available under ASC 606 that permits us not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. As of July 31, 2022, we do not have any unsatisfied performance obligations for contracts greater than one year.

Costs incurred to obtain a contract are not material. These costs are generally employee sales commissions, which are expensed as incurred and included in selling, general and administrative expense in the unaudited condensed consolidated statements of operations and comprehensive income.

Restricted Cash

Under the terms of an operating lease related to one of our facilities (Note 4), we are required to maintain a letter of credit as collateral. Accordingly, at July 31, 2022 and April 30, 2022, restricted cash of $0.4 million was pledged as collateral under the letter of credit.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets that sum to the total of the same amounts shown in the unaudited condensed consolidated statements of cash flows (in thousands):

Schedule of cash
	July 31, 2022		April 30, 2022		July 31, 2021		April 30, 2021
Cash and cash equivalents	$	115,137	$	126,166	$	159,692	$	169,915
Restricted cash		350		350		350		350
Total cash, cash equivalents and restricted cash	$	115,487	$	126,516	$	160,042	$	170,265

Accounts Receivable, Net

Accounts receivable is primarily comprised of amounts owed to us for services provided under our customer contracts and are recorded at the invoiced amount net of an allowance for doubtful accounts, if necessary. We apply judgement in assessing the ultimate realization of our receivables and we estimate an allowance for doubtful accounts based on various factors, such as the aging of our receivables, historical experience, and the financial condition of our customers.

Based on our analysis of our accounts receivable balance as of July 31, 2022 and April 30, 2022, we determined an allowance for doubtful accounts for both periods of $18.4 million was deemed necessary. For both periods, the amount is primarily due to a dispute with a customer over the payment of certain cancellation fees due to us under the terms of the related customer contract. We believe we have a contractual right to this amount, but as this contractual right is being disputed and therefore may be uncollectible, we have chosen to reserve the disputed amount.

Inventory

Inventory consists of raw materials inventory and is valued at the lower of cost, determined by the first-in, first-out method, or net realizable value. We periodically review raw materials inventory for potential impairment and adjust inventory to its net realizable value based on the estimate of future use and reduce the carrying value of inventory as deemed necessary.

Property and Equipment

Property and equipment is recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related asset, which are generally as follows:


Description		Estimated Useful Life
Leasehold improvements		Shorter of estimated useful life or lease term
Laboratory and manufacturing equipment		5 – 10 years
Computer equipment and software		3 – 5 years
Furniture, fixtures and office equipment		5 – 10 years

Costs for property and equipment net yet placed into service have been capitalized as construction-in-progress. These costs are primarily related to equipment and leasehold improvements associated with our manufacturing facilities, and will be depreciated in accordance with the above guidelines once placed into service. Interest costs incurred during construction of major capital projects are capitalized as construction-in-progress until the underlying asset is ready for its intended use, at which point the interest costs are amortized as depreciation expense over the life of the underlying asset. Interest capitalized as construction-in-progress was $0.2 million for the three months ended July 31, 2022 and $0.2 million for the fiscal year ended April 30, 2022. All of our property and equipment are located in the United States. Property and equipment consist of the following (in thousands):

Schedule of property and equipment
	July 31, 2022			April 30, 2022
Leasehold improvements	$	47,180		$	37,345
Laboratory and manufacturing equipment		30,071			30,089
Computer equipment and software		5,031			5,326
Furniture, fixtures and office equipment		843			843
Construction-in-progress		57,460			43,809
Total property and equipment, gross		140,585			117,412
Less: accumulated depreciation and amortization		(25,656	)		(24,457	)
Total property and equipment, net	$	114,929		$	92,955

Depreciation and amortization expense for the three months ended July 31, 2022 and 2021 was $1.6 million and $1.0 million, respectively.

Leases

We determine if an arrangement is or contains a lease at inception. Our operating leases with a term greater than one year are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities and operating lease liabilities, less current portion in our consolidated balance sheets. ROU assets represent our right to use an underlying asset during the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date, based on the present value of lease payments over the lease term. In determining the net present value of lease payments, we use our incremental borrowing rate which represents an estimated rate of interest that we would have to pay to borrow equivalent funds on a collateralized basis at the lease commencement date.

Our operating leases may include options to extend the lease which are included in the lease term when it is reasonably certain that we will exercise a renewal option. Operating lease expense is recognized on a straight-line basis over the expected lease term.

Our finance lease with a term greater than one year is included as an asset within property and equipment, net and a lease liability equal to the present value of the minimum lease payments is included in other current liabilities and finance lease liabilities, less current portion in our consolidated balance sheets. The present value of the finance lease payments is calculated using the implicit interest rate in the lease. Finance lease ROU assets are amortized on a straight-line basis over the expected useful life of the asset and the carrying amount of the lease liability is adjusted to reflect interest, which is recorded as interest expense.

Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheets and lease expense for these short-term leases is recognized on a straight-line basis over the lease term. We have also elected the practical expedient to not separate lease components from non-lease components.

Impairment

Long-lived assets are reviewed for impairment in accordance with authoritative guidance for impairment or disposal of long-lived assets. Long-lived assets are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable. If such events or changes in circumstances arise, we compare the carrying amount of the long-lived assets to the estimated future undiscounted cash flows expected to be generated by the long-lived assets. If the long-lived assets are determined to be impaired, any excess of the carrying value of the long-lived assets over its estimated fair value is recognized as an impairment loss. For the three months ended July 31, 2022 and 2021, there were no indicators of impairment of the value of our long-lived assets and no cumulative impairment losses were recognized as of July 31, 2022.

Stock-Based Compensation

We account for stock options, restricted stock units, performance stock units and other stock-based awards granted under our equity compensation plans in accordance with the authoritative guidance of ASC 718, Compensation – Stock Compensation. The estimated fair value of stock options granted to employees in exchange for services is measured at the grant date, using a fair value based method, such as a Black-Scholes option valuation model, and is recognized as an expense on a straight-line basis over the requisite service periods. The fair value of restricted stock units and performance stock units is measured at the grant date based on the closing market price of our common stock on the date of grant. For restricted stock units, the fair value is recognized as an expense on a straight-line basis over the requisite service periods. For performance stock units, which are subject to performance conditions, the fair value is recognized as an expense on a straight-line basis over the requisite service periods when the achievement of such performance condition is determined to be probable. If a performance condition is not determined to be probable or is not met, no stock-based compensation expense is recognized, and any previously recognized expense is reversed. Forfeitures are recognized as a reduction of stock-based compensation expense as they occur.

Debt Issuance Costs

Debt issuance costs related to convertible senior notes are recorded as a deduction that is netted against the principal value of the debt and are amortized to interest expense using the effective interest method over the contractual term of the debt (Note 3).

Comprehensive Income

Comprehensive income is the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income is equal to our net income for all periods presented.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance prioritizes the inputs used in measuring fair value into the following hierarchy:

Level 1 – Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices included in Level 1, such as assets or liabilities whose values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.

Level 3 – Unobservable inputs that are supported by little or no market activity and significant to the overall fair value measurement of the assets or liabilities; therefore, requiring the company to develop its own valuation techniques and assumptions.

As of July 31, 2022 and April 30, 2022, we did not have any Level 2 or Level 3 financial assets and our cash equivalents of $102.9 million and $116.3 million, respectively, were invested in money market funds with one major commercial bank and carried at fair value based on quoted market prices for identical securities (Level 1 input). We consider the fair value of our convertible senior notes to be a Level 2 financial liability due to limited trading activity of the senior convertible notes (Note 3). We did not have any other Level 2 or Level 3 financial liabilities as of July 31, 2022 and April 30, 2022.

Accounting Standards Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU 2016-13”). The standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates, which required entities to make a one-time determination of whether an entity is eligible to be a smaller reporting company as of November 15, 2019 for the purpose of determining the effective date of ASU 2016-13. We determined that we were eligible to be a smaller reporting company as of November 15, 2019, and therefore, ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, which will be our fiscal year 2024 beginning May 1, 2023. Early adoption is permitted. We are currently evaluating the timing and impact the adoption of this standard will have on our condensed consolidated financial statements.

Debt

3 Months Ended

Jul. 31, 2022

Debt Disclosure [Abstract]

Debt

Note 3 – Debt

Convertible Senior Notes Due 2026

In March 2021, we issued $143.8 million in aggregate principal amount of 1.25% exchangeable senior notes due 2026 (“Convertible Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The net proceeds we received from the issuance of Convertible Notes was $138.5 million, after deducting initial purchaser discounts and other debt issuance related expenses of $5.3 million.

The Convertible Notes are senior unsecured obligations and accrue interest at a rate of 1.25% per annum, payable semi-annually in arrears on March 15 and September 15 of each year. The Convertible Notes mature on March 15, 2026, unless earlier redeemed or repurchased by us or converted at the option of the holders. The Convertible Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election in the manner and subject to the terms and conditions provided in the indenture (the “Indenture”) governing the Convertible Notes.

The initial conversion rate for the Convertible Notes is approximately 47.1403 shares of our common stock per $1,000 principal amount, which represents an initial conversion price of approximately $21.21 per share of our common stock. The conversion rate is subject to adjustments upon the occurrence of certain events in accordance with the terms of the Indenture. In addition, following certain corporate events that occur prior to the maturity date, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert their Convertible Notes in connection with such a fundamental change, as defined in the Indenture.

Holders of the Convertible Notes may convert their Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding September 15, 2025, only under the following circumstances: (1) During any fiscal quarter commencing after the fiscal quarter ending July 31, 2021, if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) During the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the exchange rate on each such trading day; (3) If we call any or all of the Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; and (4) Upon the occurrence of specified corporate events as described in the Indenture.

On or after September 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders at their option may convert their Convertible Notes at any time, regardless of the foregoing circumstances.

We may not redeem the Convertible Notes prior to March 20, 2024. On or after March 20, 2024, the Convertible Notes are redeemable for cash, whole or in part, at our option, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

If we undergo a fundamental change (as defined in the Indenture), holders may require us to repurchase for cash all or any portion of their Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding the redemption date.

The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding Convertible Notes may declare the entire principal of all the Convertible Notes plus accrued and unpaid interest to be immediately due and payable.

As of July 31, 2022, the conditions allowing holders of the Convertible Notes to convert had not been met and, therefore, the Convertible Notes are classified as a long-term liability on the unaudited condensed consolidated balance sheets at July 31, 2022 and April 30, 2022.

The net carrying amount of the Convertible Notes is as follows (in thousands):


	July 31, 2022			April 30, 2022
Principal	$	143,750		$	143,750
Unamortized issuance costs		(3,913	)		(4,173	)
Net carrying amount	$	139,837		$	139,577

As of July 31, 2022, the estimated fair value of the Convertible Notes was approximately $163.9 million. The fair value was determined based on the last actively traded price per $100 of the Convertible Notes for the period ended July 31, 2022 (Level 2).

The following table summarizes the interest expense recognized related to the Convertible Notes for the three months ended July 31, 2022 and 2021 (in thousands).

Schedule of interest expense
	Three Months Ended July 31, 2022		Three Months Ended July 31, 2021
Contractual interest expense	$	224	$	449
Amortization of issuance costs		260		254
Total interest expense	$	484	$	703

Capped Call Transactions

In connection with the issuance of the Convertible Notes, we entered into privately negotiated capped call transactions (the “Capped Calls”) with certain financial institution counterparties (the “Option Counterparties”). We used $12.8 million of the net proceeds from the issuance of the Convertible Notes to pay the cost of the Capped Calls. The Capped Calls cover, subject to customary anti-dilution adjustments, the aggregate number of shares of our common stock that initially underlie the Convertible Notes, and are generally expected to reduce the potential dilution of our common stock upon any conversion of the Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Calls. The cap share price of the Capped Calls is approximately $28.02 per share, which represents a premium of 75% over the last reported sale price of our common stock on March 9, 2021 and is subject to certain adjustments under the terms of the Capped Calls. However, there would nevertheless be dilution upon conversion of the Convertible Notes to the extent that such market price exceeds the capped share price as measured under the terms of the Capped Calls.

We evaluated the Capped Calls under ASC 815-10 and determined that they should be accounted for as a separate transaction from the Convertible Notes and that the Capped Calls met the criteria for equity classification. Therefore, the cost of $12.8 million to purchase the Capped Calls was recorded as a reduction to additional paid-in capital in the consolidated balance sheet at April 30, 2021. The Capped Calls will not be subsequently remeasured as long as the conditions for equity classification continue to be met. As of July 31, 2022 and April 30, 2022, there were no conversions of our Convertible Notes, and therefore, there was no activity with respect to the Capped Calls. We believe the conditions for equity classification continue to be met as of July 31, 2022 and April 30, 2022.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (SX 210.4-08(c))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Leases

3 Months Ended

Jul. 31, 2022

Leases

Leases

Note 4 – Leases

We currently lease certain office, manufacturing, laboratory and warehouse space located in Orange County, California under operating lease agreements. Our leased facilities have original lease terms ranging from 7 to 12 years, contain multi-year renewal options, and scheduled rent increases of 3% on either an annual or biennial basis. A multi-year renewal option was included in determining the right-of-use asset and lease liability for one of our leases as we considered it reasonably certain that we would exercise such renewal option. In addition, three of our leases provide for periods of free rent, lessor improvements and tenant improvement allowances, of which certain of these improvements have been classified as leasehold improvements and/or are being amortized over the shorter of the estimated useful life of the improvements or the remaining life of the lease.

Certain of our operating facility leases require us to pay property taxes, insurance and common area maintenance. While these payments are not included as part of our lease liabilities, they are recognized as variable lease cost in the period they are incurred.

The components of operating lease cost for the three months ended July 31, 2022 and 2021 were as follows (in thousands):

Schedule of lease costs
	Three Months Ended July 31,
	2022		2021
Operating lease cost	$	1,083	$	788
Variable lease cost		389		198
Short-term lease cost		130		102
Total operating lease cost	$	1,602	$	1,088

We also lease certain manufacturing equipment under a 5-year finance lease that commenced in the second quarter of fiscal year 2022. Finance lease costs were immaterial for the three months ended July 31, 2022.

Supplemental consolidated balance sheet and other information related to our operating and finance leases as of July 31, 2022 and April 30, 2022 were as follows (in thousands, expect weighted average data):

Balance sheet classification of leases
Leases	Classification	July 31, 2022		April 30, 2022
Assets
Operating	Operating lease right-of-use assets	$	36,093	$	36,806
Finance	Property and equipment, net		2,680		2,728
Total leased assets		$	38,773	$	39,534

Liabilities
Current:
Operating	Current portion of operating lease liabilities	$	3,152	$	2,969
Finance	Other current liabilities		511		505
Non-current:
Operating	Operating lease liabilities, less current portion		37,077		37,886
Finance	Finance lease liabilities, less current portion		1,963		2,093
Total lease liabilities		$	42,703	$	43,453

Operating and finance leases
Weighted average remaining lease term (years):
Operating leases	12.2	12.4
Finance lease	4.4	4.7
Weighted average discount rate
Operating leases	3.3%	3.3%
Finance lease	5.3%	5.3%

Cash paid for amounts included in the measurement of operating lease liabilities was $1.0 million and $0.8 million for the three months ended July 31, 2022 and 2021, respectively, and is included in net cash used in operating activities in our accompanying unaudited condensed consolidated statements of cash flows. Cash paid for amounts included in the measurement of finance lease liabilities was immaterial for the three months ended July 31, 2022.

As of July 31, 2022, the maturities of our lease liabilities, which includes those derived from lease renewal options that we considered it reasonably certain that we would exercise, were as follows (in thousands):


Fiscal Year Ending April 30,	Operating Leases			Finance Lease			Total
2023 (remaining period)	$	3,316		$	472		$	3,788
2024		4,140			629			4,769
2025		4,060			629			4,689
2026		4,167			629			4,796
2027		4,199			419			4,618
Thereafter		28,708			–			28,708
Total lease payments	$	48,590		$	2,778		$	51,368
Less: imputed interest		(8,361	)		(304	)		(8,665	)
Total lease liabilities	$	40,229		$	2,474		$	42,703

Equity Compensation Plans

3 Months Ended

Jul. 31, 2022

Share-Based Payment Arrangement [Abstract]

Equity Compensation Plans

Note 5 – Equity Compensation Plans

Stock Incentive Plans

As of July 31, 2022, we had an aggregate of 8,665,188 shares of our common stock reserved for issuance under our stock incentive plans, of which 4,277,289 shares were subject to outstanding stock options, restricted stock units (“RSUs”) and performance stock units (“PSUs”) and 4,387,899 shares were available for future grants of stock-based awards.

Stock Options

The following summarizes our stock option transaction activity for the three months ended July 31, 2022:

Schedule of stock option activity
	Stock Options			Grant Date Weighted Average Exercise Price
	(in thousands)
Outstanding at May 1, 2022		2,505		$	6.88
Granted		–		$	–
Exercised		(95	)	$	6.83
Canceled or expired		(22	)	$	9.48
Outstanding at July 31, 2022		2,388		$	6.86

Restricted Stock Units

The following summarizes our RSUs transaction activity for the three months ended July 31, 2022:

Schedule of RSU activity
	Shares			Weighted Average Grant Date Fair Value
	(in thousands)
Outstanding at May 1, 2022		642		$	14.89
Granted		602		$	18.00
Vested		(151	)	$	8.19
Forfeited		(10	)	$	15.73
Outstanding at July 31, 2022		1,083		$	17.54

Performance Stock Units

During the three months ended July 31, 2022, the Compensation Committee of the Board of Directors granted PSUs as part of the annual grant of equity incentive awards to our executives. The PSUs are subject to annual vesting, as to one-third of the PSUs, over our three fiscal years ending April 30, 2023, 2024 and 2025 (each a “Performance Period”) based upon our attainment of certain predetermined financial metrics for each such Performance Period. Each PSU that vests represents the right to receive one share of our common stock. Depending on the actual financial metrics achieved relative to the target financial metrics for such Performance Periods, the number of PSUs issued could range from 0% to 200% of the target amount. The number of granted shares included in the table below is based on a maximum 200% achievement of each financial metric during each Performance Period (the “Maximum Performance Target”). If a financial metric is achieved at a rate below the Maximum Performance Target, or is not achieved, the corresponding portion of the PSUs that do not vest will be forfeited.

The following summarizes our PSUs transaction activity for the three months ended July 31, 2022:

Schedule of PSU activity
	Shares		Weighted Average Grant Date Fair Value
	(in thousands)
Outstanding at May 1, 2022		233	$	25.31
Granted		573	$	18.09
Vested		–	$	–
Forfeited		–	$	–
Outstanding at July 31, 2022		806	$	20.18

Employee Stock Purchase Plan

The Avid Bioservices, Inc. 2010 Employee Stock Purchase Plan (the “ESPP”) is a stockholder-approved plan under which employees can purchase shares of our common stock, based on a percentage of their compensation, subject to certain limits. The purchase price per share is equal to the lower of 85% of the fair market value of our common stock on the first trading day of the six-month offering period or on the last trading day of the six-month offering period. During the three months ended July 31, 2022, a total of 27,711 shares of our common stock were purchased under the ESPP at a purchase price $12.97 per share. As of July 31, 2022, we had 1,004,251 shares of our common stock reserved for issuance under the ESPP.

Stock-Based Compensation

Stock-based compensation expense for the three months ended July 31, 2022 and 2021 was comprised of the following (in thousands):

Share-based compensation expense
	Three Months Ended July 31,
	2022		2021
Cost of revenues	$	687	$	468
Selling, general and administrative		1,210		831
Total	$	1,897	$	1,299

As of July 31, 2022, the total estimated unrecognized compensation cost related to non-vested stock options and RSUs was $2.5 million and $17.9 million, respectively. These costs are expected to be recognized over weighted average vesting periods of 1.5 and 3.2 years, respectively.

As of July 31, 2022, there was $12.2 million of total estimated unrecognized compensation cost related to non-vested PSUs associated with the Performance Periods ending April 30, 2023, 2024 and 2025. These costs are expected to be recognized over the weighted average vesting period of 1.6 years, however, we will assess the likelihood of achieving the predetermined financial metrics associated with each Performance Period on a quarterly basis and the expense recognized, if any, will be adjusted accordingly.

Income Taxes

3 Months Ended

Jul. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 6 – Income Taxes

We are subject to taxation in the United States and various states jurisdictions in which we conduct our business.

Our tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items arising in that quarter. On a quarterly basis, we update our estimate of the annual effective tax rate, and if the estimated annual tax rate changes, we make a cumulative adjustment in that quarter.

The tax expenses recorded for the first quarter of fiscal year 2023 differs from the U.S. federal statutory tax rate of 21% due primarily to the tax impact of state income taxes, stock-based compensation, non-deductible officers’ compensation and transportation fringe benefits.

For the three months ended July 31, 2022, we recorded income tax expense of $0.7 million resulting in an effective tax rate of 31%.

We have no material uncertain tax positions as of July 31, 2022. It is our policy to recognize interest and penalties related to income tax matters in interest expense and other income (expense), net, respectively, in our unaudited condensed consolidated statements of operations and comprehensive income. There was no accrued interest or penalties associated with uncertain tax positions as of July 31, 2022.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
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-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Net Income Per Common Share

3 Months Ended

Jul. 31, 2022

Earnings Per Share [Abstract]

Net Income Per Common Share

Note 7 – Net Income Per Common Share

Basic net income per common share is computed by dividing our net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share is computed by dividing our net income by the sum of the weighted average number of shares of common stock outstanding during the period plus the potential dilutive effects of stock options, unvested RSUs and PSUs, shares of common stock expected to be issued under our ESPP, and Convertible Notes.

The potential dilutive effect of stock options, unvested RSUs and PSUs, and shares of common stock expected to be issued under our ESPP during the period are calculated in accordance with the treasury stock method, but are excluded if their effect is anti-dilutive. The potential dilutive effect of our Convertible Notes are calculated using the if-converted method assuming the conversion of our Convertible Notes as of the earliest period reported or at the date of issuance, if later, but are excluded if their effect is anti-dilutive. A reconciliation of the numerators and the denominators of the basic and dilutive net income per common share computations are as follows (in thousands, except per share amounts):

Reconciliation of earnings per share
	Three Months Ended July 31,
	2022		2021
Numerator
Net income	$	1,564	$	6,304
Denominator
Weighted average basic common shares outstanding		61,905		61,137
Effect of dilutive securities:
Stock options		1,195		2,008
RSUs and ESPP		233		426
Weighted average dilutive common shares outstanding		63,333		63,571

Net Income per share:
Basic	$	0.03	$	0.10
Diluted	$	0.02	$	0.10

The following table presents the potential dilutive securities excluded from the calculation of diluted net income per share for the periods presented as the effect of their inclusion would have been anti-dilutive (in thousands):

Schedule of antidilutive shares
	Three Months Ended July 31,
	2022		2021
Stock options		55		29
RSUs and PSUs		466		83
Convertible Notes		6,776		6,776
Total		7,297		6,888

Commitments and Contingencies

3 Months Ended

Jul. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 8 – Commitments and Contingencies

In the ordinary course of business, we are at times subject to various legal proceedings and disputes. We make provisions for liabilities when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Such provisions, if any, are reviewed at least quarterly and adjusted to reflect the impact of any settlement negotiations, judicial and administrative rulings, advice of legal counsel, and other information and events pertaining to a particular case. We currently are not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on our consolidated financial condition or results of operations.

Humanigen Arbitration

On December 17, 2021, we filed a Demand for Arbitration claiming more than $20.5 million in damages against Humanigen, Inc. (“Humanigen”) with the American Arbitration Association (“AAA”) entitled, Avid Bioservices, Inc. v. Humanigen, Inc. (AAA Case No. 01-21-0018-0523). The Demand contains three claims for: (1) breach of contract concerning the process development and manufacturing master services agreement (“MSA”); (2) anticipatory breach of contract concerning the capacity expansion and contribution/commitment letter (“Letter Agreement”); and (3) trade libel and commercial disparagement. We claim that per the terms of the MSA Humanigen’s cancellation triggered an obligation to pay certain fees and reimburse us for certain costs with respect to the contracted committed manufacturing runs, which amounts remain unpaid. On January 6, 2022, Humanigen filed an Answer to our Demand, denying the allegations and asserting affirmative defenses. On July 1, 2022, Humanigen filed its counterclaims against us in the form of a complaint in the Orange County Superior Court (Case No. 30-2022-01268184) alleging three claims for (1) breach of the MSA seeking return or reimbursement of the amounts Humanigen paid us before cancelling the MSA, (2) declaratory relief that Humanigen has no remaining obligations under the Letter Agreement, and (3) unfair business practices. On July 19, 2022, we filed a motion with the state court to compel all claims by Humanigen against us to arbitration before the AAA. On August 29, 2022, Humanigen filed a motion with the state court to stay the arbitration and consolidate all proceedings in state court, which motion we will oppose.

While we intend to vigorously pursue this arbitration against Humanigen, we cannot offer any assurances that we will recover any damages from Humanigen.

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Jul. 31, 2022

Accounting Policies [Abstract]

Revenue Recognition

Revenue Recognition

Revenue recognized from services provided under our customer contracts is disaggregated into manufacturing and process development revenue streams.

Manufacturing revenue

Process development revenue

The following table summarizes our manufacturing and process development revenue streams (in thousands):

Schedule of revenues
	Three Months Ended July 31,
	2022		2021
Manufacturing revenues	$	31,481	$	25,675
Process development revenues		5,211		5,079
Total revenues	$	36,692	$	30,754

During the three months ended July 31, 2022 and 2021, we recognized revenue of $18.6 million and $17.5 million, respectively, for which the contract liability was recorded in a prior period.

Restricted Cash

Restricted Cash

Schedule of cash
	July 31, 2022		April 30, 2022		July 31, 2021		April 30, 2021
Cash and cash equivalents	$	115,137	$	126,166	$	159,692	$	169,915
Restricted cash		350		350		350		350
Total cash, cash equivalents and restricted cash	$	115,487	$	126,516	$	160,042	$	170,265

Accounts Receivable, Net

Accounts Receivable, Net

Inventory

Inventory

Property and Equipment

Property and Equipment


Description		Estimated Useful Life
Leasehold improvements		Shorter of estimated useful life or lease term
Laboratory and manufacturing equipment		5 – 10 years
Computer equipment and software		3 – 5 years
Furniture, fixtures and office equipment		5 – 10 years

Schedule of property and equipment
	July 31, 2022			April 30, 2022
Leasehold improvements	$	47,180		$	37,345
Laboratory and manufacturing equipment		30,071			30,089
Computer equipment and software		5,031			5,326
Furniture, fixtures and office equipment		843			843
Construction-in-progress		57,460			43,809
Total property and equipment, gross		140,585			117,412
Less: accumulated depreciation and amortization		(25,656	)		(24,457	)
Total property and equipment, net	$	114,929		$	92,955

Depreciation and amortization expense for the three months ended July 31, 2022 and 2021 was $1.6 million and $1.0 million, respectively.

Leases

Leases

Impairment

Impairment

Stock-Based Compensation

Stock-Based Compensation

Debt Issuance Costs

Debt Issuance Costs

Comprehensive Income

Comprehensive Income

Fair Value Measurements

Fair Value Measurements

Level 1 – Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities.

Accounting Standards Not Yet Adopted

Accounting Standards Not Yet Adopted

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Jul. 31, 2022

Accounting Policies [Abstract]

Schedule of revenues

Schedule of revenues
	Three Months Ended July 31,
	2022		2021
Manufacturing revenues	$	31,481	$	25,675
Process development revenues		5,211		5,079
Total revenues	$	36,692	$	30,754

Schedule of cash

Schedule of cash
	July 31, 2022		April 30, 2022		July 31, 2021		April 30, 2021
Cash and cash equivalents	$	115,137	$	126,166	$	159,692	$	169,915
Restricted cash		350		350		350		350
Total cash, cash equivalents and restricted cash	$	115,487	$	126,516	$	160,042	$	170,265

Schedule of estimated useful lives of property


Description		Estimated Useful Life
Leasehold improvements		Shorter of estimated useful life or lease term
Laboratory and manufacturing equipment		5 – 10 years
Computer equipment and software		3 – 5 years
Furniture, fixtures and office equipment		5 – 10 years

Schedule of property and equipment

Schedule of property and equipment
	July 31, 2022			April 30, 2022
Leasehold improvements	$	47,180		$	37,345
Laboratory and manufacturing equipment		30,071			30,089
Computer equipment and software		5,031			5,326
Furniture, fixtures and office equipment		843			843
Construction-in-progress		57,460			43,809
Total property and equipment, gross		140,585			117,412
Less: accumulated depreciation and amortization		(25,656	)		(24,457	)
Total property and equipment, net	$	114,929		$	92,955

Debt (Tables)

3 Months Ended

Jul. 31, 2022

Debt Disclosure [Abstract]

Schedule of net carrying amount of the debt component


	July 31, 2022			April 30, 2022
Principal	$	143,750		$	143,750
Unamortized issuance costs		(3,913	)		(4,173	)
Net carrying amount	$	139,837		$	139,577

Schedule of interest expense

Schedule of interest expense
	Three Months Ended July 31, 2022		Three Months Ended July 31, 2021
Contractual interest expense	$	224	$	449
Amortization of issuance costs		260		254
Total interest expense	$	484	$	703

Leases (Tables)

3 Months Ended

Jul. 31, 2022

Leases

Schedule of lease costs

Schedule of lease costs
	Three Months Ended July 31,
	2022		2021
Operating lease cost	$	1,083	$	788
Variable lease cost		389		198
Short-term lease cost		130		102
Total operating lease cost	$	1,602	$	1,088

Balance sheet classification of leases

Balance sheet classification of leases
Leases	Classification	July 31, 2022		April 30, 2022
Assets
Operating	Operating lease right-of-use assets	$	36,093	$	36,806
Finance	Property and equipment, net		2,680		2,728
Total leased assets		$	38,773	$	39,534

Liabilities
Current:
Operating	Current portion of operating lease liabilities	$	3,152	$	2,969
Finance	Other current liabilities		511		505
Non-current:
Operating	Operating lease liabilities, less current portion		37,077		37,886
Finance	Finance lease liabilities, less current portion		1,963		2,093
Total lease liabilities		$	42,703	$	43,453

Operating and finance leases

Operating and finance leases
Weighted average remaining lease term (years):
Operating leases	12.2	12.4
Finance lease	4.4	4.7
Weighted average discount rate
Operating leases	3.3%	3.3%
Finance lease	5.3%	5.3%

Schedule of maturities of operating lease liabilities


Fiscal Year Ending April 30,	Operating Leases			Finance Lease			Total
2023 (remaining period)	$	3,316		$	472		$	3,788
2024		4,140			629			4,769
2025		4,060			629			4,689
2026		4,167			629			4,796
2027		4,199			419			4,618
Thereafter		28,708			–			28,708
Total lease payments	$	48,590		$	2,778		$	51,368
Less: imputed interest		(8,361	)		(304	)		(8,665	)
Total lease liabilities	$	40,229		$	2,474		$	42,703

Equity Compensation Plans (Tables)

3 Months Ended

Jul. 31, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of stock option activity

Schedule of stock option activity
	Stock Options			Grant Date Weighted Average Exercise Price
	(in thousands)
Outstanding at May 1, 2022		2,505		$	6.88
Granted		–		$	–
Exercised		(95	)	$	6.83
Canceled or expired		(22	)	$	9.48
Outstanding at July 31, 2022		2,388		$	6.86

Schedule of RSU activity

Schedule of RSU activity
	Shares			Weighted Average Grant Date Fair Value
	(in thousands)
Outstanding at May 1, 2022		642		$	14.89
Granted		602		$	18.00
Vested		(151	)	$	8.19
Forfeited		(10	)	$	15.73
Outstanding at July 31, 2022		1,083		$	17.54

Schedule of PSU activity

Schedule of PSU activity
	Shares		Weighted Average Grant Date Fair Value
	(in thousands)
Outstanding at May 1, 2022		233	$	25.31
Granted		573	$	18.09
Vested		–	$	–
Forfeited		–	$	–
Outstanding at July 31, 2022		806	$	20.18

Share-based compensation expense

Share-based compensation expense
	Three Months Ended July 31,
	2022		2021
Cost of revenues	$	687	$	468
Selling, general and administrative		1,210		831
Total	$	1,897	$	1,299

Net Income Per Common Share (Tables)

3 Months Ended

Jul. 31, 2022

Earnings Per Share [Abstract]

Reconciliation of earnings per share

Reconciliation of earnings per share
	Three Months Ended July 31,
	2022		2021
Numerator
Net income	$	1,564	$	6,304
Denominator
Weighted average basic common shares outstanding		61,905		61,137
Effect of dilutive securities:
Stock options		1,195		2,008
RSUs and ESPP		233		426
Weighted average dilutive common shares outstanding		63,333		63,571

Net Income per share:
Basic	$	0.03	$	0.10
Diluted	$	0.02	$	0.10

Schedule of antidilutive shares

Schedule of antidilutive shares
	Three Months Ended July 31,
	2022		2021
Stock options		55		29
RSUs and PSUs		466		83
Convertible Notes		6,776		6,776
Total		7,297		6,888

Summary of Significant Accounting Policies (Details - Revenue) - USD ($) $ in Thousands	3 Months Ended
	Jul. 31, 2022	Jul. 31, 2021
Product Information [Line Items]
Revenues	$ 36,692	$ 30,754
Manufacturing Revenue [Member]
Product Information [Line Items]
Revenues	31,481	25,675
Process Development Revenue [Member]
Product Information [Line Items]
Revenues	$ 5,211	$ 5,079

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Summary of Significant Accounting Policies (Details - Cash) - USD ($) $ in Thousands	Jul. 31, 2022	Apr. 30, 2022	Jul. 31, 2021	Apr. 30, 2021
Accounting Policies [Abstract]
Cash and cash equivalents	$ 115,137	$ 126,166	$ 159,692	$ 169,915
Restricted cash	350	350	350	350
Total cash, cash equivalents and restricted cash	$ 115,487	$ 126,516	$ 160,042	$ 170,265

Summary of Significant Accounting Policies (Details - Useful life)	3 Months Ended
	Jul. 31, 2022
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Useful lives of property and equipment	Shorter of estimated useful life or lease term
Other Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Useful lives of property and equipment	5 – 10 years
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Useful lives of property and equipment	3 – 5 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Useful lives of property and equipment	5 – 10 years

Summary of Significant Accounting Policies (Details - Property and Equipment) - USD ($) $ in Thousands	Jul. 31, 2022	Apr. 30, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 140,585	$ 117,412
Less: Accumulated depreciation and amortization	(25,656)	(24,457)
Total property and equipment, net	114,929	92,955
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	47,180	37,345
Manufactured Product, Other [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	30,071	30,089
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	5,031	5,326
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	843	843
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 57,460	$ 43,809

Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Jul. 31, 2022	Jul. 31, 2021	Apr. 30, 2022
Accounting Policies [Abstract]
Revenue recognized for which the contract liability was recorded in the prior year	$ 18,600	$ 17,500
Increase in revenues	0	0
Restricted cash	400		$ 400
Allowance for doubtful accounts	18,400		18,400
Capitalized Interest Costs, Including Allowance for Funds Used During Construction	200		200
Depreciation and amortization	1,600	1,000
Impairment of long-lived assets	0	$ 0
Cash equivalents	$ 102,900		$ 116,300

Debt (Details - Debt component) - Convertible Debt Carrying Amount [Member] - USD ($) $ in Thousands	Jul. 31, 2022	Apr. 30, 2022
Debt Instrument [Line Items]
Principal	$ 143,750	$ 143,750
Unamortized issuance costs	(3,913)	(4,173)
Net carrying amount	$ 139,837	$ 139,577

Debt (Details - Interest expense) - USD ($) $ in Thousands	3 Months Ended
Debt (Details - Interest expense) - USD ($) $ in Thousands	Jul. 31, 2022	Jul. 31, 2021
Debt Instrument [Line Items]
Amortization of issuance costs	$ 260	$ 254
Convertible Notes [Member]
Debt Instrument [Line Items]
Contractual interest expense	224	449
Amortization of issuance costs	260	254
Total interest expense	$ 484	$ 703

Debt (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended
	Mar. 31, 2021	Jul. 31, 2022
Convertible Senior Notes [Member]
Debt Instrument [Line Items]
Debt face amount	$ 143,800
Proceeds from Convertible Debt	138,500
Debt issuance costs	$ 5,300
Interest rate	1.25%
Maturity date	Mar. 15, 2026
Payment of capped calls	$ 12,800
Convertible Notes [Member]
Debt Instrument [Line Items]
Fair value of the Convertible Notes		$ 163,900
Trade price per share		$ 100

Leases (Details - Components of lease) - USD ($) $ in Thousands	3 Months Ended
	Jul. 31, 2022	Jul. 31, 2021
Leases
Operating lease cost	$ 1,083	$ 788
Variable lease cost	389	198
Short-term lease cost	130	102
Total operating lease cost	$ 1,602	$ 1,088

Leases (Details - Operating leases assets and liabilities) - USD ($) $ in Thousands	Jul. 31, 2022	Apr. 30, 2022
Leases
Operating lease right-of-use assets	$ 36,093	$ 36,806
Finance Property and equipment, net	2,680	2,728
Total leased assets	38,773	39,534
Operating lease liabilities	3,152	2,969
Finance other current liabilities	511	505
Operating lease liabilities, less current portion	37,077	37,886
Finance lease liabilities, less current portion	1,963	2,093
Total lease liabilities	$ 42,703	$ 43,453

Leases (Details - Operating and finance leases)	Jul. 31, 2022	Apr. 30, 2022
Leases
Weighted average lease term, Operating leases	12 years 2 months 12 days	12 years 4 months 24 days
Weighted average lease term finance lease	4 years 4 months 24 days	4 years 8 months 12 days
Weighted average discount rate operating leases	3.30%	3.30%
Weighted average discount rate finance lease	5.30%	5.30%

Leases (Details - Maturities of Operating Lease Liabilities) $ in Thousands	Jul. 31, 2022 USD ($)
2023 (remaining period)	$ 3,788
2024	4,769
2025	4,689
2026	4,796
2027	4,618
Thereafter	28,708
Total lease payments	51,368
Less: imputed interest	(8,665)
Total operating lease liabilities	42,703
Finance Lease [Member]
2023 (remaining period)	472
2024	629
2025	629
2026	629
2027	419
Thereafter	0
Total lease payments	2,778
Less: imputed interest	(304)
Total Financing lease liabilities	2,474
Operating Lease [Member]
2023 (remaining period)	3,316
2024	4,140
2025	4,060
2026	4,167
2027	4,199
Thereafter	28,708
Total lease payments	48,590
Less: imputed interest	(8,361)
Total operating lease liabilities	$ 40,229

Leases (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
Leases (Details Narrative) - USD ($) $ in Thousands	Jul. 31, 2022	Jul. 31, 2021
Leases
Operating Lease, Payments	$ 1,000	$ 800

Equity Compensation Plans (Details - Option activity) - Equity Option [Member] shares in Thousands	3 Months Ended
	Jul. 31, 2022 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of Options Outstanding, Beginning \| shares	2,505
Weighted Average Exercise Price Outstanding, Beginning \| $ / shares	$ 6.88
Number of Options Granted \| shares	0
Weighted Average Exercise Price Granted \| $ / shares	$ 0
Number of Options Exercised \| shares	(95)
Weighted Average Exercise Price Exercised \| $ / shares	$ 6.83
Number of Options Cancelled or Expired \| shares	(22)
Weighted Average Exercise Price Canceled \| $ / shares	$ 9.48
Number of Options Outstanding, Ending \| shares	2,388
Weighted Average Exercise Price Outstanding, Ending \| $ / shares	$ 6.86

Equity Compensation Plans (Details - RSU Activity) - Restricted Stock Units (RSUs) [Member] shares in Thousands	3 Months Ended
	Jul. 31, 2022 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding, beginning balance \| shares	642
Weighted Average Exercise Price Outstanding, Beginning \| $ / shares	$ 14.89
RSUs granted \| shares	602
RSUs granted \| $ / shares	$ 18.00
RSUs vested \| shares	(151)
RSUs vested \| $ / shares	$ 8.19
RSUs forfeited \| shares	(10)
RSUs forfeited \| $ / shares	$ 15.73
Outstanding, ending balance \| shares	1,083
Weighted Average Exercise Price Outstanding, Ending \| $ / shares	$ 17.54

Equity Compensation Plans (Details - PSU Activity) - Performance Stock Units [Member] shares in Thousands	3 Months Ended
	Jul. 31, 2022 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding, beginning balance \| shares	233
Weighted Average Exercise Price Outstanding, Beginning \| $ / shares	$ 25.31
PSUs granted \| shares	573
Granted \| $ / shares	$ 18.09
PSUs vested \| shares	0
Vested \| $ / shares	$ 0
PSUs forfeited \| shares	0
Forfeited \| $ / shares	$ 0
Outstanding, ending balance \| shares	806
Weighted Average Exercise Price Outstanding, Ending \| $ / shares	$ 20.18

Equity Compensation Plans (Details - Share based compensation) - USD ($) $ in Thousands	3 Months Ended
	Jul. 31, 2022	Jul. 31, 2021
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share based compensation	$ 1,897	$ 1,299
Cost of Sales [Member]
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share based compensation	687	468
Selling General And Administrative [Member]
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share based compensation	$ 1,210	$ 831

Equity Compensation Plans (Details Narrative) $ / shares in Units, $ in Thousands	3 Months Ended
	Jul. 31, 2022 USD ($) $ / shares shares
Performance Stock Units [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unrecognized compensation costs \| $	$ 12,200
Unrecognized compensation cost weighted average vesting period	1 year 7 months 6 days
Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unrecognized compensation costs \| $	$ 2,500
Unrecognized compensation cost weighted average vesting period	1 year 6 months
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unrecognized compensation costs \| $	$ 17,900
Unrecognized compensation cost weighted average vesting period	3 years 2 months 12 days
Stock Incentive Plans [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock reserved for issuance	8,665,188
Stock Incentive Plans [Member] \| Options And Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock reserved for issuance	4,277,289
Stock Incentive Plans [Member] \| Performance Stock Units [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock reserved for issuance	4,387,899
Employee Stock Purchase Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock reserved for issuance	1,004,251
Stock issued during period, ESPP	27,711
ESPP weighted average purchase price \| $ / shares	$ 12.97

Income Taxes (Details Narrative)	3 Months Ended
Income Taxes (Details Narrative)	Jul. 31, 2022 USD ($)
Income Tax Disclosure [Abstract]
Income tax expense	$ 700,000
Effective tax rate	31.00%
Uncertain tax positions	$ 0
Accrued interest	$ 0

Net Income (Loss) per Common Share (Details - Reconcilation of per share) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Jul. 31, 2022	Jul. 31, 2021
Numerator
Net income	$ 1,564	$ 6,304
Denominator
Weighted average basic common shares outstanding	61,905	61,137
Effect of dilutive securities:
Stock options	1,195	2,008
RSUs and ESPP	233	426
Weighted average dilutive common shares outstanding	63,333	63,571
Net Income per share:
Basic	$ 0.03	$ 0.10
Diluted	$ 0.02	$ 0.10

Net Income (Loss) per Common Share (Details - Antidilutive shares) - shares shares in Thousands	3 Months Ended
	Jul. 31, 2022	Jul. 31, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive effect of shares on diluted shares outstanding	7,297	6,888
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive effect of shares on diluted shares outstanding	55	29
R S Us And P S Us [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive effect of shares on diluted shares outstanding	466	83
Convertible Notes [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive effect of shares on diluted shares outstanding	6,776	6,776