On September 5, 2019 Avid Bioservices, Inc. (NASDAQ:CDMO) (NASDAQ:CDMOP), a dedicated biologics contract development and manufacturing organization (CDMO) working to improve patient lives by providing high quality development and manufacturing services to biotechnology and pharmaceutical companies, reported financial results for the first quarter of fiscal 2020 ended July 31, 2019 (Press release, Avid Bioservices, SEP 5, 2019, View Source [SID1234539300]).
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Highlights Since April 30, 2019
"During the first quarter of 2020, we recorded revenue that met our expectations for the period, significantly strengthened our backlog and initiated a number of operational improvements in our facilities," stated Rick Hancock, interim president and chief executive officer. "Despite our topline strength, margins declined during the quarter due to several factors, none of which are expected to impact our stated guidance for the year. These factors include an increase in headcount to accommodate growth in production demand, a realignment of the company’s compensation structure to secure our existing work force, and equipment repairs.
"Important achievements during the period included the completion of an additional process validation campaign for a customer that anticipates conducting future commercial manufacturing at Avid. The company also entered into two new contract manufacturing service agreements during the first quarter, adding one of the world’s leading pharmaceutical companies to our customer list. These projects are currently in the onboarding process, both of which are proceeding well.
"During the period, Avid also announced the appointment of Catherine Mackey, Ph.D. as an independent member to the company’s board of directors. With more than 30 years experience in biopharma research and development, Dr. Mackey brings an important perspective that will allow us to best support the needs of our current, as well as prospective clients. The board is thrilled with Dr. Mackey’s appointment and we look forward to working together toward Avid’s continued growth.
"The highlights of the first quarter of 2020 were new customer contracts, significant backlog growth and completion of another successful process validation campaign. We believe each of these accomplishments will contribute significantly to the future growth and expansion of the business and we are eager to build on this momentum."
Financial Highlights and Guidance
The company is reaffirming revenue guidance for the full fiscal year 2020 of $64 million – $67 million.
Revenue was $15.3 million for the first quarter of fiscal 2020, a 21% increase compared to $12.6 million for the first quarter of last fiscal year. This increase is primarily due to growing demand from a more diversified client base.
As of July 31, 2019, revenue backlog was approximately $61 million, an increase of 34% as compared to the fourth quarter of fiscal 2019. The company expects to recognize the majority of this backlog in fiscal year 2020.
Gross margin for the first quarter of fiscal 2020 of 7% was down slightly compared to a gross margin of 9% in the prior year period. Despite increased revenue during the first quarter of 2020, gross margin was impacted by hiring personnel to accommodate growth in production demand, a realignment of the company’s compensation structure to secure our existing work force, and equipment repairs that impacted efficiencies during the period. Management does not expect these factors to impact our stated revenue guidance for the year.
Selling, general and administrative expenses ("SG&A") for the first quarter of fiscal 2020 were $4.5 million compared to $3.2 million for the first quarter of last year. The increase in SG&A was primarily due to employee separation-related expenses, and increased stock-based compensation. Excluding the separation agreement expenses and the increase in stock-based compensation, SG&A during the first quarter of 2020 is consistent with SG&A for the prior year quarter.
For the first quarter of fiscal 2020, the company recorded consolidated net loss attributable to common stockholders of $4.6 million or $0.08 per share, compared to a consolidated net loss attributable to common stockholders of $3.4 million or $0.06 per share, for the first quarter of fiscal 2019.
Avid reported $28.9 million in cash and cash equivalents as of July 31, 2019, compared to $32.4 million on April 30, 2019.
More detailed financial information and analysis may be found in Avid Bioservices’ Quarterly Report on Form 10-Q, which will be filed with the Securities and Exchange Commission today.
Recent Corporate Developments
Signed two new contract manufacturing service agreements to support the development of novel drug candidates. The agreements include the addition of one of the world’s leading pharmaceutical companies to Avid’s growing list of customers, as well as the expansion of the relationship with one of the company’s existing biotechnology customers.
Completed the first process validation campaign of fiscal 2020. Completion of a process validation campaign is a critical step in the regulatory product approval process, and is likely to result in future commercial production at Avid.
Appointed Catherine Mackey, Ph.D. as an independent member to the company’s board of directors. Dr. Mackey is an experienced leader, director and advisor with more than 30 years of R&D and operations experience in the pharmaceutical, biotechnology and agricultural industries, including over a decade in key leadership roles at Pfizer Inc.
Conference Call
Avid will host a conference call and webcast this afternoon, September 5, 2019, at 4:30 PM EDT (1:30 PM PDT).
To listen to the conference call, please dial (877) 312-5443 or (253) 237-1126 and request the Avid Bioservices conference call. To listen to the live webcast, or access the archived webcast, please visit: View Source