On March 8, 2022 BioNTech SE (Nasdaq: BNTX, "BioNTech" or "the Company") reported the expansion of its strategic collaboration with Regeneron to advance the Company’s FixVac candidate BNT116 in combination with Libtayo (cemiplimab), a PD-1 inhibitor, in advanced non-small cell lung cancer (NSCLC) (Press release, BioNTech, MAR 8, 2022, View Source [SID1234609644]). Under the terms of the agreement the companies plan to jointly conduct clinical trials to evaluate their combination in different patient populations with advanced NSCLC. Lung cancer is worldwide one of the most common diagnosed malignant cancer types and the leading cause of cancer death. 1 NSCLC is the most common type of lung cancer, making up about 85% of all lung cancers.

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"Advancing the sixth FixVac product candidate based on uridine mRNA into clinical development underlines the versatility and potential of this platform. Advanced NSCLC still has a five-year survival rate of only 25% leaving patients with very limited treatment options. We believe that a potent vaccine that induces strong T cell responses against shared tumor associated antigens combined with PD-1 blockade that further enables the activated T cell repertoire will help to address the high unmet medical need in this indication," said Özlem Türeci, M.D., Co-Founder and Chief Medical Officer at BioNTech. "We look forward to further building on our successful collaboration with Regeneron to accelerate the clinical development of BNT116 in our growing mRNA oncology pipeline."

The investigational mRNA-based cancer vaccine BNT116 is based on BioNTech’s FixVac platform. It consists of a fixed combination of shared tumor-associated antigens that were identified to be frequently expressed in NSCLC. The companies plan to develop the collaboration beginning with Phase 1/2 clinical trials in the first-line treatment setting in advanced NSCLC. Under the terms of the agreement, BioNTech and Regeneron will equally share development costs for the trials. In addition, under a separate agreement, BioNTech plans to conduct and sponsor a Phase 1 clinical trial (LuCa-MERIT-1) evaluating the combination of BNT116 and Libtayo in further subpopulations with NSCLC.

"We are delighted to expand our collaboration with BioNTech to a third tumor type – advanced NSCLC – and investigate whether combining Libtayo with BNT116 will further enhance the efficacy and safety we’ve demonstrated with Libtayo in this cancer as both a monotherapy and in combination with chemotherapy," said Israel Lowy, M.D., Ph.D., Senior Vice President, Clinical Development, Oncology, at Regeneron. "Combining PD-1 inhibition with mRNA-based vaccines is an exciting, yet still emerging, approach in oncology. This collaboration provides an opportunity for us to conduct scientifically sophisticated and pioneering clinical research in this space and investigate whether this novel combination may help drive a multi-faceted activation of the immune system against advanced NSCLC."

The agreement follows the company’s existing collaboration evaluating the combination of BioNTech’s FixVac candidate BNT111 with Libtayo in advanced melanoma. BNT111 was granted U.S. FDA Fast Track Designation in November 2021 and is currently investigated in a randomized Phase 2 trial. The trial was initiated in June 2021, following encouraging data from an exploratory interim analysis of the ongoing Phase 1 Lipo-MERIT study with BNT111 as monotherapy and in combination with PD-1 blockade, which was published in Nature. In addition, BioNTech is investigating and sponsoring a Phase 1 clinical trial evaluating the combination of Libtayo with the Company’s FixVac candidate BNT112 in prostate cancer.
Libtayo is being jointly developed by Regeneron and Sanofi.

About FixVac
BioNTech’s FixVac platform candidates consist of a fixed combination of mRNA-encoded non-mutated antigens shared across patients with a defined cancer type. They feature the Company’s proprietary RNA-lipoplex platform for intravenous administration that consists of mRNA optimized for translation efficiency and stability and a formulation that specifically targets dendritic cells. The vaccine antigens trigger a strong and precise innate and adaptive immune response against cancer cells overexpressing the respective antigens.

On March 8, 2022 Biomea Fusion, Inc. ("Biomea") (Nasdaq: BMEA), a clinical-stage biopharmaceutical company dedicated to the discovery and development of novel irreversible covalent small molecules to treat and improve the lives of patients with genetically defined cancers and metabolic diseases, reported that two abstracts on BMF-219 have been accepted for poster presentation at the upcoming American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting 2022 (Press release, Biomea Fusion, MAR 8, 2022, View Source [SID1234609643]). The AACR (Free AACR Whitepaper) Annual Meeting will be held from April 8-13, 2022, at the Ernest N. Morial Convention Center in New Orleans, LA. BMF-219, Biomea’s lead program, is an irreversible covalent menin inhibitor, currently in a Phase I study for the treatment of patients with relapsed/refractory acute leukemias, including those with the MLL1/KMT2A gene rearrangements and NPM1 mutations. BMF-219 is the first and only irreversible covalent menin inhibitor in the clinic.

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"The preclinical data we will present at AACR (Free AACR Whitepaper) further validate our planned development of BMF-219 in KRAS- and MYC-dependent solid tumors and highlight the potential anti-cancer benefits of inhibiting menin, achieved via irreversible covalency," said Thomas Butler, Biomea’s CEO and Chairman of the Board. "In preclinical models, BMF-219 demonstrated near complete tumor growth inhibition in both MYC-dependent and pan-KRAS mutant cancers. These mutations are broadly manifested in numerous tumor types and are generally considered categories of very high unmet need. We are excited with the potential benefits BMF-219 may bring to patients across a spectrum of multiple liquid and solid cancers, and we look forward to seeing the results in the clinic."

Biomea plans to initiate enrollment of patients with MM and diffuse large B-cell lymphoma (DLBCL) in the ongoing Phase I clinical trial of BMF-219 in the first half of 2022. The company anticipates submitting an investigational new drug (IND) application for BMF-219 in KRAS-mutant solid tumors, including patients with NSCLC, CRC, and pancreatic cancer in the fourth quarter of 2022.

Poster Presentation Details

Biomea abstracts are now available on the AACR (Free AACR Whitepaper) website, www.aacr.org. Details for the upcoming presentations are as follows:

Anti-tumor activity of irreversible menin inhibitor, BMF-219, in high-grade B-cell lymphoma and multiple myeloma preclinical models (Abstract #1205)

Session Category: Experimental and Molecular Therapeutics
Session Title: Novel Targets and Pathways
Session Date and Time: Tuesday, April 12, 2022 9:00 AM – 12:30 PM
Location: New Orleans Convention Center, Exhibit Halls D-H, Poster Section 24
Poster Board Number: 23
Permanent Abstract Number: 2654
Full Text of Abstract:

Double/Triple Hit Lymphoma (DHL/THL) and Double Expressor Lymphoma (DEL) are high-grade B-cell lymphomas (HGBCL) that exhibit low responses to standard therapeutic regimens resulting in poor prognosis. DHL harbor translocations in MYC and BCL2 or BCL6, THL contain translocations in MYC/BCL2/BCL6, and DEL are characterized by high expression of MYC and BCL2. Menin is a scaffold protein that drives oncogenic function through its regulation of genes such as HOXA9, with distinct effects on transcription that are directed by various cofactors. A recent study reported that knockdown of HOXA9 resulted in marked growth inhibition of multiple myeloma (MM) cells (Chapman et al., 2017).

We previously reported the ability of irreversible menin inhibitor, BMF-219, to modulate MYC expression and exhibit high potency against DHL DLBCL preclinical models. Moreover, we demonstrated that MYC and its co-factor MAX, regulate differential gene expression in BMF-219-treated leukemia cells. Here, we demonstrate the anti-tumor activity of BMF-219 in HGBCL and MM preclinical models harboring various mutational backgrounds.

BMF-219 exhibited high potency against THL and DEL cell lines, with IC50 values of 0.27 μM and 0.37 μM, respectively. Both models achieved >90% growth inhibition with single-agent treatment. Notably, BMF-219 was multi-fold more potent and exerted dramatically greater growth inhibition compared to clinical reversible menin inhibitors in all DLBCL cell lines tested, including an expanded panel of DHL cell lines. In ex vivo studies, an R-CHOP refractory THL patient sample and an R-EPOCH refractory MYC-amplified DLBCL patient sample were highly sensitive to BMF-219 treatment, with IC50 values of 0.15 μM and 0.2 μM, respectively, and demonstrated complete growth inhibition at 1 μM exposure. In contrast, two clinical reversible menin inhibitors demonstrated much lower potency (IC50 = 0.96 μM and 6.3 μM in the MYC-amplified model, and IC50 = 5.63 μM and not calculable for the second reversible inhibitor in the THL model). MM cell lines harboring mutations in TP53, KRAS and NRAS were all sensitive to BMF-219 with IC50 values in the range of 0.25 μM to 0.5 μM and achieved 100% growth inhibition at 1 μM exposure. Combination treatments of BMF-219 with standard-of-care agents in MM cell lines were also tested. Notably, BMF-219 demonstrated single-agent efficacy (IC50 values between 0.1 μM and 0.3 μM) against a panel of newly diagnosed and R/R ex vivo MM samples, including a p53- deleted clinical profile.

Collectively, our data demonstrate the novel and robust anti-tumor activity of BMF-219 in HGBCL and MM preclinical models that represent categories of high unmet need. BMF-219 exhibits multi-fold higher potency and complete growth inhibition in these preclinical models compared to clinical reversible menin inhibitors, demonstrating its unique anti-tumor potential in these cancers.

Irreversible menin inhibitor, BMF-219, inhibits the growth of KRAS-mutated solid tumors (Abstract #1202)

Session Category: Experimental and Molecular Therapeutics
Session Title: Signaling Pathway Inhibitors
Session Date and Time: Tuesday, April 12, 2022 9:00 AM – 12:30 PM
Location: New Orleans Convention Center, Exhibit Halls D-H, Poster Section 25
Poster Board Number: 8
Permanent Abstract Number: 2665
Full Text of Abstract:

Introduction:
KRAS (Kirsten rat sarcoma virus) is the most frequently mutated isoform amongst RAS oncogenes in human solid tumors being present in a high percentage of colorectal cancers (CRC), non-small cell lung cancers (NSCLC), and pancreatic cancers. With only one approved KRAS G12C inhibitor for NSCLC, KRAS driven tumors continue to represent a significant unmet medical need where novel effective therapies are highly desired. Menin is a required co-factor of oncogenic transcriptional proteins with functional interactions that are critical for various malignancies including acute leukemia. We previously reported that BMF-219, a novel irreversible menin inhibitor, exhibits strong potency on acute leukemia (MOLM-13) and KRAS-mutant (MiaPaCa-2) cells. Results from MiaPaCa-2 cells prompted our exploration of the effects of BMF-219 in an expanded panel of KRAS-mutant solid tumors through in vitro and ex vivo preclinical models.

Methods:
BMF-219, clinical reversible menin inhibitors, or clinically approved KRAS G12C inhibitor, sotorasib, were cultured with CRC, NSCLC and pancreatic cancer cell lines for 4-days. Human ex vivo preclinical models harboring KRAS mutations were cultured with BMF-219 and reversible menin for 6-days. Cell viability was measured using CellTiter Glo and IC50 values were calculated. MiaPaCa-2 cells incubated with BMF-219 were analyzed by RNA-seq on the Illumina NextSeq 550 platform.

Results:
MiaPaCa-2, a KRAS G12C-mutant cell line, showed marked reduction of KRAS expression levels following 24 hours of BMF-219 treatment at 0.5 μM. An expanded panel of 14 CRC, NSCLC and pancreatic KRAS-mutant cell lines harboring G12C, G12D, G12V, and Q61L revealed single-agent BMF-219 activity after a 4-day treatment. Majority of the cell lines tested exhibited >90% inhibition of growth, independent of KRAS mutation type. Sotorasib reached a maximum of 90-93% growth inhibition in three of eight cell lines. By contrast, BMF-219 inhibited cell viability ≥ 90% in six of eight KRAS G12C lung cancer lines. Human CRC, NSCLC and pancreatic ex vivo preclinical models with G12C, G12D, and G12V KRAS mutations were all sensitive to BMF-219 after a 6-day treatment. Complete abrogation of growth was observed in all samples with IC50 values ranging between 0.2 μM – 0.6 μM.

Conclusion:
KRAS-mutant CRC, NSCLC, pancreatic cancer cell lines and ex vivo preclinical models are highly sensitive to irreversible menin inhibitor, BMF-219, where clinical reversible menin inhibitors displayed limited activity. High potency of BMF-219 was observed amongst various KRAS-mutant cell lines suggesting that BMF-219 broadly inhibits these tumors. As an irreversible menin inhibitor, BMF-219, manifests advantages over the KRAS-targeted inhibitor sotorasib in multiple cell lines tested, and displays unique potency compared with clinical reversible menin inhibitors in ex vivo preclinical models of CRC, NSCLC, and pancreatic cancer.

On March 8, 2022 Ayala Pharmaceuticals, Inc. (Nasdaq: AYLA), together with M.D. Anderson Cancer Center and the Adenoid Cystic Carcinoma (ACC) Research Foundation reported that the first five patients have been enrolled in a "Window of Opportunity" study for individuals with an aggressive, Notch-activated form of Adenoid Cystic Carcinoma (Press release, Ayala Pharmaceuticals, MAR 8, 2022, View Source [SID1234609642]). Under the leadership of Dr. Renata Ferrarotto at M.D. Anderson, this study is focused on determining the effects of AL101, a gamma-secretase inhibitor being developed by Ayala for the treatment of ACC and other cancers, on the biology of ACC tumors.

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In this study, participants will have a biopsy to confirm the diagnosis of ACC with Notch activation and will then receive AL101 for 6 to 8 weeks prior to surgery to remove the tumor. AL101 has already shown monotherapy activity in the treatment of individuals with advanced, Notch-activated ACC. The study is being funded by the Department of Defense, the ACC Research Foundation, and Ayala.

"It has been established that mutations in Notch are tumorigenic drivers in ACC and correlate with poorer prognosis. AL101, as a γ-secretase inhibitor, can extinguish Notch signaling in these mutant tumors and has the potential to reduce recurrence and improve long-term patient outcomes," said Dr. Renata Ferrarotto, Associate Professor and Director of Head and Neck Oncology Clinical Research at M.D. Anderson Cancer Center. "This study allows us to monitor changes in the tumor caused by AL101 and to better understand how it affects the biology of the disease."

Dr. Roni Mamluk, Chief Executive Officer of Ayala commented, "There is a compelling rationale for the inhibition of the Notch signaling pathway in ACC. We have already demonstrated clinical proof of concept with AL101 in this disease. The goals of this study are to better understand the mechanism of AL101, help us determine the most successful treatment regime, and generate data that will inform the future development strategy."

Jeffrey Kaufman, Executive Director of the ACC Research Foundation stated, "ACC can be treated with surgery and radiation following initial diagnosis, resulting in relatively high 5-year survival rates. However, late disease recurrence is common and can occur many years after initial treatment. Unfortunately, there are no approved therapies for patients with recurrent/metastatic disease, and the 10 to 20-year survival rates for ACC remain very low. We are very encouraged by the excellent work being conducted by Ayala and M.D. Anderson Cancer Center and the promise that AL101 holds in improving outcomes for patients. We are pleased to support this important study."

For more information on the study, refer to Clinicaltrials.gov identifier NCT04973683.

About Adenoid Cystic Carcinoma (ACC)

ACC is a rare malignancy of the secretory glands including salivary glands, accounting for about 10% of all salivary gland tumors with an annual incidence of 3,400 in the U.S. There is currently no approved standard of care for patients with recurrent/metastatic ACC. Patients with locoregional disease undergo surgery and radiation therapy, with recurring disease treated by chemotherapy. ACC is an immunologically "cold" tumor that is refractory to chemotherapy, with a recurrence rate of about 60% after initial surgery. The Notch pathway has been determined to be an oncogenic driver of ACC and its dysregulation plays a key role in tumorigenesis and correlates with a distinct pattern of metastasis and a poor prognosis.

On March 8, 2022 Avid Bioservices, Inc. (NASDAQ:CDMO), a dedicated biologics contract development and manufacturing organization (CDMO) working to improve patient lives by providing high quality development and manufacturing services to biotechnology and pharmaceutical companies, reported financial results for the third quarter of fiscal 2022, ended January 31, 2022 (Press release, Avid Bioservices, MAR 8, 2022, View Source [SID1234609641]).

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Highlights from the Quarter Ended January 31, 2022, and Other Events:

"I am pleased to report another successful quarter for Avid. Our financial and operational performance were strong, demonstrating year-over-year growth in revenues, gross margin, net income and adjusted EBITDA. This represents our seventh consecutive quarter of operational profitability," stated Nicholas Green, president and chief executive officer of Avid Bioservices.

"Fueling this growth has been the success of our business development team. They continue to achieve robust new business signings, as evidenced by our current backlog of $140 million – our highest backlog to date. We expect this trend to continue as we increase capacity, expand our commercial team and broaden our services, including our recent expansion into the cell and gene therapy sector of the market.

"Finally, to support growth today and in the future, the company continues to execute a strategically phased expansion plan that allows us to align spending with increasing market demand. This is highlighted by our downstream expansion, which came on line this quarter just in time to support our increased backlog, up from $120 million last quarter to $140 million.

"The company expects to launch its new viral vector business in two phases with process and analytical development suites launching in mid calendar 2022 and GMP manufacturing suites coming on line approximately one year later. In addition, we anticipate the completion of the Myford South facility expansion in early calendar 2023. Combined, we expect these expansions to organically increase the company’s total annual revenue generating capacity from approximately $120 million to in excess of $350 million in a period of three years."

Financial Highlights and Guidance

The company is reiterating revenue guidance for fiscal 2022 of $115 million to $117 million, a 20-22% increase over fiscal 2021.

Revenues for the third quarter of fiscal 2022 were $31.5 million, representing a 44% increase compared to $21.8 million recorded in the prior year period. The increase in revenues for the quarter can primarily be attributed to an increase in the scope of in-process and completed manufacturing runs and an increase in process development revenues primarily associated with services provided to new customers as compared to the prior year period. For the first nine months of fiscal 2022, revenues were $88.4 million, a 29% increase compared to $68.3 million in the prior year period. The increase in revenues for the nine months of fiscal 2022 as compared to the prior year period can primarily be attributed to an increase in the number and scope of in-process and completed manufacturing runs, in unutilized reserved capacity fees, and in process development revenues.

As of January 31, 2022, revenue backlog was $140 million, representing a net increase of 17% compared to $120 million at the end of the same quarter last year. The company expects to recognize the majority of this backlog over the next twelve months.

Gross margin for the third quarter of fiscal 2022 was 29%, compared to a gross margin of 28% for the third quarter of fiscal 2021. Gross margin for the first nine months of fiscal 2022 was 34% compared to 31% for the prior year period. The increases in gross margin for the quarter and the first nine months were primarily from higher manufacturing and process development revenues during the periods, partially offset by increases in planned growth costs including compensation and benefits, stock-based compensation, and facility and equipment related costs.

Selling, general and administrative expenses ("SG&A") for the third quarter of fiscal 2022 were $5.8 million, an increase of 45% compared to $4.0 million recorded for the third quarter of fiscal 2021. The increase in SG&A for the third quarter was primarily due to stock-based compensation, compensation and benefits, and facility and related expenses. For the first nine months of fiscal 2022, SG&A expenses were $15.3 million as compared to $12.0 million for the prior year period. The increase in SG&A during the nine months was primarily due to stock-based compensation, facility and related expenses, advertising costs, compensation and benefits, and legal and accounting fees.

For the third quarter of fiscal 2022, the company recorded net income attributable to common stockholders of $2.2 million or $0.04 per basic and diluted share, as compared to net income attributable to common stockholders of $0.8 million or $0.01 per basic and diluted share, for the third quarter of fiscal 2021. For the first nine months of fiscal 2022, the company recorded net income attributable to common stockholders of $12.1 million or $0.20 per basic and $0.19 per diluted share, compared to net income attributable to common stockholders of $5.6 million or $0.10 per basic and diluted share, for the fiscal 2021 period.

Avid reported $150.0 million in cash and cash equivalents as of January 31, 2022 compared to $169.9 million as of the prior fiscal year ended April 30, 2021.
More detailed financial information and analysis may be found in Avid Bioservices’ Quarterly Report on Form 10-Q, which will be filed with the Securities and Exchange Commission today.

Recent Corporate Developments

Drew Brennan, general manager of Avid’s viral vectors business, has successfully recruited key leadership for the viral vector business to manage process development, quality, operations and facilities. The process of adding additional strength and depth to the team is also well underway, as is the construction of our 53,000 square foot dedicated viral vector facility in Costa Mesa, CA.

The company’s commercial team signed multiple new orders during the third quarter, totaling approximately a net $52 million. These projects span all areas of the business, from process development to commercial manufacturing.

Phase I of the company’s Myford, mammalian facility was completed and is now operational, increasing annual revenue generating capacity from $120 million to $170 million. This expansion was strategically timed to accommodate the company’s growing backlog, which reached $140 million by the end of the third quarter. The company currently expects to complete the second phase of our Myford South expansion, which includes both upstream and downstream GMP manufacturing suites, during the first quarter of calendar 2023. With respect to the viral vectors business, the company expects to bring its process and analytical development capacity on line in mid-calendar 2022 and ultimately the GMP manufacturing suites on line approximately one year later. Please visit the Avid website Facilities page for more information about the company’s expansions and videos documenting progress (View Source).
Statement Regarding Use of Non-GAAP Financial Measures

The company uses certain non-GAAP financial measures such as non-GAAP adjusted net income, free cash flow, as well as adjusted EBITDA. The company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The company believes that they provide useful information about operating results, enhance the overall understanding of our operating performance and future prospects, and allow for greater transparency with respect to key metrics used by management in our financial and operational decision making. These non-GAAP financial measures exclude amounts that the company does not consider part of ongoing operating results when planning and forecasting and when assessing the performance of the organization and our senior management. The company computes non-GAAP financial measures using the same consistent method from quarter to quarter and year to year, and may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures.

The company reports non-GAAP financial measures in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles, differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. The company believes that non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP financial measures, and encourages investors to carefully consider our results under GAAP, as well as the supplemental non-GAAP information and the reconciliations between these presentations, to more fully understand our business.

Non-GAAP net income excludes stock-based compensation; business transition and related costs including corporate initiatives into new business activities such as our expansion into viral vectors for the cell and gene therapy sector of the market and other costs directly associated with such activities, and severance and related expenses; non-cash interest expense on convertible senior notes for the accretion of the issuance costs associated with our convertible senior notes; and other income or expense items. Adjusted EBITDA excludes non-cash operating charges for stock-based compensation, depreciation and amortization as well as non-operating items such as interest income, interest expense, gain or loss on disposal or sale of assets, and income tax expense or benefit. For the reasons explained above, adjusted EBITDA also excludes certain business transition and related costs. The company also uses measures such as free cash flow, which represents cash flow from operations less cash used in the acquisition and disposition of capital.

Additionally, non-GAAP net income and adjusted EBITDA are key components of the financial metrics utilized by the company’s compensation committee to measure, in part, management’s performance and determine significant elements of management’s compensation. The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP financial measures included at the end of this press release.

Conference Call

Avid will host a conference call and webcast this afternoon, March 8, 2022, at 4:30 PM EST (1:30 PM PST).

To listen to the conference call, please dial (877) 312-5443 or (253) 237-1126 and request the Avid Bioservices conference call. To listen to the live webcast, or access the archived webcast, please visit: View Source

On March 8, 2022 Avid Bioservices, Inc. (NASDAQ:CDMO), a dedicated biologics contract development and manufacturing organization (CDMO) working to improve patient lives by providing high quality development and manufacturing services to biotechnology and pharmaceutical companies, reported financial results for the third quarter of fiscal 2022, ended January 31, 2022 (Press release, Avid Bioservices, MAR 8, 2022, View Source [SID1234609640]).

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Highlights from the Quarter Ended January 31, 2022, and Other Events:

"I am pleased to report another successful quarter for Avid. Our financial and operational performance were strong, demonstrating year-over-year growth in revenues, gross margin, net income and adjusted EBITDA. This represents our seventh consecutive quarter of operational profitability," stated Nicholas Green, president and chief executive officer of Avid Bioservices.

"Fueling this growth has been the success of our business development team. They continue to achieve robust new business signings, as evidenced by our current backlog of $140 million – our highest backlog to date. We expect this trend to continue as we increase capacity, expand our commercial team and broaden our services, including our recent expansion into the cell and gene therapy sector of the market.

"Finally, to support growth today and in the future, the company continues to execute a strategically phased expansion plan that allows us to align spending with increasing market demand. This is highlighted by our downstream expansion, which came on line this quarter just in time to support our increased backlog, up from $120 million last quarter to $140 million.

"The company expects to launch its new viral vector business in two phases with process and analytical development suites launching in mid calendar 2022 and GMP manufacturing suites coming on line approximately one year later. In addition, we anticipate the completion of the Myford South facility expansion in early calendar 2023. Combined, we expect these expansions to organically increase the company’s total annual revenue generating capacity from approximately $120 million to in excess of $350 million in a period of three years."

Financial Highlights and Guidance

The company is reiterating revenue guidance for fiscal 2022 of $115 million to $117 million, a 20-22% increase over fiscal 2021.

Revenues for the third quarter of fiscal 2022 were $31.5 million, representing a 44% increase compared to $21.8 million recorded in the prior year period. The increase in revenues for the quarter can primarily be attributed to an increase in the scope of in-process and completed manufacturing runs and an increase in process development revenues primarily associated with services provided to new customers as compared to the prior year period. For the first nine months of fiscal 2022, revenues were $88.4 million, a 29% increase compared to $68.3 million in the prior year period. The increase in revenues for the nine months of fiscal 2022 as compared to the prior year period can primarily be attributed to an increase in the number and scope of in-process and completed manufacturing runs, in unutilized reserved capacity fees, and in process development revenues.

As of January 31, 2022, revenue backlog was $140 million, representing a net increase of 17% compared to $120 million at the end of the same quarter last year. The company expects to recognize the majority of this backlog over the next twelve months.

Gross margin for the third quarter of fiscal 2022 was 29%, compared to a gross margin of 28% for the third quarter of fiscal 2021. Gross margin for the first nine months of fiscal 2022 was 34% compared to 31% for the prior year period. The increases in gross margin for the quarter and the first nine months were primarily from higher manufacturing and process development revenues during the periods, partially offset by increases in planned growth costs including compensation and benefits, stock-based compensation, and facility and equipment related costs.

Selling, general and administrative expenses ("SG&A") for the third quarter of fiscal 2022 were $5.8 million, an increase of 45% compared to $4.0 million recorded for the third quarter of fiscal 2021. The increase in SG&A for the third quarter was primarily due to stock-based compensation, compensation and benefits, and facility and related expenses. For the first nine months of fiscal 2022, SG&A expenses were $15.3 million as compared to $12.0 million for the prior year period. The increase in SG&A during the nine months was primarily due to stock-based compensation, facility and related expenses, advertising costs, compensation and benefits, and legal and accounting fees.

For the third quarter of fiscal 2022, the company recorded net income attributable to common stockholders of $2.2 million or $0.04 per basic and diluted share, as compared to net income attributable to common stockholders of $0.8 million or $0.01 per basic and diluted share, for the third quarter of fiscal 2021. For the first nine months of fiscal 2022, the company recorded net income attributable to common stockholders of $12.1 million or $0.20 per basic and $0.19 per diluted share, compared to net income attributable to common stockholders of $5.6 million or $0.10 per basic and diluted share, for the fiscal 2021 period.

Avid reported $150.0 million in cash and cash equivalents as of January 31, 2022 compared to $169.9 million as of the prior fiscal year ended April 30, 2021.
More detailed financial information and analysis may be found in Avid Bioservices’ Quarterly Report on Form 10-Q, which will be filed with the Securities and Exchange Commission today.

Recent Corporate Developments

Drew Brennan, general manager of Avid’s viral vectors business, has successfully recruited key leadership for the viral vector business to manage process development, quality, operations and facilities. The process of adding additional strength and depth to the team is also well underway, as is the construction of our 53,000 square foot dedicated viral vector facility in Costa Mesa, CA.

The company’s commercial team signed multiple new orders during the third quarter, totaling approximately a net $52 million. These projects span all areas of the business, from process development to commercial manufacturing.

Phase I of the company’s Myford, mammalian facility was completed and is now operational, increasing annual revenue generating capacity from $120 million to $170 million. This expansion was strategically timed to accommodate the company’s growing backlog, which reached $140 million by the end of the third quarter. The company currently expects to complete the second phase of our Myford South expansion, which includes both upstream and downstream GMP manufacturing suites, during the first quarter of calendar 2023. With respect to the viral vectors business, the company expects to bring its process and analytical development capacity on line in mid-calendar 2022 and ultimately the GMP manufacturing suites on line approximately one year later. Please visit the Avid website Facilities page for more information about the company’s expansions and videos documenting progress (View Source).
Statement Regarding Use of Non-GAAP Financial Measures

The company uses certain non-GAAP financial measures such as non-GAAP adjusted net income, free cash flow, as well as adjusted EBITDA. The company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The company believes that they provide useful information about operating results, enhance the overall understanding of our operating performance and future prospects, and allow for greater transparency with respect to key metrics used by management in our financial and operational decision making. These non-GAAP financial measures exclude amounts that the company does not consider part of ongoing operating results when planning and forecasting and when assessing the performance of the organization and our senior management. The company computes non-GAAP financial measures using the same consistent method from quarter to quarter and year to year, and may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures.

The company reports non-GAAP financial measures in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles, differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. The company believes that non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP financial measures, and encourages investors to carefully consider our results under GAAP, as well as the supplemental non-GAAP information and the reconciliations between these presentations, to more fully understand our business.

Non-GAAP net income excludes stock-based compensation; business transition and related costs including corporate initiatives into new business activities such as our expansion into viral vectors for the cell and gene therapy sector of the market and other costs directly associated with such activities, and severance and related expenses; non-cash interest expense on convertible senior notes for the accretion of the issuance costs associated with our convertible senior notes; and other income or expense items. Adjusted EBITDA excludes non-cash operating charges for stock-based compensation, depreciation and amortization as well as non-operating items such as interest income, interest expense, gain or loss on disposal or sale of assets, and income tax expense or benefit. For the reasons explained above, adjusted EBITDA also excludes certain business transition and related costs. The company also uses measures such as free cash flow, which represents cash flow from operations less cash used in the acquisition and disposition of capital.

Additionally, non-GAAP net income and adjusted EBITDA are key components of the financial metrics utilized by the company’s compensation committee to measure, in part, management’s performance and determine significant elements of management’s compensation. The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP financial measures included at the end of this press release.

Conference Call

Avid will host a conference call and webcast this afternoon, March 8, 2022, at 4:30 PM EST (1:30 PM PST).

To listen to the conference call, please dial (877) 312-5443 or (253) 237-1126 and request the Avid Bioservices conference call. To listen to the live webcast, or access the archived webcast, please visit: View Source