On December 10, 2018 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 second quarter of fiscal year (FY) 2019 ended October 31, 2018, and provided an update on its contract manufacturing operations, and other corporate highlights (Press release, Avid Bioservices, DEC 10, 2018, View Source [SID1234538987]).
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Highlights Since July 31, 2018
"During the second quarter we have made very significant progress in both the commercial arena and in our operations as we continue to execute to plan. Re-launching the company as a dedicated biologics contract development and manufacturing organization is a challenging endeavor and I am exceptionally pleased with our progress," said Roger Lias, Ph.D., Avid’s president and chief executive officer.
"On the commercial front we continue to see strong demand and we are making substantial progress in advancing both new and existing projects and improving our profitability. We are engaged in negotiations on new programs that will contribute revenue both during the current fiscal year and through fiscal year 2020 and, perhaps more importantly, many of our current customer programs expanded during the quarter. In addition to securing nearer-term business, our recently installed and highly experienced business development team is advancing longer lead time discussions with established biopharmaceutical clients for future commercial opportunities.
"To support the on-boarding of new projects and to deliver robust, compliant and cost-effective processes to our expanding and diversifying customer base, we continue to strengthen our process development function via the expansion and enhancement of our laboratories and the addition of state-of-the-art equipment. Process development services will become an increasingly important contributor to revenue and will build a strong pipeline of future manufacturing opportunities.
"It’s pleasing to be able to report revenue of over $10 million and a backlog of $36 million during a quarter in which revenue generating potential was limited by planned sequential maintenance shutdowns of both of Avid’s cGMP manufacturing facilities. These shutdowns, during which we undertook important maintenance activities and upgraded systems represent the most comprehensive overhaul program in the company’s history and were crucial to maintaining compliance; serving our current clients and winning new business, as well as minimizing operational and regulatory risk.
"Collectively our significant operational and commercial progress, along with diligent management of our financial resources position Avid Bioservices well for transition to cash generation and positive EBITDA."
Recent Developments
Signed project expansion orders with current clients representing future revenue in the amount of $6.3 million during the second quarter.
Increased marketing and media activities during the quarter to enhance industry visibility. Received double the number of Requests for Proposal in Q2 2019 as compared to Q1 2019 and increased the number of proposals issued by 100% during the same period.
Sold remaining legacy R&D asset, r84, to Oncologie, Inc., for $1.0 million upfront. r84 is a pre-clinical novel therapeutic antibody asset targeting VEG-F that has demonstrated anti-tumor activity in animal models. Under the terms of the purchase and assignment agreement, Avid is eligible to receive up to an additional $21.0 million in development, regulatory and commercialization milestones, as well as low to mid-single digit royalties on net sales upon commercialization of products utilizing r84.
Continued progress with ongoing expansion and optimization of our process development capabilities and laboratory space, including:
Expanding the total available process development laboratory space to more than 6,000 square feet;
Upgrading the infrastructure and equipment within the existing process development laboratories;
Implementing new state-of-the-art technologies and equipment designed to facilitate efficient, high-throughput development of upstream and downstream manufacturing processes.
Successfully executed the most comprehensive sequential maintenance overhaul in the company’s history, to best serve our existing customers and entice new business.
Financial Highlights and Guidance
The company is reaffirming revenue guidance for the full FY 2019 of $51 million – $55 million.
The revenue backlog as of October 31, 2018 was $36 million, the majority of which we expect to recognize in FY 2019.
Contract manufacturing revenue from Avid’s clinical and commercial biomanufacturing services was $10.2 million for the second quarter of FY 2019 compared to $12.8 million for the second quarter of FY 2018. The decline in the second quarter of FY 2019 was primarily due to decreased demand from our two lead customers as previously disclosed. In addition, our revenues were impacted by the scheduled facility maintenance and upgrade shutdown.
Gross margin for the second quarter was a positive 3%, a significant improvement compared to a gross margin of negative 27% during the prior year period. The increase in gross margin for the quarter was primarily attributed to our product mix resulting in improved overhead efficiencies.
Selling, general and administrative expenses for the second quarter of FY 2019 were $2.8 million, compared to $3.6 million for the second quarter of FY 2018. The decrease in the second quarter of FY 2019 was primarily due to reductions in facility costs and legal, accounting and other professional fees.
For the second quarter of FY 2019, the company recorded consolidated net loss attributable to common stockholders of $2.9 million, or $0.05 per share, compared to a consolidated net loss attributable to common stockholders of $14.1 million, or $0.31 per share, for the second quarter of FY 2018.
Avid reported $32.7 million in cash and cash equivalents as of October 31, 2018, compared to $42.3 million on April 30, 2018.
More detailed financial information and analysis may be found in Avid’s Quarterly Report on Form 10-Q, which will be filed with the Securities and Exchange Commission today.
Conference Call
Avid will host a conference call and webcast this afternoon, December 10, 2018, 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