On July 16, 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 fourth quarter and fiscal year (FY) 2018 ended April 30, 2018, and provided an update on its contract manufacturing operations, and other corporate highlights (Press release, Avid Bioservices, JUL 16, 2018, View Source [SID1234527719]).
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Highlights Since January 31, 2018
"During fiscal 2018, Avid Bioservices initiated a transition to a pure play biologics contract development and manufacturing organization. Today, Avid is a recognized, established and well-respected service provider to the biotechnology and pharmaceutical industry," said Roger Lias, Ph.D., president and chief executive officer of Avid Bioservices. "In recent months we have significantly diversified and expanded our portfolio of customers. This effort has also fostered a steady increase in our backlog, which creates a strong foundation as we diligently pursue our goal to achieve breakeven and positive EBITDA. We have brought in an impressive new board and established a cohesive new leadership team with expertise spanning every vital facet of our business from business development to process development and finance. We are responding to, and winning, more requests for proposal than at any time in Avid’s history and we are filling our available capacity with a product mix consisting of both earlier phase process development and clinical programs, as well as late phase clinical and commercial programs. While fiscal 2018 was an impressive turnaround year for Avid, fiscal 2019 will be our first full year as a focused CDMO business and we are excited about the market opportunity and the very significant prospects for growth and market leadership that lie ahead.
"I would like to recognize the tremendous efforts of the staff at Avid Bioservices. The type of transition that we have effected is not easy and I remain incredibly impressed by the dedication and talent of the Avid team and their commitment to exemplary customer service and continued industry leading compliance. I would like to very specifically thank them for their continued support. Our people remain the backbone of our service offering and our business."
Recent CDMO Developments
Appointed multiple experienced executives to strengthen the leadership team including:
oMagnus Schroeder, Ph.D., vice president of process sciences. Dr. Schroeder is an accomplished scientist with more than 16 years of experience spanning bioprocess development, cGMP manufacturing, CMC strategy and global project leadership. Dr. Schroeder most recently served as a director at AGC Biologics, formerly CMC Biologics, where he participated in the successful commercial launch of multiple products.
oSandra Carbonneau, director, business development, (eastern region
Ms. Carbonneau brings to Avid more than 26 years of relevant industry experience. Previously with Lonza Biologics, Ms. Carbonneau oversaw the global mammalian commercial development business unit, including manufacturing, quality assurance, compliance and contract management.
Michael Faughnan, senior director, business development (western region)
Mr. Faughnan joins Avid with more than 20 years of customer focused sales and management experience. In particular, Mr. Faughnan has 18 years of successful biotech and CDMO sales experience with industry leading companies including Lonza and WuXi Biologics, where he contributed to significant growth.
Initiated expansion and optimization of the company’s 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.
The first new laboratories are expected to be operational during the third quarter of calendar 2018.
Signed five new master service agreements (MSAs) in the first six months of calendar 2018. This is more than Avid signed during all of calendar 2017. New projects under the MSAs range from process development to clinical stage biomanufacturing. All projects will contribute to revenue during fiscal 2019.
Recent Corporate Developments
Entered into an Asset Assignment and Purchase Agreement with Oncologie, Inc. in February 2018 for Avid’s phosphatidylserine (PS)-targeting program including bavituximab
Avid is entitled to receive an aggregate of $8.0 million in upfront payments over a period of six months, of which $6.0 million has been received according to the contractually agreed schedule. Avid will also be eligible to receive up to $95.0 million with Oncologie, Inc.’s successful achievement of development, regulatory and commercialization milestones.
Oncologie, Inc. is responsible for all future research, development and commercialization of bavituximab, and related intellectual property costs.
Avid is eligible to receive royalties on net sales that are upward tiering into the mid-teens.
Oncologie has entered into an agreement with Avid for future contract development and manufacturing activities in support of bavituximab and other potential products.
Completed a public offering of 10,294,445 shares of common stock in February 2018 raising gross proceeds of approximately $23.2 million.
Avid intends to use the net proceeds from the offering to support the growth of its contract manufacturing business and general corporate purposes.
Financial Highlights and Guidance
The current revenue backlog increased by 48.2% to $57.8 million from $39.0 million at the end of the third quarter of FY 2018 (ASC 605).
The company is providing revenue guidance for the full FY 2019 of $51.0 million – $55.0 million (ASC 606).
Contract manufacturing revenue from Avid’s clinical and commercial biomanufacturing services was $6.9 million for the fourth quarter of FY 2018 compared to $17.9 million for the fourth quarter of FY 2017. Revenue for the full FY 2018 met guidance at $53.6 million compared to $57.6 million for full FY 2017. The decline in both the fourth quarter and FY 2018 was primarily due to previously announced lower demand from one of our largest customers.
Gross margin for the fourth quarter of FY 2018 was negative 28%, and gross margin for full FY 2018 was negative 5%. These margins are compared to positive 34% for the fourth quarter of FY 2017 and positive 34% for the full FY 2017.
·Selling, general and administrative (S,G&A) expenses for the fourth quarter of FY 2018 were $4.2 million, compared to $4.5 million for the fourth quarter of FY 2017. For the full FY 2018, total S,G&A expenses were $16.5 million, compared to $18.1 million for FY 2017. S,G&A expense for the fourth quarter of FY 2018 included one-time charges totaling $1.2 million for the write-off of equipment, severance and other one-time charges. The decreases in both the fourth quarter and FY 2018 were driven primarily by lower headcount and expense reductions.
Income from discontinued operations for the fourth quarter of FY 2018 was $9.2 million, which was primarily due to the gain on sale of certain assets to Oncologie, Inc.
For the fourth quarter of FY 2018, the company recorded consolidated net income attributable to common stockholders of $1.6 million or $0.03 per share, compared to a consolidated net loss attributable to common stockholders of $6.7 million, or $0.16 per share, for the fourth quarter of FY 2017. For full FY 2018, the company recorded a consolidated net loss attributable to common stockholders of $26.5 million or $0.56 per share, compared to a consolidated net loss attributable to common stockholders of $32.8 million, or $0.88 per share, for full FY 2017.
·Avid reported $42.3 million in cash and cash equivalents as of April 30, 2018, compared to $46.8 million on April 30, 2017.
More detailed financial information and analysis may be found in Avid’s Annual Report on Form 10-K, which will be filed with the Securities and Exchange Commission today.
Conference Call
Avid will host a conference call and webcast this afternoon, July 16, 2018, 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