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, today announced financial results for the fourth quarter
and full fiscal year ended April 30, 2023.
Highlights from the Quarter Ended April
30, 2023, and Other Events:
"Fiscal 2023 was a record-setting year, with
Avid recording its highest single quarter revenue, its highest
annual revenue, and ending the year with its largest backlog
to-date,” stated Nick Green, president and CEO.
“Our business development team continues to
execute, generating net fourth quarter bookings of $55 million, and
as a result, we ended fiscal 2023 with a new record-high backlog of
$191 million.
“In operations, our mammalian cell manufacturing
and process development facility expansions are now in full
operation and we are actively working on customer projects. We
continue to make progress with our cell and gene therapy facility
(“CGT Facility”) and remain on schedule to bring this online later
this calendar year.
“We are pleased to begin fiscal 2024 with a
strong backlog and a mature pipeline. Having said that,
we acknowledge today’s challenging macro-economic conditions and
their impact on the biotech sector. Accordingly, we feel compelled
to broaden our revenue guidance for fiscal year 2024 to between
$145 million to $165 million. We do note, however, that the
industry’s focus on late-phase and commercial projects should
benefit Avid’s long-term growth prospects, as we are one of a small
number of biotech CDMOs with extensive experience manufacturing
approved biologics. This is evidenced by the contribution made to
our backlog by late phase projects (defined as Phase III and PPQ
campaigns) increasing by 34% in fiscal 2023 over the prior fiscal
year.”
Financial Highlights and
Guidance
- The company is providing revenue
guidance for fiscal year 2024 of between $145 million and $165
million.
- Revenues for the fourth quarter of
fiscal 2023 were $39.8 million, representing a 28% increase
compared to $31.2 million recorded in the prior year period.
For the 2023 full fiscal year, revenues were $149.3 million, a 25%
increase compared to $119.6 million in the prior year period. For
both the quarter and the fiscal year, the increase in revenues can
primarily be attributed to increases in manufacturing runs and
process development services provided to new customers.
- As of April 30, 2023, the
company’s revenue backlog was $191 million, representing an
increase of 25% compared to $153 million at the end of the fourth
quarter of fiscal 2022. The company expects a growing portion of
the backlog will extend beyond a year.
- Gross margin for the fourth quarter
of fiscal 2023 was 21%, and in-line as compared to a gross margin
of 22% for the fourth quarter of fiscal 2022. Gross margin for the
2023 full fiscal year was 21%, compared to a gross margin of 31%
for the same period during fiscal 2022. During the three and twelve
months ended April 30, 2023, as compared with the same prior year
periods, our labor, overhead, and depreciation expenses increased
primarily due to the hiring of personnel and additional facility,
equipment and related costs ahead of our mammalian and cell and
gene therapy CGMP facility expansions. This decrease in margin
was partially offset by a current year period benefit to margin
from revenue associated with a change in variable consideration
under a contract where uncertainties have been resolved. In
addition, the same period in the prior year included a margin
benefit from unutilized capacity fees. Excluding these factors, our
fourth quarter and fiscal year adjusted gross margin would have
been six percentage points and three percentage points higher,
respectively, than the adjusted gross margin would have been in the
same prior year periods.
- Selling, general and administrative
(“SG&A”) expenses for the fourth quarter of fiscal 2023 were
$7.6 million, an increase of 29% compared to $5.9 million recorded
for the fourth quarter of fiscal 2022. SG&A expenses for 2023
full fiscal year were $27.9 million, an increase of 32% as compared
to $21.2 million recorded in the same prior year period. The
increases in SG&A for both the fourth quarter and full fiscal
year were primarily due to increases in compensation and benefits,
legal, accounting, and other professional expenses.
- During the fourth quarter of fiscal
2022, Avid recorded a non-cash income tax benefit of $115
million, or $1.63 per diluted share, due to release of
the company’s valuation allowance recorded against the company's
deferred tax assets (“DTAs”). The company previously maintained a
valuation allowance on its DTAs until there was sufficient evidence
to support the reversal of all or some portion of those allowances.
During the prior year fourth quarter, the company determined that
it was more-likely-than-not that its DTAs would be realized and
released the valuation allowance related to federal and state DTAs
as of April 30, 2022.For the fourth quarter of fiscal 2023,
the company recorded a net loss of approximately $0.3 million or
$0.00 per basic and diluted share, as compared to net income of
$115.6 million or $1.87 per basic and $1.65 per diluted share, for
the fourth quarter of fiscal 2022. For the 2023 full
fiscal year, the company recorded net income of approximately $0.6
million or $0.01 per basic and diluted share, as compared to net
income of $127.7 million or $2.08 per
basic and $1.84 per diluted share, respectively,
during the same prior year period.
- Avid reported $38.5
million in cash and cash equivalents as of April 30, 2023,
compared to $126.2 million as of April 30, 2022.
More detailed financial information and analysis
may be found in Avid Bioservices’ Annual Report on Form 10-K, which
will be filed with the Securities and Exchange
Commission today.
Recent Corporate
Developments
- The company’s commercial team
signed multiple new orders during the fourth quarter, totaling
approximately $55 million net. These orders are with new and
existing customers, and span all areas of the business, from
process development to commercial manufacturing.
- During fiscal 2023, the company
completed and opened each of its mammalian expansion projects in
the same quarter as backlog equaled or exceeded prior capacity. As
a result, the company transitioned to a fully disposable platform
with more than 20,000 liters of state-of-the-art capacity. The
company’s remaining expansion project is the build-out of its new
CGT Facility, which will support early-stage development through
commercial manufacturing. The company has already launched
analytical and process development capabilities at this facility
and remains on track to launch the CGMP manufacturing suites by the
end of the third quarter of calendar 2023.
- As previously reported, on March
14, 2023, the company entered into a credit agreement (the “Credit
Agreement”) with certain guarantors, certain lenders and Bank of
America, N.A., as administrative agent and letter of credit issuer.
The Credit Agreement provides for a revolving credit facility (the
“Credit Facility”) in an amount equal to the lesser of (i) $50
million, and (ii) a borrowing base calculated as the sum of (a) 80%
of the value of certain eligible accounts of the company, plus (b)
up to 100% of the value of eligible cash collateral. The Credit
Facility will mature on March 13, 2024 and is secured by
substantially all the assets of the company. Loans under the Credit
Facility will bear interest on the outstanding principal, at either
(1) a term secured overnight financing rate (“SOFR”) for a
specified interest period plus a SOFR adjustment (equal to 0.10%)
plus a margin of 1.40% or (2) base rate plus a margin of 0.40% at
the option of the company. Should the company obtain any loans
under the Credit Facility, the proceeds are expected to be used for
general corporate purposes.
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
primarily 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 (loss) excludes stock-based
compensation; business transition and related costs including
corporate initiatives into new business activities such as initial
start-up costs related to our expansion into viral vectors for the
cell and gene therapy sector of the market, and severance and
related expenses; non-cash interest expense on debt; and other
income or expense items and is adjusted for income taxes. 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, and
income tax expense or benefit and is adjusted for income taxes. 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 (loss) 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.
Webcast
Avid will host a webcast this
afternoon, June 21, 2023, at 4:30 PM EDT (1:30 PM
PDT).
To listen to the live webcast, or access the
archived webcast, please
visit: https://ir.avidbio.com/investor-events.
About Avid Bioservices, Inc.
Avid Bioservices (NASDAQ:CDMO), an S&P
SmallCap 600 company, is a dedicated contract development and
manufacturing organization (CDMO) focused on development and CGMP
manufacturing of biologics. The company provides a comprehensive
range of process development, CGMP clinical and commercial
manufacturing services for the biotechnology and biopharmaceutical
industries. With 30 years of experience producing biologics, Avid's
services include CGMP clinical and commercial drug substance
manufacturing, bulk packaging, release and stability testing and
regulatory submissions support. For early-stage programs the
company provides a variety of process development activities,
including cell line development, upstream and downstream
development and optimization, analytical methods development,
testing and characterization. The scope of our services ranges
from standalone process development projects to full development
and manufacturing programs through
commercialization. www.avidbio.com.
Forward-Looking
StatementsStatements in this press release, which are not
purely historical, including statements regarding Avid
Bioservices' intentions, hopes, beliefs, expectations,
representations, projections, plans or predictions of the future,
are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The forward-looking
statements involve risks and uncertainties including, but not
limited to, the risk the company may experience delays in engaging
new customers, the risk that the company may not be successful in
executing customers projects, the risk that changing economic
conditions may delay or otherwise adversely impact the realization
of the company’s backlog, the risk that the company may experience
technical difficulties in completing customer projects due to
unanticipated equipment and/or manufacturing facility
issues which could result in projects being terminated
or delay delivery of products to customers, revenue
recognition and receipt of payment or result in the loss
of the customer, the risk that one or more existing customers
terminates its contract prior to completion or reduces or delays
its demand for development or manufacturing services which could
adversely affect guided fiscal 2024 revenues, the risk that
the completion of the cell and gene therapy facility
may be delayed, may cost more than
anticipated or may not increase revenue generating
capacity by the amounts contemplated, the risk that expanding into
a new biologics manufacturing segment may distract senior
management’s focus on the company’s existing operations, the risk
that the company may experience delays in hiring qualified
individuals into the cell and gene therapy business, the risk that
the company may experience delays in engaging initial customers for
the cell and gene therapy business, and the risk that the cell and
gene therapy business may not become profitable for several years,
if ever. Our business could be affected by a number of other
factors, including the risk factors listed from time to time in our
reports filed with the Securities and Exchange
Commission including, but not limited to, our annual report on
Form 10-K for the fiscal year ended April 30, 2023, as well as
any updates to these risk factors filed from time to time in our
other filings with the Securities and Exchange Commission. We
caution investors not to place undue reliance on the
forward-looking statements contained in this press release, and we
disclaim any obligation, and do not undertake, to update or revise
any forward-looking statements in this press release except as may
be required by law.
Contacts: |
|
Stephanie Diaz (Investors) |
Tim Brons (Media) |
Vida Strategic Partners |
Vida Strategic Partners |
415-675-7401 |
415-675-7402 |
sdiaz@vidasp.com |
tbrons@vidasp.com |
AVID BIOSERVICES, INC.CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)(In
thousands, except per share information)
|
Three Months Ended April 30, |
|
Twelve Months Ended April
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
39,799 |
|
|
$ |
31,226 |
|
|
$ |
149,266 |
|
|
$ |
119,597 |
|
Cost of revenues |
|
31,408 |
|
|
|
24,242 |
|
|
|
117,786 |
|
|
|
82,949 |
|
Gross profit |
|
8,391 |
|
|
|
6,984 |
|
|
|
31,480 |
|
|
|
36,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
|
7,559 |
|
|
|
5,915 |
|
|
|
27,879 |
|
|
|
21,226 |
|
Total operating expenses |
|
7,559 |
|
|
|
5,915 |
|
|
|
27,879 |
|
|
|
21,226 |
|
|
|
|
|
|
|
|
|
Operating income |
|
832 |
|
|
|
1,069 |
|
|
|
3,601 |
|
|
|
15,422 |
|
Interest expense |
|
(759 |
) |
|
|
(555 |
) |
|
|
(2,600 |
) |
|
|
(2,680 |
) |
Other income (expense), net |
|
375 |
|
|
|
73 |
|
|
|
1,002 |
|
|
|
(81 |
) |
Net income before income
taxes |
|
448 |
|
|
|
587 |
|
|
|
2,003 |
|
|
|
12,661 |
|
Income tax (expense) benefit |
|
(757 |
) |
|
|
115,011 |
|
|
|
(1,443 |
) |
|
|
115,011 |
|
Net income (loss) |
$ |
(309 |
) |
|
$ |
115,598 |
|
|
$ |
560 |
|
|
$ |
127,672 |
|
Comprehensive income
(loss) |
$ |
(309 |
) |
|
$ |
115,598 |
|
|
$ |
560 |
|
|
$ |
127,672 |
|
|
|
|
|
|
|
|
|
Net income (loss) per
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.00 |
) |
|
$ |
1.87 |
|
|
$ |
0.01 |
|
|
$ |
2.08 |
|
Diluted |
$ |
(0.00 |
) |
|
$ |
1.65 |
|
|
$ |
0.01 |
|
|
$ |
1.84 |
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
62,587 |
|
|
|
61,761 |
|
|
|
62,268 |
|
|
|
61,484 |
|
Diluted |
|
62,587 |
|
|
|
70,394 |
|
|
|
63,782 |
|
|
|
70,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVID BIOSERVICES, INC.CONSOLIDATED
BALANCE SHEETS (In thousands, except par value)
|
|
|
|
|
April 30,2023 |
|
April 30,2022 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
38,542 |
|
|
$ |
126,166 |
|
Accounts receivable, net |
|
18,298 |
|
|
|
20,547 |
|
Contract assets |
|
9,609 |
|
|
|
5,369 |
|
Inventory |
|
43,908 |
|
|
|
26,062 |
|
Prepaid expenses and other current assets |
|
2,094 |
|
|
|
1,879 |
|
Total current assets |
|
112,451 |
|
|
|
180,023 |
|
Property and equipment, net |
|
177,369 |
|
|
|
92,955 |
|
Operating lease right-of-use
assets |
|
42,772 |
|
|
|
36,806 |
|
Deferred tax assets |
|
113,639 |
|
|
|
115,082 |
|
Other assets |
|
4,473 |
|
|
|
4,627 |
|
Restricted cash |
|
350 |
|
|
|
350 |
|
Total assets |
$ |
451,054 |
|
|
$ |
429,843 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
24,593 |
|
|
$ |
9,504 |
|
Accrued compensation and benefits |
|
8,780 |
|
|
|
8,418 |
|
Contract liabilities |
|
37,352 |
|
|
|
53,798 |
|
Current portion of operating lease liabilities |
|
1,358 |
|
|
|
2,969 |
|
Other current liabilities |
|
1,626 |
|
|
|
1,072 |
|
Total current liabilities |
|
73,709 |
|
|
|
75,761 |
|
Convertible senior notes,
net |
|
140,623 |
|
|
|
139,577 |
|
Operating lease liabilities, less
current portion |
|
45,690 |
|
|
|
37,886 |
|
Finance lease liabilities, less
current portion |
|
1,562 |
|
|
|
2,093 |
|
Total liabilities |
|
261,584 |
|
|
|
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 |
|
— |
|
|
|
— |
|
Common stock, $0.001 par value; 150,000 shares authorized; 62,692
and 61,807 shares issued and outstanding at respective dates |
|
63 |
|
|
|
62 |
|
Additional paid-in capital |
|
620,224 |
|
|
|
605,841 |
|
Accumulated deficit |
|
(430,817 |
) |
|
|
(431,377 |
) |
Total stockholders’ equity |
|
189,470 |
|
|
|
174,526 |
|
Total liabilities and stockholders’ equity |
$ |
451,054 |
|
|
$ |
429,843 |
|
|
|
|
|
|
|
|
|
AVID BIOSERVICES,
INC.ITEMIZED RECONCILIATION BETWEEN GAAP AND
NON-GAAP FINANCIAL MEASURES(Unaudited) (In thousands)
|
Three Months Ended April 30, |
|
Twelve Months Ended April
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss) |
$ |
(309 |
) |
|
$ |
115,598 |
|
|
$ |
560 |
|
|
$ |
127,672 |
|
Stock-based compensation |
|
3,551 |
|
|
|
2,028 |
|
|
|
10,978 |
|
|
|
7,380 |
|
Business transition and
related costs |
|
— |
|
|
|
1,376 |
|
|
|
— |
|
|
|
3,147 |
|
Non-cash interest expense |
|
264 |
|
|
|
264 |
|
|
|
1,046 |
|
|
|
1,030 |
|
Income tax effect of
adjustments |
|
(653 |
) |
|
|
(115,011 |
) |
|
|
(2,470 |
) |
|
|
(115,011 |
) |
|
|
|
|
|
|
|
|
Adjusted net income |
$ |
2,853 |
|
|
$ |
4,255 |
|
|
$ |
10,114 |
|
|
$ |
24,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss) |
$ |
(309 |
) |
|
$ |
115,598 |
|
|
$ |
560 |
|
|
$ |
127,672 |
|
Interest expense, net |
|
382 |
|
|
|
486 |
|
|
|
1,514 |
|
|
|
2,380 |
|
Income tax expense
(benefit) |
|
757 |
|
|
|
(115,011 |
) |
|
|
1,443 |
|
|
|
(115,011 |
) |
Depreciation and
amortization |
|
1,884 |
|
|
|
1,420 |
|
|
|
7,210 |
|
|
|
4,480 |
|
Stock-based compensation |
|
3,551 |
|
|
|
2,028 |
|
|
|
10,978 |
|
|
|
7,380 |
|
Business transition and
related costs |
|
— |
|
|
|
1,376 |
|
|
|
— |
|
|
|
3,147 |
|
|
|
|
|
— |
|
|
|
|
|
Adjusted EBITDA |
$ |
6,265 |
|
|
$ |
5,897 |
|
|
$ |
21,705 |
|
|
$ |
30,048 |
|
|
|
|
|
|
|
|
|
GAAP net cash (used
in) provided by operating activities |
$ |
2,799 |
|
|
$ |
612 |
|
|
$ |
(12,887 |
) |
|
$ |
9,465 |
|
Purchase of property and
equipment |
|
(24,877 |
) |
|
|
(24,566 |
) |
|
|
(77,638 |
) |
|
|
(56,411 |
) |
Free cash flow |
$ |
(22,078 |
) |
|
$ |
(23,954 |
) |
|
$ |
(90,525 |
) |
|
$ |
(46,946 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contacts:
Stephanie Diaz (Investors)
Vida Strategic Partners
415-675-7401
sdiaz@vidasp.com
Tim Brons (Media)
Vida Strategic Partners
415-675-7402
tbrons@vidasp.com
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