CDMO - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Avid Bioservices’ Second Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this conference call may be recorded. I would now like to hand the conference over to Tim Brons of Avid’s Investor Relations Group. ahead. go Please

Tim Brons

President afternoon, today’s Good CEO; on overview quarter updates ended remarks, XXXX. our you joining Kinjerski, for Hart, activities providing October will Today, Thank business, we and an have development On Vice we manufacturing Tracy results and call, prepared Financial and Business Roger us. Operations. Chief we your Avid you. XX, Officer; thank of of be and Lias, Dan questions. will contract financial Bioservices’ and including corporate the welcome for After President

we that and December undertakes any other this of the you call Before concerning uncertainties. CEO. begin, certain to meaning made risks all Securities Roger from I’d that, involves will Litigation which XXXX the to obligation company, Private filings with caution like forward-looking today, XXXX, number comments and Commission Reform revise these and call the encourage current within turn of will of assumptions, I and I the With to no over Actual Lias, of the conference belief contain a could statements during results XX, Securities today. the Exchange update Roger? company concerning or to the President made company’s these and statements, matters. of differ the review statement Act

Roger Lias

who’ve who are in, dialed participating and you the Thank of Tim, via webcast. all you, to thanks today

market needed a significant space. Avid dynamic important and very and The as an foundation for was the one, in exciting future to for second plan we quarter successful build the growth and continued execute

quite opposite. you the from that seemed While it the may have outside, I period can assure the was quiet

executed strong transition most we comprehensive the overhaul and company quarter, the profitability. continued laboratory in maintenance upgrades expansion growth in positioning We’ve the history. made progress development, process company’s During the and and to significant for

have any progressed execution on being The limited our in and client current us according with to and projects revenue-generating and though being programs. allow business improvements both development current provide numerous made, customer to quarter, new importantly, the continued ongoing to now implemented discussion focus projects vital timely manufacturing team these progress to of expansion customers. improvements her advance process this an our development in the And Tracy projects area were of in discussions expanded onboard plan While area and on new ability we update this operations. will of and execute existing significant our process during

discussions, with the to addition potentially biologics in In customer highly collaborations we’re manufacturing exploring also arena. qualified players beneficial other

we’ve been positive As transition these and cash Avid have activities generation EBITDA. to position order in been cash progressing, to diligently our Bioservices managing to

are hit QX as we extent, As such scheduling existing of that precise client of mentioned programs. to and the scientific during call, out these on point our control, issues which important milestones some dependent progress direct our technical is at the and

overhaul and Given details have I’ll of however, we including Dan. capabilities of from following the of make on development the the the progress pleased results process steady goals. enhancement improving all these very maintenance visibility we these towards with the to provide today, we’re financial continue matters, more the review that

it So a financial overview. turn provide to with to him over that, I’ll

Daniel Hart

Thanks, Roger.

details. which results refer to for our from Before filing Securities we like I’ll revenue. the everyone Commission, operations to I discuss recommend ended begin, XX, continuing that XXXX the today financial starting and now filed I’d quarter participating Exchange with second Avid’s with additional October XX-Q for

compared our in to the fiscal decline this standard are second the year year provided guidance quarter despite revenues revenue during the in has goal. we and XXX remain XXXX ASC to as $XX a under of of period. guidance for reminder, We Avid full meet $XX confident and between recognition million this As XXXX, fiscal million reaffirming ability revenue the a prior today

million the of $XX.X $XX.X revenue compared as Avid to of of million, quarter Specifically, decrease the second a prior XX%, in recognized year.

and Our the current planned order Myford conduct facilities quarter period manufacturing revenues of Franklin sequential significant broad in maintenance both during that upgrades. impacted by occurred were to overhaul our scale shutdown and and

During this halted idle several year for weeks decline a period, creating manufacturing in prior period. to the capacity revenues compared was and same

the manufacturers, conduct the annual – my basis. While maintenance generating limited these Roger highest programs such compliance All maintaining on detail and review. maintenance give standards to of the obviously they biologic the are specifics shutdowns for following revenue overhaul quarter, as regulatory including generated CDMOs, opportunity to critical manufacturing. an will more during reputable

second majority X.X%, were dedicated CDMO. to factors, Supporting ended the clients gross was and margin in prior goal year including the the decrease key margin XXXX future contribute the shutdown of negative million, during revenue of months and On for the reduction decrease, by increase the XXXX. commercial and expect fiscal year October few which of was significant of QX, this to a $XX discussed a Gross For for is revenues compared materials a of million see aforementioned maintenance these XXXX was decrease a in improved the revenue. in for XX% the our points. in percentage a growth quarter to compared primarily combined requirement quarter the the XX.X% was six year overhead prior XX positive reduction represents an note, was cost. capacity This $XX.X October second we gratifying It This backlog, factors was a primarily year mix, attributed our transition a to by previously cost, recognize XXXX to to our gross to revenues in compared due our increase impacted variability cost idle a positive immediately fact to year and in XX, period. the $XX.X primarily a October new attributed XX, of additional months had X.X%, XX, by will each efficiencies, as the as to XX% would idle period. margin increase million, to which gross XXXX, not decrease attributed have in a the overhaul. Idle the quarter second was profit we fiscal X% the improved The product during to for with of and product margins quarter cost. idle decrease capacity capacity been margin Gross maintenance period. to negatively million $X.X improve in of ended capacity during they incurred resulting favorable further prior the six offset

good increased. the we To As backlog current continue be base utilization. an extend enhance to and end, costs regulatory utilization highly margins practices, previously, associated under until our we’ve our and effort capacity this stated both aggressive is expand continue projects to – increase given manufacturing biologics with current capacity manufacturing will to fixed client regulated customer impacted

to expenses. now Turning operating

XXXX. prior implemented the ended restructuring of in October August related a year XXXX, to million directly plan During we we quarter charges incurred of $X.X

driven second and professional The $X.X decrease decrease a compared in quarter primarily For more The reduction information the SG&A SG&A our discussion charges. $X.X legal excludes and refer year was the impact annual were of expenses by the fees, XX-K costs of in restructuring on April million these the Form to XX, million, of restructuring, second report XXXX. the facility on of the remaining quarter please XXXX. a in quarter including XXXX accounting. ended XX% fiscal to for for the Total fiscal

the reduction For were a million primarily million, compared of six period. was The to XX% fiscal the six in in months XXXX cost, during cost fees the first first decrease SG&A six and $X fiscal to expenses due the XXXX, facility a months fiscal XXXX. decrease of of for $X.X months personnel-related professional

the to second XXXX, common $X.XX loss per For compared $X.XX company stockholders for or the of of attributable recorded a share, consolidated to same stockholders million, of or $XX.X attributable share year the to consolidated net prior quarter loss quarter. common net $X.X million, per

and commercializes concludes achieves products XX, royalties is terms a mid that back on event commercialization to now of therapeutic antibody the XXXX the consolidated in million, animal $XX.X of were Avid in $X.X Oncologie receive year single the XXXX of stockholders demonstrated net million, that $XX models. to XX, has months I well for to as activity low per loss preclinical a that the regulatory VEG-F million financial stockholders second my $X.XX second R&D October respect loss and or six the and will the common net net the activities common average overview. of XXXX. the April digits in XXXX, XXXX. to six-month during attributable as to both million, sales or legacy assignment for over the milestones to asset to an purchase Oncologie Cash of million certain rXX, is that per fiscal also sells rXX. utilizing Oncologie months as of event fiscal Incorporated, to fiscal compared improvements key up $XX.X The This of attributable eligible share included are For share, fiscal development, of to sale recorded a six $X.XX consolidated asset, call the ended rXX, the the Under asset targeting and to anti-tumor $X quarter at equivalents novel to some rXX upfront. agreement, and period quarter cash the additional in achievements in compared address $XX.X remaining with XXXX. Roger turn million and company

Roger Lias

Dan. you, Thank

busy and sectors of the quarter we’ve across productive second our important business. for most Avid. call, progress As foundational very I of stated made beginning time behind of at the took a the advancements was the closed doors, place Though all

implementation maintenance So limited procedures planned critical former manufacturing firstly, to Pharmaceuticals, allowing In overhauls the primarily and has maintenance risk I’d mitigate the sequential subsidiary the address not Myford of the to and did certain and Avid like that maintenance while allow basic both Peregrine of shutdowns bioprocessing. implemented necessary upgrades past, efficient ensure facilities. rolling Franklin of the

I regarding additional these on the XXXX. shutdown useful in shutdown facility undertaken of many that thought new to the Franklin of Our a concept importance last annual stockholders, some efforts. is would be full scheduled was to our potentially context a provide it Realizing

and by to which of not essential overhaul there requirements shutdowns commercial our required ability limited essential are are of standards, meet needs reducing systems While to maintaining of These meet equipment to customers. and execution to the planned to equipment industry some and of and facility our recalibration meeting risk. equipment installation are allow to, upgrades specifically new and maintenance maintenance facilities to to continue authorities, of include, quality and not the the regulatory but activities the periodic are activities required

and have patients. So product highest of standard compliance and shutdowns essential part annual safe of timely maintaining the the ensuring quality customers planned become an and, to delivery of course, service for an and industry medicines

complex the and nature of manufacturers facilities most on reason a biologics of one-time overhaul basis execute of then manufacturing that the One full is effort. a the complete annual planned

require as during that In shutdowns The the the Franklin case Because will we of duration work had executed the overhauls this shutdown revenue-generating contractors, is of necessitated goal were in can age been very coordination upgrade and So and between project forward, be number undertook be conducted the addressed manufacturing company during going impact from minimizing this adequately the period. vendors staff, the that longer cGMP In of the full typically by a to with facility will year we second reasons. laboratory operations facility, shutdown during for and and fiscal more the of maintaining of to a performed they planned days redundancy. also with facility, the of required of systems shutdown per to significant than not backup days a maintenance operations. work any quarter work a was perspective and routine during previously. and equipment timelines. then the truly tremendous shutdowns on reclassified nature idle annual successfully become the facilities overhaul, customer commissioning no of exact the to must be facility dependent prior to total each first seven Myford to some it XX note annual The declassified likely newer case for second facility, complete such add new facility the the a associated power the the span prior and important to the for It’s year. areas, XX Future monitoring the facility some to the resuming necessary and will result Franklin to facilities work be quarter. days XX Myford have

and During inefficiencies by periods, reclassification the impacted. de scheduling definition, also,

financial impacted that to happy in our status. labs revenue the executing opportunity the very by shutdown activities, both were and quarter. in these to our continued facilities manufacturing declassification important of by back loss process with performance note performance I’m team services period. complex full the during the not manufacturing development of work I’m shutdowns are with operational Given the It’s and our efficiently reclassification facilities, the occasioned of during pleased our also

securing third and line for of earnings new and development a pipeline for company, process these with Avid profit functions, clients project These our in in of contribute, it’s starting which a of revenue DNA into into laboratories. for our way detailed for also for emerging our of cell a responsible call, CDMOs As development sequence to opportunities. cost-effective every which Avid. is creating development a processes comes my whether a either are first our development typically process process biologic manufacturing facilities major well-established new transferring the of pass-through our production our biotech manufacturing processes we’re biopharmaceutical transfer vital facilitates existing around is the function, an quarter company, that function, for for experience, PD process and Literally, center existing robust compliance client an important manufacturing Bioservices,

development and and previously, our the effectively lacked detailed As legacy global CDMO not a space. were necessary facilities to of within standard process biologic investment scale compete

result significant that upgrades our to related allow our of in a best grow to we’re the and and to will customers you currently new needs pipeline. many are serve us win as of and existing already investing manufacturing As business to aware, equipment labs

improve phase facilities ongoing capabilities this care area, to any we our we’ve not disrupt so to as expand taken projects. and in work As this and great

is fully first supports that Ongoing has completed with a refurbished work reported the which introduce that the new cell operational. we been outfitted refurbishment These of now includes efficiencies. other laboratory last processes, major well As development as state-of-the-art suite upstream considerable quarter, of new is development within existing development, our and are culture installation as buildings. work being equipment purification our laboratory, laboratories

revenue also upstream approximately facilitate calendar line in pipeline. capabilities, service significantly will manufacturing We the it thus, the and the and cell new XXXX, of client of take suite our Avid enhancing quarter will occupancy development development base of and first ability expand to process offering. cell strengthening triple will our culture It potential

profit operating development our meaningful So is today, a as immediate revenues. and and process center contributing group standalone

development on extension further current programs. forward and fiscal scientists, associates. the and and we labs, new new through progress phase we projects we look As to new process analysts commencing improvements, commission We year, equipment add qualified work additional continue existing open the laboratory of

peers, Before a for being to staff made to the discuss progress goals. in business achieving operations to professionals ensure exceptionally is would we qualified extremely report well-qualified into and personnel identify to hiring critical retain identifying to is our and business and a as are we in commenced to have and And to Continuing to an our we component In the biologics I’d the good handing pleased some market the quality with Tracy and field globe prospective visible over biomanufacturing our to positions. truly vital initiatives area, in this in be broad really Demand and highly growth. is in biomanufacturing high open in candidates development, Avid able competitive. attractive as But job manufacturing reiterate like that qualified that and the the capable numerous our of currently, importance of market hiring employer, our viewed geographic result, employees than location. is like. common qualified is I’m slower and both around area

turn I’m to over update provide So the be our call business operations happy with that, Tracy? on able an Tracy now to activities. to to

Tracy Kinjerski

Thanks, Roger.

biopharmaceuticals manufacturing mammalian robust. in extremely from development detailed culture earnings cell and our calls, from previous our market services for Roger derived As segment, remains

we our this fiscal busy strong anticipate services are seeing We of for an extremely and year. second-half demand

a America of that by capabilities aware efforts have being the leads both been of we’re Eastern demand Avid newly awareness driven strong previously target business halves and of we our not is have a effort, enhanced The hired Of Avid our North continued development at of seeing marketing and market bring Western and also course, audiences between the to been number new as of more issued requests of two, as during proposals also the CDMO. in some of Perhaps and the penetration. doubled us same for good quality of the the importantly, that of part that a requests potential installed one and opportunities be from increased to the The us quarter to period. clients improved, capacity. quarter our greatly for more proposals capabilities target being doubled received selective number fit proposals our received allowing existing has and represent for

media commercial stepped-up in had these at included and over shows webcasts. a activities included also industry. and each last articles industry strong have important trade efforts conferences inches our months, of within the multiple such media to resulting significant marketing These visibility We’ve and targeted as increased outlets campaign, audience. the Our building showings our interviews, column, few

in the XXXX with new also to customers with we’re significant. significant number beyond. potential is new to continue established result, to timeframe with our manufacturing and actively a pleased business As engage lead partner team forward-planning. which The is of discussions making the more in tend sales These engaged for the clients opportunities looking longer in these grow. cycles progress be I’m

are process preferred us more commitments, will as safety clients through Avid for audits draw substantial activities throughout future from and Before that pleased I’m substantial to financial list new time negotiations important customers anticipated and as vital. projects strength Equally we our these and our evaluate several commercial be we than details order take and related audits vendor are look currently such these resources be engaging securing on our and expected, able making organization, significant but customers. we to this are our forward and in additional as progressing and considered considerable of agreements quality environmental projects, conversations anticipate with technical two to us reviews, These further in for report organization. health contracted as increasing contractual with engaged opportunities. to discussions we’re Though of providing finalized. audits, like, activities, existing these further meetings is to on the potential place the once on new contracts relationships

During the positively we two importance, specific we on between history ongoing us of several sharing Halozyme of time, into asked at given commercial this gained believe based related revenue, with the frequently products larger information its are coming these confidentiality our capacity margins the our programs. customers enhanced companies the manufacturer to and such from for concerns will increased quarter, platform Unsurprisingly, from the this enzyme these visibility as projections Roche. Customer for companies demand prevent by impact our their of forecast we but in their second and Therapeutics in relationship continued quarters. about business partner outlook used and

advance partners will with In recent Our Avid too to commercialization. technical into their and our XXXX, we relationship our is were future. of recombinant strong remains continue to to booked the preparing review expected Halozyme able forecast, commercial look trend a with human forward updated hyaluronidase enzyme products in and programs business increasing meeting. the of there short-term, to Halozyme partners not list have this our begin continue clinical distant for we as growing review, support Halozyme their colleagues and both and and increased, execute at regularly enhanced against recently and sales of Halozyme’s progress and drug

programs is a clinical clients sticky commitments contracted expand development. as previously, from progress detailed ours and and been their through has business As extend

developments quarter, the projects. now revenue of the During in of as a our growth These of orders and valuable for source relationships expansion and customer we existing our signed many future. the second value highlight current

future to process cases, with and existing over And development I some evaluate we of to we strong us entertaining summary, and to numerous as call additional manufacturing additional back opportunity we allow in initiatives also designed provide the the coming you bringing efficiencies industry this introduce market Roger? and growth In and the of to stakeholders relationships into development both hand for client addition for profitability, of better-positioned the I’m in numerous advantage our excited developments process and capture. about XXXX. capabilities possible time in remains and clients, new expansion Roger before very and you news to positive and dialogues In our take closing other collaborations considerable. remarks, vendors other will are technology communication become quarters that fiscal two other as the ongoing through with support year opportunity

Roger Lias

quarter, we Bioservices underfunded like is, concurrent you, on by than a more as formal most from point. to we excess this Francisco, are made significant – our less biologic Tracy. revisit From important to The many capacity most based which that dedicated the kickoff by Thank second message, San closing, consistent build than I’d to and the XX JPMorgan believe strides as briefly In undertaking understood a with we future. I we’ve understood in event of than starting the provided foundation highlight during for transition solid Healthcare transition very CDMO continue remain play of our the the pure months Avid ago business. in to crucial continue

capabilities. forward maintenance and our in process with that customers. regulatory enhancing provide we strong revenue-generating development fiscal activities, risk functions continue us our will lacking previous business delivering the Both also process past is key to business and profitable and we minimized our now operational our potential be the progress, and key in and with development expand XXXX. to model invest other in our ability allowing diversify our to from and quarter, expanding going project to win under in laboratories along Separate capabilities of us cornerstones expansion are and and high-quality fully now expect services management the and Our efficient onboard of development business during significant that limiting a and initiatives, new second they, made business deliver infrastructure while client what investments to this and base. We’ve were allow will and

improve marketplace. significant very quarter in progress average visibility the during Our has continues business team to made the development global and

and time and in projects negotiations potential longer customers. lead are with with commercial opportunities discussions high-quality new advancing generating We’re

orders during with also expansion quarter, current of signed we the our many Importantly, customers. second

to Our on There done along we but transition, very good next into backlog in more remains remains robust and the visibility work comes be our opportunity. growth a complete well this considerable foundations side opportunities for have to fiscal year. our

during in second year, the building So continue in we made the and of support strong pleased biologics we’ve place contract quarter I’m fiscal as the as to the closing, and XXXX with in to a necessary execute progress development blocks the that plan a dedicated to second-half fiscal put manufacturing organization.

So this concludes and now my the questions. today, prepared remarks open Operator? for for we’ll up call

Operator

Instructions] sir. Yes, first Our from or line Joe Wainwright. the comment Pantginis from [Operator H.C. of question comes

Your line is open.

Joseph Pantginis

guys, afternoon. good for questions. Hey, Thanks taking the

to upcoming arms the and get bit wrap in maintenance the wanted a little sense of facilities. – expected around Just my planned a

the aspect? sense them should the we that a are see going is for wanted get of forward, really expect the a phased the generally forward-looking only ones that full So just of this shutdowns or year we’ll the to they’re happened time more while

Roger Lias

Yes. Hey, Roger. How it’s Joe, are you?

Joseph Pantginis

good, thanks. Good,

Roger Lias

Yes.

major much and expect a maintenance So annual on overhaul basis. obviously, really we’ve completed would more shutdown an we than

haven’t it’s lot that necessary us good past that taken behind the care a work few to in So of perhaps years. get of been

same two shutdown. absolutely so forward, And to care this it that but even is doesn’t an major time the this anticipate and it’s typically, it. for be or going work of the around year, mentioned one be think, weeks the likely during of. is at annual we’d taken at do lot Again, probably a routine would month to is annual I is coordinated, think, shutdown the between as more shutdown forward, probably the being typically way Going of what planned now call, time annual is I we have

bit we’re little if lot new a a equipment. change installing obviously, can of it Now year-to-year

For could instance, little it bit things bit along well. less little longer, are humming a might it if take take a

they be. be this sure So duration they in weeks correctly. be although quarter, think two will around will so, question they I’m and between be be and plans, time they not if answering second have then, of summary don’t annual, year will in I I’m to But one will these same your

Joseph Pantginis

that. that No, you all with certainly shows, certainly advertisements And from in proprietary maybe technical standpoint might for shows touch of information. give succeeded answered. you, you at that you you I – and guys presence on strong potentially and call you question sort the so technical But your trade of a this Thanks presence or the of what upon all know you with attracting else highlighted like say, do edge have, that business? a you do new scientific have competitive what highlight, then advancements

Roger Lias

Yes, Tracy may add want well. and first, perhaps I’ll go as comments but to

now. us, whether what unusual, But to I change available, Joe, will we’re the an speed, is right that have that’s with really we think, to interest and as fill. in attractive so something it’s course, to short-term, that’s capacity so us of we clinical market, that helps

much, XX, capacity available being useful the combination and incredible really, you that point we being XXXX or…? small enough these have have, the agile really new extra able that saying you you that like alongside bioreactors if the are approved facility, record, it’s having Myford enough with commercial obviously, differentiate any the about view, do regulatory you just on now, and to facilities capacity full. a products efficiently. counts. our them for think, do to of years releasing doesn’t I for XX to flexible quickly what us But would long we track This Administration comments, and Drug have that differentiators Tracy, from with in Although, bring of numbers rather and be have marketplace and the Food products our main customers

Tracy Kinjerski

touch product in CDMO. have development a is experience I funnel, that that on there’s a say is unique, as and company. think, would I we Well, to that Avid also a that as

in So scientific years still we who at here development. been and for that from perspective, Avid have folks have product many are a involved technical

needs they So I We consider. when help, to very into the and through clinical they’re totally where our and and need and of their really that’s really understand us clients have market. coming they their we take and projects think important empathy want from point on, trials molecules that they’re to phases come for to the journey their all

Joseph Pantginis

it. Got lot, a Thanks guys.

Roger Lias

Joe. Thanks,

Operator

Thank you.

or from question next Our comment Paul line Knight the comes Janney. of from

Your line is open.

Paul Knight

are Hey, Roger, you. how

Roger Lias

well, are doing? How Paul. you I’m

Paul Knight

Tracy talk she in doubling planned Backlog a the again, of activity. backlog. missed this was And much business? you little was quarter. know legacy if it $XX to could to of then kind Can lastly, level I Great. million that or $XX could kind a customer from kind of more where your of she was the that? the of in Could I million color, – – had down she that sequentially on How just view repeat mentioned Was part? give went

Roger Lias

Sure. to the don’t wouldn’t I because partly this ability plan, actually call because, mean, backlog we our on during the anticipated but we new we growth of the say, limited it any see runway were certainly, quarter, With in respect in much bring development process space. that I business to backlog, on

anticipated. certainly that So was

side, going we’re the very a that On say, the in when with the development it number ribbon quarter, clients gave we now to negotiation then of to during are space able on the we plus in process execute forward. Year, course, those the programs New the cut of us active opportunity new

some, with process you like an that that bring funnel, a we if is the like, execute But So it’s process, to iterative are pipeline execute capabilities on, on, now development have you bring some – some expanded. been if opening some.

and think I forward. equally going would the now we could backlog grow it again was I anticipated anticipate say, will So

Daniel Hart

XXX probably backlog also think, based revenue on XXX. And, asking recognition Paul, I to criteria guidance prior versus you’re

million, $XX up revenue we’ve If recognition the XXX, signed that during you new the from contracts of being at the revenue our period. backlog $XX million difference look prior with and to went

Roger Lias

much comparing to so drop-off, it Paul. apples oranges, a So we wasn’t of might

Paul Knight

Yes, very helpful.

Roger Lias

the about question flow And the had you then, of sort Tracy, of Tracy for business. the

Paul Knight

specifically, Well, the or they Yes. customers your more from large two new or it you could believe that customers customers. names? existing lineup, be two Are is

Tracy Kinjerski

Yes.

thank question. Paul, for you your So,

new So signing we new are with projects clients.

question you’re the asking. that’s think I So

us. in a for but are have I We from two existing lot coming mentioned manufacturing new businesses opportunities clients, of the

quality our since And have East So I important issuing representatives just as in have and number result. high we’ve they and and West that we’re they the visibility of the going that in experience high-high online, proposals of business in their come us to market kind increase industry Coast in doubling are significant been the significant received role development have instrumental our qualified a and reiterate, of both portfolio part forward. guess, our, helping RFPs and

Paul Knight

are Roger, right supply production? are then – seem Is XX%, big, production lastly, we production mAb What globally And the status what’s is of production U.S.? globally? up state where of or monoclonal supply is around? in Scripts market pipelines antibody enough now market tight, capacity with the be to the for the

Roger Lias

Yes.

you certainly following we’re put if at demand market the – terms the antibody, think, in recent I demand simply. I strong of look manufacturing for growth strong for the so a on all XX%, is data, antibody you the mammalian as read which antibody in and whose antibodies, XX% whole, derivatives, growth. space driven CDMO but biologic by annual it’s primarily statistics depends

really. is, think, project-specific it’s my I a view question

to the the about – imbalanced hard find my timelines may across you looking industry, there well project, be think general opinion geographic But you’re for I specific it capacity we’re we’re is, find personal in find about now. capacity might problems. a in or right or For

seen too capacity, at we moment. sleep that. huge largely have but much about the lose – And Asia it’s for investments don’t We frankly Avid, over in in

from or next August clinic of sledding capacity don’t. find better with you – question, a it it’s But so in were overall, be not not because done but marketplace, I going active a Paul. to I Asia, in we tough a customer think we’re I’d We’re very you’re we’re roughly need I now, imbalanced. my if getting if have to I’ll that enter mean, a something, reserve nuanced customer – the year

Paul Knight

Yes.

very thank you much. Okay,

Operator

Steve question [Operator comes or Instructions] you. line Our the of from from comment Thank Analysis. Schwartz next First

Your open. line is

Steven Schwartz

Good afternoon, everyone.

Roger Lias

Hi, Hey, Steve.

Steven Schwartz

If essentially at it you sequentially reading Paul’s continue booked correctly? you $XX what like orders new on we of ended million million the you could through look It is that the with to $XX backlog, I Am backlog about the revenue, XX, up quarter. went if million. project at the looks $X.X in the expansion question I

Roger Lias

That’s correct.

Steven Schwartz

is Okay. weeks hamper ability forecast the in your being XX months, shutdown at – what three XX runs to look that forecast And book a if the work? would out that for it you to about new production industry

Roger Lias

The new process past recognize over to book Steve, we’ve to bottleneck revenue. in been slight work, No, the obviously, that our shutdown ability revenue-generating on projects had execute, impact quarter no the had just and has manufacturing development.

precisely lab didn’t right work, opposite. – to on own work well. impact any fact, we In work that book the it’s the course, But ability in that have projects as in into our shutdown revenue-generating it’s manufacturing need just the these fact, bring new to and, it’s its of

Steven Schwartz

Okay.

Roger Lias

like we’re like backup obviously install maintenance. customers to sorts that were things, of of routine able see. clients all Our to which taking and We power see care to

So forward. that’s a positive going

Steven Schwartz

the Certainly. that misinterpreted you to – many of maybe backlog guess, And light build I going so I your these on. of I you that expected just quarter activities because comment be in the guess, production-related had I

So…

Roger Lias

Yes.

Steven Schwartz

you’re then expected build guess, that exceptionally, especially second-half the of produce that, from I quarter this year? the and backlog the I same year level backlog the of to given the work revenue not …and still could second in higher to would you and since have circumstance through for down given a expecting the

Roger Lias

Yes, I’m Go sure not about. ahead.

Steven Schwartz

No, respect kind the revenue numbers what what I’m of here reconcile backlog, just to versus my trying in the I’m in is with that’s to seeing Yes. perspective all?

Roger Lias

were any on we mean, I we to – essentially, bring projects. didn’t new able

balanced. speaking, quarter, revenue able the remaining roughly meant roughly projects of during same what So we I we expand were to the by value of recognized roughly to value the existing the that’s

Steven Schwartz

the new Yes. on It’s that are customers potentially that Tracy talk you’re with. two working hear nice to that, about coming

of existing $XX customers, sense million, relative I can you magnitude backlog? give from like us talking to the secure If that $XX perspective to of we just the some mean, million, again, projects would give new you to some us be? are what those were

Roger Lias

Yes. dry I don’t able we’ll ink if think of final We you contracts. those those they’re when the we to make when consummated, like, now, on that announcements is hope can right Steve. be

Steven Schwartz

Yes.

me. for it that’s Okay,

Roger Lias

I They’re business, think. our material They’re substantial. to

Steven Schwartz

but like imagine, relative what’s I shutdowns to And would kind and the okay. that that, you going have Yes. of question they’re at the ask. the I involvement risk. would involved, you they’re production couple the This Certainly years of When does risk next any you you’ve FDA? thought forward understand, reduce that did, Yes, for just – do next question all of course. involved? because XXs things of And done work like this the is

Roger Lias

Yes, the two questions.

So the FDA maintenance. you’re I And getting entirely guess involved I’m doing actually at stop internal in looking the your because isn’t what It’s FDA from to it an is future, exercise. involved.

the all. part it involved question, that the doing But for in the run into an the is guess. not at internal this This second think, to any that’s So reduce probabilities I does FDA I problems you’ll reason exercise. of the future it, directly is

Steven Schwartz

much put for for Okay, a the inspections? now, better yourself guess so in I future you position speaking, figuratively

Roger Lias

for Yes, it’s – need that and customers maintain on, equipment make well. we’re we sure absolutely. execution And as delivering to to our our

So so. yes, very much

Steven Schwartz

are pretty For this go in type upstream that is is that and does there be until that you’re or on? got can the you much here pre-sell, starting you how it, of wait lights suite up out work? couple next the and have thing can going lab to months, in to bodies of sell then the Tracy You’ve

Tracy Kinjerski

stopped haven’t So, Steve, actually, we selling…

Steven Schwartz

Yes.

Tracy Kinjerski

this …during period.

whether – it’s bring or forward. doesn’t it So not not projects can we impact

for coming thing And position all. – it we it a us perspective our our bad to to going actually, a a forward, have does as hasn’t not additional ability us in hindered from put it’s at up So find. projects set business but nice way, development really

Steven Schwartz

then with respect is is my think cash from operations. Dan. But last Okay. I to this just for question, And

to earned Can Over cash And operations quarters, like, five past quarters, the step kind production of for on you looks the for past like is in we what third the you’ve definitely are look any us going five guidance fourth looking from to operations. million give and step it at might up, $X of up. cash where revenue year, generation from essentially is the going now about second-half quarters?

Daniel Hart

think Steve, thanks the Well, – I for question.

had balance I rate legacy two that quarters spend discontinued to have you that operations information that for our some involved is of we clean sheet still think, last I’ll the the on up. we’ve provided was burn the what needed

down. wind see top drop forward, to capacity continue as our fill start increases, as of lot Going to within to increase pure-play the that a idle those as we’re that we start more and our we’ll facilities to see margins to And line. going and utilize our CDMO, line with a the will bottom

Steven Schwartz

yes. Yes,

taking all I you. thank appreciate questions. the Okay,

Roger Lias

Thanks, Yes. Steve.

Operator

at this Lias Roger any like – to would Mr. you. I’m over back Thank I queues turn additional the time. no showing the to in queue questions remarks. closing in call for

Roger Lias

operator. you Thank very much,

for the creation. Bioservices. continued in your our for Directors, certainly like and So pursue our employees, And as in time always, I’d investors your continuing support for everybody, other Board closing, stakeholders Avid our our and in thank our you, of value today to we thank many interest as goals to and growth company particular,

we’ll So the afternoon. have a with conclude that call. and you, Thank great

Operator

in program. This Ladies thank conference. participating today’s concludes you and the for gentlemen,

now Everyone, may disconnect. wonderful day. a have You

Avid Bioservices (CDMO) 10 Dec 182019 Q2 Earnings call transcript