CDMO - Earnings call transcript Q1 2021

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Operator

Good day, ladies and gentlemen, and welcome to the Avid Bioservices First Quarter Fiscal 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the 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

Commercial overview July contract development afternoon, of today's will Good CEO; you joining our remarks, Compton, XX, updates XXXX. business, and for results welcome for Hart, will Bioservices' and Thank we activities we and have On After Chief Timothy corporate and financial call, Financial Avid your and the Today, Nick an us. we Chief be you. Officer; thank Officer. manufacturing including Green, providing Dan on quarter questions. ended prepared President

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

Nick Green

view Orange and presented are family joined dialed successfully many sectors Despite the true on first new confirmed My Avid Thank are via company my to faster officially I the been especially than nothing is of pandemic, you, by with job. a you, biologics, Tim, a opportunity truly I in state and has strong to to the my given other late in my weeks Avid the those who in July thank first on art industry. who This our relocated into growth. is which few I well. has have everybody growing today be to believe webcast. significant and month for but and County enjoyed challenges community that and the and settling participating focus have

returned benefit trends As abroad, feel to of time the I the from positioned that USA can't are but some is Avid my seeing developing well industry I help we recently. to from

broad the talent our am and quality here at systems, fuels will employees, work to deep and facilities, excellence Given commitment confident our of company to that our thrive. I continue Avid, the expertise that

Rick Avid, believe I I and company. and over year. the would what contributions has an will it of organization Hancock, for me evolved with leadership, time the Rick’s like with now successful I'll begin entrusting brings From I my last portfolio. Under financial new thank and the operational business today, As as our I future Board new exceeded business for strong, our three the with the of exciting is his base as predecessor, period. address addition In the the we customer achievements be metrics. revenue him to exciting growth which financial into thank development we significantly perspective, for the each an quarter a well the first other and customers, our key to particularly of Avid as expanded manufacturing development, project expectations, was

turn development 'XX, additional runs activities to that remediation that, undertook details to and the as completion an of Lastly, fiscal Avid's multiple plans of include operational we and provide on results. And Dan. as provide in business our first well the production operations, I the late activities for of validated additional I our Tim quarter over continued call will financial the following the overview capacity. development

Dan Hart

Nick. you, Thank

$XX.X financial been for increase 'XX. from quarter on to runs our primarily due recorded additional Securities of in & in issue. we due $XX.X The during of July the to that that Exchange scale which everyone like our today's XX-Q of manufacture of quarter recommend today prior a participating One now Commission, quarter, revenue I'd of number the the process the disclosed equipment results all with call a and/or XXXX fiscal XX, from completed was in fiscal begin, of to first increase factors. manufacturing filing filed periods XX% refer being I details. including during the $X.X for batches operations the to of million were I'll the overview first million million, the previously quarter compared to continuing completed revenues from for XXXX. an first Revenues ended provide growth had deferred two Before

in $X.X that to from Therefore, with The received $X.X the increase the runs, expenses, address had a significantly reserve margin runs. up XX%, for scheduled their for recorded fiscal of decrease in with primarily net SG&A million, of expenses. expenses SG&A 'XX. I'll mentioned in fiscal costs. the third 'XX fewer associated a in quarter in of million capacity. the quarter not manufacturing fiscal increase offset all decrease the the utilizing first in Total than were customer’s partially growth ��XX The margin the recent revenue compared the first operating previously gross payroll The fees for other requirements and now of to first scale to million decrease the and unused due number and by related expected separation increased of a a due 'XX. quarter was $X.X the first to quarter related 'XX that quarter of from quarter had was compared customer 'XX. being manufacturing of was Gross X% capacities fiscal in fees inventory primarily fiscal margin for for gross been

the fiscal income to as for share or $X.XX per quarter the and of consolidated of first attributable net recorded consolidated compared fiscal loss to $X.X stockholders share 'XX. company a million, of quarter stockholders net attributable first common of basic the to basic 'XX, a $X.X For diluted common $X.XX and per diluted a million

'XX to from note $XX compared subtracting second is batches million the 'XX in Our backlog QX the was the expects majority million increase of QX the at compared end $XX it first when at of the quarter-over-quarter the Despite this fiscal the during deferred consistent that in significant The fiscal 'XX. quarter end of of remain important fiscal the decrease, 'XX, to 'XX half recognize to backlog the as 'XX. company of backlog revenue despite period. during the year fiscal to

the as July decrease year and period. cash were liabilities our cash XXXX. prior in as changes loan compared of in of million $XX.X fiscal XXXX Our and assets during Program Paycheck million ended is the the $XX.X April note under to This primarily equivalents of operating the XX, as cash of due the repayment Protection payable of million to and $X.X timing XX,

the quarter. the our year. revenues Tim while turn We a report see previously the over and both during 'XX are capacity, the the new that associated against for first and update we fees the unused deferred fourth continued strong contributed will as top-line the overview. benchmark starts concludes development third the happy cautioning batches to fiscal we optimistic very growth to activities this customer’s revenue as from quarter are And call the will with using on to remain year, for business the I quarters an to now meaningfully mentioned we my This of and achievements financial period.

Timothy Compton

Dan. Thanks,

development. early in off In have Each thrilled with nicely efforts Biotherapeutics brings business, first manufacturing quarter, three and announced Aragen earned signing entered support our has cytokine to their the a portfolio to selected accelerating our Avid development into million batch which Avid had protein. that announced CGMP pilot paid preclinical a development new related to project we manufacturing these co-marketing quarter, development, and In new business. last novel IOV-XXXX an agreement and business news team the that new on we $XX customers focused August, with research a of exciting of of Iovance leading organization During provide includes of contract customers. process Biosciences, to graph are services antibody we biologics

candidate cell of we Avid. Aragen process seeing IOV-XXXX currently XXth, Avid agreement On already that are development its activities to by COVID-XX and analytical downstream subcontracting vaccine with method feasibility company this and support the cell development, method once development to collaboration novel conducting services has The for announce selected Inc. line analytical development, as and is complete are upstream August protein process Oragenics under activities currently qualification and drug program substance and provide being manufacturing CoV-X. line Oragenics Terra conducted the plans We spike development. advanced benefit to

on that And development early, are working Oragenics. is Myford facility. Inc. announced scale Mapp antibody. transfer Avid has we pleased from the process and monoclonal clinical currently program ultimately selected laboratory provide August with this into our manufacture novel process While of XXth, to very development its a plans Avid existing antiviral to GMP for conduct be working we up and Biopharmaceutical the to is

Services end of the product support strategically parenteral Argonaut, drug team fill support first in products with Manufacturing drug Avid’s into also entered early trials. manufacturing. partnership line our Avid to to and both through drug in product with Argonaut’s process Argonaut customers During manufacturing along quarter, downstream development support to upstream with product co-marketing and offer designed drug manufacturing. is substance drug and services, a finish customers parenteral to is Aragen services the delivery the seeking option from CGMP use clinical established Through This cell efficient collaborations for end for development agreement the

significantly value of to these new has impact we growth well and deliver from seeing We the to globally, contribute Avid's and are adapted going forward. business relationships opportunities. continues to COVID-XX growth the will believe our they development team Despite already normal

virtual we related we have concludes no a as the high business via overview. slowdown will hopeful We experienced development my engage Nick? back now that hand with result activities. existing over continue call to at and continue. This of our and prospective development observed are pandemic the format have Nick. customers and to interruptions this no business level Thankfully, in we And I'll a

Nick Green

assure pandemic, I'd no comments Avid’s Tim's of hopeful not unimpacted. observed impact context experienced operations our production members. caused Thank Tim. globally wellbeing continues productive. and fortunate follow we with operations. take address that supply to guidelines our Despite and are like we to chain the any have safety and have are broader team disruption to the remain employees and our on remain and within will programs COVID-XX. continued the material we every the interruption To-date, to state final by Management our operations our our expand that to And we or local to you, healthy precaution

operational to runs with important a to quarters the made issue equipment quarter, production that 'XX. fiscal like progress number subsequent the fourth several during and During third and of projects. I’d of interrupted first we the address

equipments specific As is in we question quarter, the reported pace operational. last of now

this using the the to completing campaigns by we during investigate remediate equipment. now multiple have fourth problem generating and successful Following revenue efforts these quarter, validated efforts production

of completed. Importantly, all Dan batches At have very end its initiated the preventative shutdown. reported of as now earlier also on, been delayed the maintenance annual Avid XXXX July,

years, prior results. capacity, some reduces two our have in we this XXXX usual, to available as which expect fiscal As process financial impact quarter temporarily on

Lastly, we continue to plans. make expansion with our progress

see we additional access in to ability growth increasingly grows As customer continue demand, the to important. capacity

I business. I to good typically believe closing, not the the the ancillary design momentum can plans only am of first this the of I thoughtfully. the XX An as a of As am forward to quarter and making of established path with for year such, decision business, the takes this complete. process of best of I for come. importance and swiftly accomplishments but considering also up have keen team we to the rest to the other the the as ahead that to reviewing in future say requirements the our months new expansion final move respect are In to the of And nature

business During orders XX existing customers. well million as development the as quarter, new our team project in signed customers, with with

to and continue growth ahead, we this our we Financially, pipeline. with believe production expand margins manufacturing drive top demand in growth will demand our line. see Looking in to expect line continue improving to

This year. remarks to open position we quarter currently quarter line can performance go are my our for to focused this in a profitability, on While we project now to sustainable concludes are across we extending today. questions. And Operator? the prepared fiscal not

Operator

Thank [Operator Instructions]. you

first Hewitt comes from Our with question Matt Craig-Hallum.

line Your is now open.

Matt Hewitt

the questions, taking Good Thank for you Nick. welcome and afternoon.

Nick Green

very you much, Matt. Thank

Matt Hewitt

there, the and up obviously, Regarding about new like It customer how the maybe But report them led there of what two the standpoint, nice today. via pipeline the three came sounds year? talk other over you're we opportunities as wins, cadence about guess from the of partners. one to new the remainder development a seeing of the I a came

Tim Brons

organization. the from our came here activities opportunities BD other the So typical just at

a have pipeline. strong We

pipeline Our to on continues grow for a monthly basis. opportunities new

are the short, know, a cycles how just some need and you are depending they move fast the As sales to really customer Avid. partner when sales need selecting of absolute on long, like cycles some

we number a we continue add like so and that new we year. in to said, the to throughout look And customers have of opportunities pipeline

Matt Hewitt

step then frankly, I year? the you if couple XX.X% And due to the would think quarters that your gross a margin $X.X off the big should quite last thinking Is remainder a million, in from back largely up there years? gross we be that the at still the was of But benefit, last even obviously of about come couple fees. and for have margin How roughly.

Dan Hart

with -- growth. year will the revenue for margin Gross margin in track to line gross continue

our into this of quarter largely costs. noted in remarks, we helped our some of there fixed went As are that absorb first that couple items prepared

the mentioned margin for XX%, ups a for continue And line be to past, as So XX% going more going see as quarter. margins quarters with XX% number forward, significant the we'll the in us net as the forward mentioned. in little bit you move and I've our downs is will that a in that we first forward.

Matt Hewitt

question maybe then into we'll queue. the And last back and then hop one

discussions these now? that what you've of in glad doing? you work with new relationships? for new the -- got having that really internal does we're to partnerships, the you. you've that With been from two Thank And two this response the you are kind getting build Or you're customers you addition as essentially, those regarding pipeline how hearing customers are

Tim Brons

I assume the Aragen? Argonaut about you're with and partnerships talking agreement by co-marketing

Matt Hewitt

Correct.

Tim Brons

especially we're typically an programs earlier customers, for of from our proposal seeing some our in development. development to end So with line out, the out for starting offering request they're looking end starting service cell

Otherwise, keeps by come looking product, partners development them the at one the with requests of also the end going is to to the cell for program. drug of an after is us work line our the on simply so development at products. in and that line the we table perspective development other providing option we're drug of then cell would with on completed. And early table And beneficial likely the the getting customer spectrum at

it's agreements provide the so connect we would non-exclusive. Services. with again, And are solution there at But needs working And with Argonaut these customer there, partner co-marketing them Manufacturing our of flexible really, co-marketing each them. to a satisfying and for them

Operator

next question with from our Johnson comes And Stephens. you. Thank Jacob

Your now line is open.

Jacob Johnson

online release Congrats question demand and on remind to really shortly, Avid, moving roughly to to strong on ground are quarter capacity in you're you just expand welcome like In have demand. then you the capacity bring this comments, do And revenue is think pretty seeing? you break Sounds today? where enough the Nick. time if in first swiftly. the customer I to can meet about you'll projected time meet us you're you Maybe capacity. your capacity to you in and talked guess need

Dan Hart

get million as to if we'll we current current roughly the in, have hundred, in we the ability capacity to a that our million hundred expand revenue. the up lot half revenue. utilities the into If to overall half into footprint, have we to we the up second because Myford. dollars of a expand were, capacity, at another redundant in the past can to And add capacity generating then we hundred of we Myford to two don't looking of could our in plants have plus second plus expanding put we revenue us talked that have facilities installed footprint So in were

get we today million build fully we out base million. $XXX So to Myford were $XXX million, could is our if current to install $XXX

Nick Green

shorter free in capacity it's expansion within just try Nick significant sort very and which critical opportunities to has term, looking to do. the one to as longer amount activities is a the the somewhat effectively color add to at bit well take all are that. to we whether Jacob, that I there the mean, little speaking, And of of analysis and as of overall the path things moment of various are a operations expansion, the determine

you So part the which But that the depends concluded measure to on it we'll that reporting you distant future against. to portion going critical few have I exact all move be path give not and next too in the on percentage how an probably in the of think months. of we're forward

Jacob Johnson

I question, job not Avid strategy capabilities at realize thoughts or you, XX been that is that level maybe Are a Avid to on maybe just other And historical any there interesting the going you, had therapeutic thoughts on or Nick. question high level for be for forward? your sort for high interested But Avid. that would going forward. the strategy maybe here on a in be high of areas would any focus today level

Nick Green

to give you investors that we call. as and this as We're forward. calls finish soon with going speak actually A following little as the early embarking a we process for on strategy

certainly terms there's plenty I So of what of in I've think seen, opportunity.

think and mindedness very is think to team, a open in people to open be thoughts, strategy terms going and been with I of forward. healthy I've management of the I developing different suggestions always and frank which ideas delighted

as and the But opportunity the for service we the future. there's both our and lots I we at new in improving and me all a to had strategy think and a I a that wand XX sudden to days with suggest it'd folly be reveal way of magic clients. services in going I to them lots well that I that present externally for operate, looking way think us, was new bright was internally walk and going as

But quarter to going of you driven that’s by the move be So how give than to forward. something contrary. views lack sort envisage my on opportunity quite that a think we're happy the I being organization I'd don't call, more of next

Jacob Johnson

and Understood, it's some you benefits year, to why in anything is you, the to strong next start calling, the there’s question would in. time year? one reiterated guys I’ll the else the try really a the as period again more last I you But fact in quarter XQ raise for quarter. for one think And you call understanding seasonal guidance out maintenance quarter. just also guidance didn't obviously,

Timothy Compton

a there's think there, I Jacob. things couple in

couple quarter. first we were quarter top-line. the that The shutdown our things year. do our And prepared remarks, that hit that discussed do in first is one the a helped have that as first elevate in the We we there every quarter second

today As at we the moving where with where the we're with forward. our at look we're we're at in pandemic, addition forecast uncertainty at comfortable looking

guidance, that's $XX So reiterated $XX so million million. why our to we

Operator

Thank to remarks. time. call questions Nick turn like the Green to this showing I'm And you. in no back I'd any further at for queue closing the

Nick Green

thank for I'm you your deliver products work. for need at commitment you, company's thank our will be this work I Thank the thank working of on able that at in to daily, home our continued call, happy to be a pleased And whom time at you today's this success and business. and their I future we hard are I'd we to Bioservices. work deal closing, and clinical of of In great like you working in the the Avid both COVID-XX, And our in patients without exciting I'm to grateful Operator. again to need. am call. have Avid by ensure for employees. presented participating for supply to and through They exceptional optimism at support at everyone to employees, today's commercial employees Avid many possible to to the evolution, of dedication. alongside dedicated thank of very be challenges None the and participating are

Operator

your you on thank you for This now conclude your gentlemen, and may program, does conference. and today's disconnect. Ladies participation

Avid Bioservices (CDMO) 1 Sep 202021 Q1 Earnings call transcript