GlobeNewswire Inc | Jun 29, 2021 04:05PM EDT

June 29, 2021

-- Recorded Fourth Quarter Revenue of $27.6 Million and Annual Revenue of $95.9 Million --

-- Achieved Four Consecutive Quarters of Operational Profitability During Fiscal 2021 --

-- Signed Approximately $148 Million in New Business Orders and Achieved a Year-End Backlog of $118 Million During Fiscal 2021 , an 85% and 82% Increase Over Prior Year, Respectively--

-- Raised $138.5 Million Net in Successful Offering of 1.25% Convertible Senior Notes --

-- Project Fiscal 2022 Revenue of$115 to $117 Million, Representing 20% - 22% Growth Over Fiscal 2021 --

TUSTIN, Calif, June 29, 2021 (GLOBE NEWSWIRE) -- 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 2021, ended April 30, 2021.

Highlights SinceJanuary 31, 2021

Fiscal 2021 was a very strong year for Avid. During the year, revenues increased by61% as compared to fiscal 2020 and gross margins were significantly improved from 7% to more than 30%. During fiscal 2021 we signed eight new customers, and during the fourth quarter we successfully completed FDA inspections for two product approvals with zero 483 observations. During fiscal 2021, we generated more than $31 million in cash from operations, and for the first time, we achieved four consecutive quarters of operational profitability. Beyond our operational successes, Avids financial position was significantly strengthened during the year by both new and existing investors who demonstrated support for Avids strategy through two separate offerings which were completed in the third and fourth quarters of fiscal 2021, raising combined net proceeds of $170.6 million. Further, as a sign of the momentum we have moving into the next year, we ended fiscal 2021 with a backlog of $118 million, the majority of which we expect to recognize during fiscal 2022. Given this backdrop, I am pleasedto report that we expect to record revenue of between $115 million and $117 millionin fiscal 2022,representing growth of approximately20% -22%as compared tofiscal 2021, stated Nicholas Green, president and chief executive officer of Avid Bioservices.

The growth experienced during fiscal 2021 made it increasingly evident that an expansion of our capacity is required not only to best service our existing customers who are advancing products through the clinical development process toward commercialization, but to also maintain our competitive advantage in attracting new customers seeking capacity today. As discussed previously, Avid has initiated a two-phased expansion plan which was designed to bring incremental capacity onlineby the end of calendar 2021, and significantly morecapacity in calendar2022. I am very pleased to report that both phases are underway and advancing according to plan, and we look forward to reporting progress on this effort in the coming quarters. Given this work, it is important to note that our annual maintenance shutdowns that are usually conducted back-to-back in Q2, will be amended slightly this year with the Myford shutdown taking place in Q3 to accommodate our expansion schedule.

Looking ahead into fiscal 2022, we expect these expansion investments, combined with ongoing investments in the recruitment, training and retention of our workforce, to result in a continued strengthening of our core business, opening doors to new opportunities for growth. Given the expectation of increasing demand, our additional planned capacity and a strong balance sheet, we will not only be able to best support additionalcustomersworking to develop mammalian drug products, but we look forward to strategically evaluating adjacent and/or strategic business expansions that may create value for Avid and our customers.

The exceptional execution of our team during fiscal 2021 was transformative, bringing Avid to a position of operational and financial strength. We look forward to the many opportunities that lie ahead.

Financial Highlights and Guidance

-- The company is providing revenue guidance for the full fiscal year 2022 of$115 millionto$117 million. -- Revenues for the fourth quarter of fiscal 2021 were $27.6 million, more than double the revenues of $12.6 million recorded during the fourth quarter of fiscal 2020. For the full fiscal year 2021, revenues were $95.9 million, a 61% increase as compared to revenues of $59.7 million in the prior year period. Theincreases in revenue for both thefourthquarterand full fiscal year2021 were primarilydue to thegrowth inthe number and scope ofin-process and completed manufacturingruns, as well as an increase inthe number ofprocess development projectsduring the periods. Additionally, as previously disclosed, fourth quarter and full fiscal year 2020 manufacturing revenue was impacted by a production interruption. -- As ofApril 30, 2021,revenue backlog was $118 million, an increase of 82% compared to $65 million at the end of last fiscal year. The company expects to recognize the majority of this backlog during fiscal 2022. -- Gross margin for the fourth quarter of fiscal 2021 was29% compared toa gross margin of negative 10% for the fourth quarter of fiscal 2020. Gross margin for the full fiscal year 2021 was 31% compared to 7% in the prior year period. Theincreases in gross margin during both thefourthquarterand full fiscal year2021 were primarilyfrom higher plant utilization resulting from highermanufacturingand process developmentrevenues during the periods. Additionally, full fiscal year 2020 gross profit was impacted by certain costs associated with the production interruption noted above, which costs which did not recur during fiscal 2021. -- Selling, general and administrative expenses (SG&A) for the fourth quarter of fiscal 2021 were $5.1 million, an increase of 43% compared to $3.5 million recorded for the fourth quarter of fiscal 2020. For the full fiscal year 2021, SG&A expenses were $17.1 million, an 18% increase compared to $14.5 million for the prior year. Theincreasesin SG&Aduring both the fourth quarter and full fiscal year 2021wereprimarilyduetoincreases in payroll related costs,includingstock-based compensation. -- During the fourth quarter of fiscal 2021, Avid redeemed itsoutstanding 10.5% Series E Convertible Preferred Stock. Thisredemption resulted in a one-time charge of $3.4 million, which was unrelated to operations, and recorded as a reduction to net income attributable to common stockholders. As a result, forthefourthquarter of fiscal 2021,the companyrecorded a netlossattributable to common stockholders ofapproximately$2.7 millionor$0.04perbasic and dilutedshare, as compared to a net loss attributable to common stockholders of $6.2million or $0.11perbasic and dilutedshare, for thefourthquarter of fiscal 2020. However, when adjusting for the one-time redemption charge, Avid would have recorded netincomeattributable to common stockholders of approximately $0.8 million, or $0.01 per basic and diluted share,during the fourth quarter of fiscal 2021, marking the companys fourthconsecutivequarterofnet income attributable to common stockholders. For the full fiscal year 2021, the company recorded net income attributable to common stockholders of $3.3 million or $0.06 per basic and diluted share, compared to net loss attributable to common stockholders of $15.2 million or $0.27 per share, for fiscal 2020. Excluding the one-time redemption charge, Avid would have recorded net income attributable to common stockholders of approximately $6.8 million or $0.12 and $0.11 per basic and diluted share, respectively, for the full fiscal year 2021. -- Avid reported$169.9 millionin cash and cash equivalents as of April 30, 2021, an increase of $133.7 million from the end of the prior fiscal year. The increase in cash and cash equivalents as compared to fiscal 2020, is primarily due to $31.2 million generated from operations during the 2021 fiscal year, of which $17.9 million was generated during the fourth quarter. The fiscal 2021balancealso includesapproximately $32.1millionin net proceeds whichwereraised during thethirdquarterinafollow-onunderwritten equityfinancing, as well as approximately $138.5million in net proceeds raised during the fourth quarter in an offering of 1.25% convertible senior notes.

More detailed financial information and analysis may be found in Avid Bioservices Annual Report on Form 10-K, which will be filed with theSecurities and Exchange Commissiontoday.

Recent Corporate Developments

-- Signed multiple new orders during the fourth quarter, totaling approximately$26 million. These projects span all areas of the business, from process development to commercial manufacturing. During fiscal 2021, the company signed new business orders for approximately $148 million as compared to $80 million during fiscal 2020. Additionally, the company signed eight new customers in fiscal 2021, a significant increase over fiscal 2020. -- Completedan offering of 1.25% convertible senior notes during the fourth quarter, raising net proceeds of $138.5million, after deducting initial purchaser discounts and other debt issuance related expenses. The company usedapproximately$12.8 million to purchase capped call transactions with certain financial institution counterparties in connection with the issuance of the convertible senior notes and approximately $40.5 millionin April 2021to redeem all of the companyspreviouslyoutstanding10.5% Series E Convertible Preferred Stock. The company plans to use the remaining net proceeds for working capital and other general corporate purposes. The companymay also use a portion of these funds for the acquisition of, or investment in, technologies, solutions or businesses that complementourexisting capabilities, althoughit hasno commitments to enter into any such acquisitions or investments at this time. -- Two-part expansion of theMyfordfacility continues to progress according to plan. The first phaseof the expansion, whichwas initiatedduringthe second quarter offiscal2021,expands the production capacity ofthecompanysexistingMyfordNorth facility byaddinga second downstream processing suite. The second phase,which was initiatedduring the fourth quarter of fiscal 2021,is designed tofurther expand capacity through the build out of a second manufacturing train, including both upstream and downstream processing suites withinMyfordSouth.Combined, the companyestimates that the first and second phases of this expansion will result in a total revenuegeneratingcapacity of up to $270 million annually. While the company believes that this expansion is critical to its ability to service the future needs of its customers, Avid presently has adequate capacity to accommodate current demand.

Conference Call

Avid will host a conference call and webcast this afternoon,June 29, 2021, at4:30 PM EDT(1:30 PM PDT).

To listen to the conference call, please dial (877) 312-5443 or (253) 237-1126 and request theAvid Bioservicesconference call. To listen to the live webcast, or access the archived webcast, please visit: https://ir.avidbio.com/investor-events.

AboutAvid Bioservices, Inc.

Avid Bioservicesis a dedicated contract development and manufacturing organization (CDMO) focused on development andCGMPmanufacturing of biopharmaceutical drug substances derived from mammalian cell culture. The company provides a comprehensive range of process development,CGMPclinical and commercial manufacturing services for the biotechnology and biopharmaceutical industries. With 28 years of experience producing monoclonal antibodies and recombinant proteins, Avids services includeCGMPclinical 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 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 Statements

Statements in this press release, which are not purely historical, including statements regardingAvid Bioservicesintentions, 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 riskthat the ongoing COVID-19 pandemicwill adversely affect ouror our customers business and operations,the risk the company may experience delays in engaging new clients, the risk that the company may not be successful in executing client projects, the risk that the company may experience technical difficulties in completing client projectsdue to unanticipated equipment and/or manufacturing facility issueswhich couldresult in projects being terminated ordelay delivery of products to customers, revenue recognition and receipt of payment orresult inthe 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 2022 revenues, and the risk that thecompletionofone or both phasestheof theMyfordexpansion may be delayed,may cost more than anticipatedormay not increase revenue generating capacity by the amounts contemplated. 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 theSecurities and Exchange Commissionincluding, but not limited to, our annual report on Form 10-K for the fiscal year endedApril 30, 2021, as well as any updates to these risk factors filed from time to time in our other filings with theSecurities 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.

AVID BIOSERVICES, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)(In thousands, except per share information)

Three Months Ended Twelve Months Ended April 30, April 30, 2021 2020 2021 2020 Revenues $ 27,606 $ 12,550 $ 95,868 $ 59,702 Cost of revenues 19,463 13,849 66,561 55,770 Gross profit (loss) 8,143 (1,299 ) 29,307 3,932 Operating expenses: Selling, general and 5,055 3,528 17,064 14,517 administrativeLoss on lease ? ? ? 355 termination Total operating 5,055 3,528 17,064 14,872 expenses Operating income 3,088 (4,827 ) 12,243 (10,940 )(loss)Interest and other 63 60 133 482 income, netInterest expense (1,160 ) (1 ) (1,164 ) (8 ) Net income (loss) $ 1,991 $ (4,768 ) $ 11,212 $ (10,466 ) Comprehensive income $ 1,991 $ (4,768 ) $ 11,212 $ (10,466 )(loss) Series E preferredstock accumulated (1,211 ) (1,442 ) (4,455 ) (4,686 )dividendsImpact of Series Epreferred stock (3,439 ) ? (3,439 ) ? redemption Net income (loss)attributable to common $ (2,659 ) $ (6,210 ) $ 3,318 $ (15,152 )stockholders Net income (loss) pershare attributable to common stockholders:Basic $ (0.04 ) $ (0.11 ) $ 0.06 $ (0.27 )Diluted $ (0.04 ) $ (0.11 ) $ 0.06 $ (0.27 ) Weighted averagecommon shares outstanding:Basic 60,927 56,482 58,222 56,326 Diluted 63,142 56,482 59,426 56,326

AVID BIOSERVICES, INC.CONSOLIDATED BALANCE SHEETS (In thousands, except par value)

April 30, April 30, 2021 2020ASSETS Current assets: Cash and cash equivalents $ 169,915 $ 36,262 Accounts receivable 18,842 8,606 Contract assets 6,112 3,300 Inventory 11,871 10,883 Prepaid expenses 1,064 712 Total current assets 207,804 59,763 Property and equipment, net 37,455 27,105 Operating lease right-of-use assets 18,691 20,100 Restricted cash 350 350 Other assets 1,210 302 Total assets $ 265,510 $ 107,620 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable $ 9,257 $ 5,926 Accrued payroll and related costs 8,794 3,019 Contract liabilities 50,769 29,120 Current portion of operating lease liabilities 1,355 1,228 Note payable ? 4,379 Other current liabilities 761 808 Total current liabilities 70,936 44,480 Convertible senior notes, net 96,949 ? Operating lease liabilities, less current portion 19,889 21,244 Total liabilities 187,774 65,724 Commitments and contingencies Stockholders? equity: Preferred stock, $0.001 par value; 5,000 sharesauthorized; ? 2 no shares and 1,648 shares issued and outstandingat respective datesCommon stock, $0.001 par value; 150,000 sharesauthorized; 61 56 61,069 and 56,483 shares issued and outstanding atrespective datesAdditional paid-in capital 637,534 612,909 Accumulated deficit (559,859 ) (571,071 )Total stockholders? equity 77,736 41,896 Total liabilities and stockholders? equity $ 265,510 $ 107,620

Contacts:Stephanie Diaz (Investors)Vida Strategic Partners415-675-7401sdiaz@vidasp.com

Tim Brons (Media)Vida Strategic Partners415-675-7402tbrons@vidasp.com