Biotech/Pharma Contract Service Provider Avid Bioservices Sees Lower Than Expected Q3 Sales, Sticks To Annual Guidance

Wednesday, Avid Bioservices Inc CDMO reported preliminary revenues for the third quarter of fiscal 2024 of $33.8 million, representing an 11% decrease Y/Y and lower than the consensus of $34.19 million.

The revenue decrease was primarily attributed to fewer manufacturing runs and reduced process development services from early-stage customers. 

The company’s commercial team signed multiple new orders during the third quarter of fiscal 2024, totaling approximately $41 million net, resulting in a revenue backlog of $206 million, representing an increase of 17%.

Gross profit for the third quarter of fiscal 2024 was $2.4 million (7% gross margin), compared to $9.8 million (26% gross margin) in the third quarter of fiscal 2023, primarily driven by fewer manufacturing runs, a reduction in process development services from early-stage customers, and an increase in costs related to expansions of both the company’s capacity and technical capabilities. 

Operating loss for the third quarter of fiscal 2024 was $(4.0) million, a turnaround from an operating income of $2.7 million.

As of January 31, 2024, Avid Bioservices held cash and cash equivalents of $30.7 million.

Avid Bioservices completed its cell and gene therapy (or CGT) facility, representing the final step in a three-year expansion program. Avid Bioservices estimates that its combined mammalian and CGT facilities have a total revenue-generating capacity of approximately $400 million annually.

Guidance: Avid Bioservices maintains fiscal year 2024 revenue of $137 million-$147 million compared to the consensus of $138.9 million.

Concurrently, the contract development and manufacturing organization priced $160 million of 7% Convertible Senior Notes due 2029. 

The conversion rate for the 2029 Notes will initially be 101.1250 shares of the company’s common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $9.89 per share).

Price Action: CDMO shares are down 29% at $6.24 on the last check Thursday.