PART I [Business](index=5&type=section&id=Item%201.%20Business) Avid Bioservices is a dedicated CDMO specializing in biopharmaceutical drug substances from mammalian cell culture, focusing on expanding manufacturing capacity and market awareness - Avid operates as a dedicated CDMO, offering a comprehensive range of services from process development to CGMP clinical and commercial manufacturing of biopharmaceutical drug substances derived from mammalian cell culture[16](index=16&type=chunk) - The company's growth strategy includes investing in additional manufacturing capacity, broadening market awareness, expanding its customer base, exploring strategic opportunities, and increasing operating profit margins[17](index=17&type=chunk) - A two-phase expansion of the Myford Facility was initiated in fiscal 2021, which is estimated to increase the total revenue-generating capacity to up to **$270 million** annually upon completion[28](index=28&type=chunk)[33](index=33&type=chunk) Customer Concentration | Fiscal Year | Revenue from Top 3 Customers | | :--- | :--- | | 2021 | 76% | | 2020 | 63% | | 2019 | 64% | Backlog Growth | Date | Backlog Amount | | :--- | :--- | | April 30, 2021 | ~$118 million | | April 30, 2020 | ~$65 million | - As of April 30, 2021, the company had **257 employees** (252 full-time and 5 part-time), an increase from 227 employees as of April 30, 2020[52](index=52&type=chunk)[78](index=78&type=chunk) [Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces key risks from the COVID-19 pandemic, significant customer concentration, capital investment in facility expansion, and reliance on third-party suppliers - The business may be adversely affected by global health events like the **COVID-19 pandemic**, which could disrupt customer operations, clinical trials, and the supply chain for key raw materials[68](index=68&type=chunk)[69](index=69&type=chunk) - A significant portion of revenue comes from a limited number of customers; in fiscal 2021, the top three customers accounted for approximately **76% of total revenues**, making the company vulnerable to the loss of any major customer[72](index=72&type=chunk) - The company is making a **significant capital investment** in its Myford facility expansion; failure to attract new business and utilize this additional capacity could adversely affect margins and results of operations[75](index=75&type=chunk)[76](index=76&type=chunk) - Operations depend on **third-party suppliers** for necessary raw materials, with some materials coming from single sources, and any disruption could adversely impact financial results[80](index=80&type=chunk)[81](index=81&type=chunk) - All manufacturing facilities are located in **Tustin, California**, which increases exposure to business disruption from catastrophic events in a single geographic area[82](index=82&type=chunk)[83](index=83&type=chunk) - The company has significant federal and state Net Operating Loss (NOL) carryforwards (**$407 million** and **$272 million**, respectively, as of April 30, 2021), but their future use may be limited[98](index=98&type=chunk)[99](index=99&type=chunk) [Unresolved Staff Comments](index=24&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - Not applicable[151](index=151&type=chunk) [Properties](index=24&type=section&id=Item%202.%20Properties) Avid's corporate offices and manufacturing facilities are all located in Tustin, California, encompassing approximately 158,000 square feet of leased space Leased Properties Summary | Property Use | Square Footage (approx) | Lease Expiration | | :--- | :--- | :--- | | Corporate Headquarters | 26,000 sq ft | August 2023 | | Office, Mfg, Lab | 48,000 sq ft | December 2027 | | Mfg and Lab | 84,000 sq ft | January 2027 | [Legal Proceedings](index=24&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The company is not currently a party to any legal proceedings expected to have a material adverse effect on its financial condition or operations[156](index=156&type=chunk) [Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[157](index=157&type=chunk) PART II [Market For Registrant's Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities](index=25&type=section&id=Item%205.%20Market%20For%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20And%20Issuer%20Purchases%20Of%20Equity%20Securities) The company's common stock trades on NASDAQ under "CDMO", and it does not anticipate paying cash dividends, having recently redeemed its Series E Preferred Stock - The company's common stock is listed on The NASDAQ Capital Market under the trading symbol **"CDMO"**[160](index=160&type=chunk) - The company has **never declared or paid cash dividends** on its common stock and does not anticipate paying any in the foreseeable future[162](index=162&type=chunk) - On April 12, 2021, the company **redeemed all outstanding shares** of its 10.50% Series E Convertible Preferred Stock[163](index=163&type=chunk) Series E Preferred Stock Dividends Paid | Fiscal Year | Aggregate Cash Dividends | | :--- | :--- | | 2021 | ~$4.5 million | | 2020 | ~$4.3 million | | 2019 | ~$4.3 million | [Selected Financial Data](index=27&type=section&id=Item%206.%20Selected%20Financial%20Data) Fiscal year 2021 showed significant growth with revenues of $95.9 million and a return to profitability, alongside substantial increases in total assets and stockholders' equity Selected Financial Data (in thousands) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Revenues | $95,868 | $59,702 | $53,603 | | Gross profit (loss) | $29,307 | $3,932 | $7,224 | | Income (loss) from continuing operations | $11,212 | $(10,466) | $(5,056) | | Net income (loss) | $11,212 | $(10,466) | $(4,215) | | Net income (loss) attributable to common stockholders | $3,318 | $(15,152) | $(8,901) | | Total assets | $265,510 | $107,620 | $78,395 | | Total stockholders' equity | $77,736 | $41,896 | $53,068 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2021 saw record revenues of $95.9 million, a 61% increase driving profitability, while the balance sheet was strengthened by financing activities to support facility expansion [Fiscal Year 2021 Highlights](index=28&type=section&id=Fiscal%20Year%202021%20Highlights) - Reported record revenues of **$95.9 million**, a **61% increase** compared to fiscal 2020[177](index=177&type=chunk) - Reported net income attributable to common stockholders of **$3.3 million**, or **$0.06 per share**[177](index=177&type=chunk) - Backlog grew to **$118 million** at year-end, up from $65 million at the end of fiscal 2020[177](index=177&type=chunk) - Optimized capital structure by completing a **$32.1 million** net public offering of common stock, issuing **$143.8 million** in convertible senior notes, and redeeming all outstanding Series E Preferred Stock[177](index=177&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Fiscal Year 2021 vs 2020 Results (in thousands) | Metric | FY 2021 | FY 2020 | Change | | :--- | :--- | :--- | :--- | | Revenues | $95,868 | $59,702 | $36,166 | | Gross Profit | $29,307 | $3,932 | $25,375 | | Operating Income (Loss) | $12,243 | $(10,940) | $23,183 | | Net Income (Loss) | $11,212 | $(10,466) | $21,678 | - The **61% increase in revenue** was driven by a $31.7 million increase in manufacturing revenues and a $4.5 million increase in process development revenues[190](index=190&type=chunk) - Gross margin improved to **31%** in fiscal 2021 from 7% in fiscal 2020, primarily due to increased revenues and higher facility utilization[192](index=192&type=chunk) - Selling, General and Administrative (SG&A) expenses increased by **$2.5 million**, or 18%, mainly due to higher accrued bonus and stock-based compensation expenses[193](index=193&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) - As of April 30, 2021, the company had cash and cash equivalents of **$169.9 million**, which management believes is sufficient to fund operations for at least the next 12 months[218](index=218&type=chunk) - In December 2020, completed a public offering of common stock with net proceeds of **$32.1 million**, intended for the expansion of the Myford Facility[214](index=214&type=chunk) - In March 2021, issued **$143.8 million** of 1.250% convertible senior notes due 2026, with net proceeds of $138.5 million[215](index=215&type=chunk) Cash Flow Summary (in thousands) | Activity | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $31,182 | $5,827 | $(11,595) | | Net cash used in investing activities | $(9,864) | $(3,812) | $4,544 | | Net cash from financing activities | $112,335 | $1,096 | $(2,863) | - Capital expenditures for fiscal 2022 are expected to be approximately **$50 to $60 million**, primarily related to the Myford Facility expansion[231](index=231&type=chunk) [Critical Accounting Policies and Estimates](index=33&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Revenue from manufacturing and process development contracts is recognized over time using an **input method** that compares cumulative costs incurred to date against the total estimated costs[203](index=203&type=chunk)[204](index=204&type=chunk) - The company adopted **ASC 606** (Revenue from Contracts with Customers) on May 1, 2018, using the modified retrospective method[200](index=200&type=chunk) - Stock-based compensation for stock options is measured at the grant date using a **Black-Scholes model** and recognized as expense on a straight-line basis over the vesting period[210](index=210&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is minimal, relating to interest income on cash equivalents, as its convertible notes carry a fixed interest rate - Cash and cash equivalents are primarily invested in money market funds, exposing the company to credit risk from the holding bank, though this is considered minimal[235](index=235&type=chunk) - The company's Convertible Notes have a **fixed interest rate of 1.250%** and are therefore not subject to interest rate fluctuation risk[236](index=236&type=chunk) [Financial Statements and Supplementary Data](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the company's audited consolidated financial statements for the three years ended April 30, 2021, and the independent auditor's report [Notes to Consolidated Financial Statements](index=47&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The company operates in a **single reportable segment**, CDMO services, with all identifiable assets located in the United States[272](index=272&type=chunk) Revenue by Type (in thousands) | Revenue Stream | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Manufacturing | $83,678 | $52,046 | $43,432 | | Process development | $12,190 | $7,656 | $10,171 | | **Total** | **$95,868** | **$59,702** | **$53,603** | Significant Customer Revenue Concentration | Customer | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Halozyme Therapeutics, Inc | 51% | 28% | 30% | | Gilead Sciences, Inc | 16% | 24% | – | - In March 2021, the company issued **$143.8 million in 1.250% convertible senior notes** due 2026, with debt and equity components separated for accounting purposes[321](index=321&type=chunk)[334](index=334&type=chunk) - On April 12, 2021, the company redeemed all outstanding shares of its Series E Preferred Stock, resulting in a **$3.4 million charge** related to the excess of redemption value over carrying value[351](index=351&type=chunk) - The company has significant net operating loss (NOL) carryforwards of approximately **$406.7 million (federal)** and **$272.1 million (California)** as of April 30, 2021, which are fully offset by a valuation allowance[384](index=384&type=chunk) [Changes In and Disagreements With Accountants On Accounting and Financial Disclosures](index=71&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20With%20Accountants%20On%20Accounting%20and%20Financial%20Disclosures) The company reports no changes in or disagreements with its accountants on accounting and financial disclosures - None[412](index=412&type=chunk) [Controls and Procedures](index=71&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal control over financial reporting were effective as of April 30, 2021 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of April 30, 2021[413](index=413&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of April 30, 2021, an assessment audited by Ernst & Young LLP which issued an unqualified opinion[417](index=417&type=chunk)[422](index=422&type=chunk) - **No significant changes** in internal control over financial reporting occurred during the fourth quarter of fiscal year 2021[418](index=418&type=chunk) [Other Information](index=72&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[429](index=429&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=73&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2021 Definitive Proxy Statement - Information required by this item is incorporated by reference from the registrant's 2021 Definitive Proxy Statement[432](index=432&type=chunk)[433](index=433&type=chunk) [Executive Compensation](index=73&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding director and executive compensation is incorporated by reference from the company's 2021 Definitive Proxy Statement - Information required by this item is incorporated by reference from the registrant's 2021 Definitive Proxy Statement[434](index=434&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=73&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section provides information on equity compensation plans, with other security ownership details incorporated by reference from the 2021 Definitive Proxy Statement Equity Compensation Plan Information as of April 30, 2021 | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by stockholders | 3,688,392 | $6.56 | 2,600,193 | | Employee Stock Purchase Plan approved by stockholders | – | – | 1,076,326 | | **Total** | **3,689,364** | **$6.56** | **3,676,519** | [Certain Relationships and Related Transactions, and Director Independence](index=74&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related transactions and director independence is incorporated by reference from the company's 2021 Definitive Proxy Statement - Information required by this item is incorporated by reference from the registrant's 2021 Definitive Proxy Statement[438](index=438&type=chunk) [Principal Accounting Fees and Services](index=74&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's 2021 Definitive Proxy Statement - Information required by this item is incorporated by reference from the registrant's 2021 Definitive Proxy Statement[439](index=439&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=75&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Annual Report, including consolidated financial statements and an index of exhibits - This section contains the index to the Consolidated Financial Statements and lists all exhibits filed with or incorporated by reference into the Form 10-K[442](index=442&type=chunk)[443](index=443&type=chunk) [Form 10-K Summary](index=75&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no Form 10-K summary - None[443](index=443&type=chunk)

Avid Bioservices, Inc. (NASDAQ:CDMO) Q3 2021 Earnings Conference Call March 8, 2021 4:30 PM ET Company Participants Tim Brons - Investor Relations, Vida Strategic Partners Nick Green - President & Chief Executive Officer Dan Hart - Chief Financial Officer Timothy Compton - Chief Commercial Officer Conference Call Participants Matt Hewitt - Craig-Hallum Capital Group Jacob Johnson - Stephens Paul Knight - KeyBanc Capital Markets Operator Good day, ladies and gentlemen, and welcome to the Avid Bioservices' Th ...

PART I - FINANCIAL INFORMATION [Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Avid Bioservices presents unaudited consolidated financial statements, highlighting significant growth in assets, revenues, and a shift to net income - Avid Bioservices is a contract development and manufacturing organization (CDMO) specializing in biopharmaceutical drug substances derived from mammalian cell culture[22](index=22&type=chunk) Condensed Consolidated Balance Sheets (in thousands) | Balance Sheet Highlights | Jan 31, 2021 | Apr 30, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $70,894 | $36,262 | | Total current assets | $116,311 | $59,763 | | Total assets | $168,178 | $107,620 | | Total current liabilities | $62,575 | $44,480 | | Total liabilities | $82,808 | $65,724 | | Total stockholders' equity | $85,370 | $41,896 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Statement of Operations | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | Nine Months Ended Jan 31, 2021 | Nine Months Ended Jan 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $21,806 | $13,585 | $68,262 | $47,152 | | Gross Profit | $6,202 | $785 | $21,164 | $5,231 | | Operating Income (Loss) | $2,184 | $(2,211) | $9,155 | $(6,113) | | Net Income (Loss) | $2,207 | $(2,104) | $9,221 | $(5,698) | | Diluted EPS | $0.01 | $(0.06) | $0.10 | $(0.17) | Revenue by Stream (in thousands) | Revenue Stream | Three Months Ended Jan 31, 2021 | Three Months Ended Jan 31, 2020 | Nine Months Ended Jan 31, 2021 | Nine Months Ended Jan 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Manufacturing revenues | $17,895 | $11,525 | $60,407 | $40,422 | | Process development revenues | $3,911 | $2,060 | $7,855 | $6,730 | | **Total revenues** | **$21,806** | **$13,585** | **$68,262** | **$47,152** | Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (Nine Months Ended Jan 31) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $13,322 | $2,780 | | Net cash used in investing activities | $(5,717) | $(3,025) | | Net cash provided by (used in) financing activities | $27,027 | $(2,219) | | **Net increase (decrease) in cash** | **$34,632** | **$(2,464)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20And%20Results%20of%20Operations) Management discusses strong Q3 FY2021 performance, with 61% revenue growth, record $120 million backlog, and significant profitability improvement - Key strategic objectives include investing in manufacturing capacity, broadening market awareness, expanding the customer base, and increasing operating profit margins[92](index=92&type=chunk) - The company is executing a two-phased expansion of its Myford facility, with phase one expected to cost **~$15 million** and add up to **$50 million in annual revenue capacity**, and phase two estimated at **$45-$55 million** projected to add another **$100 million in annual revenue capacity**[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) - In December 2020, the company completed a public offering, raising net proceeds of **$32.1 million**, which are intended to be used for the facility expansions[94](index=94&type=chunk)[98](index=98&type=chunk)[124](index=124&type=chunk) Q3 FY2021 vs Q3 FY2020 Performance (Three Months Ended Jan 31) | Metric | Q3 2021 | Q3 2020 | Change | | :--- | :--- | :--- | :--- | | Revenues | $21.8M | $13.6M | +61% | | Gross Profit | $6.2M | $0.8M | +$5.4M | | Gross Margin | 28% | 6% | +22 p.p. | | Operating Income (Loss) | $2.2M | $(2.2)M | +$4.4M | YTD FY2021 vs YTD FY2020 Performance (Nine Months Ended Jan 31) | Metric | YTD 2021 | YTD 2020 | Change | | :--- | :--- | :--- | :--- | | Revenues | $68.3M | $47.2M | +45% | | Gross Profit | $21.2M | $5.2M | +$15.9M | | Gross Margin | 31% | 11% | +20 p.p. | | Operating Income (Loss) | $9.2M | $(6.1)M | +$15.3M | - The company's backlog reached an all-time high of **$120 million** as of January 31, 2021, a significant increase from **$65 million** as of April 30, 2020[94](index=94&type=chunk)[141](index=141&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in market risks from those previously disclosed in the Annual Report on Form 10-K - During the nine months ended January 31, 2021, there were no material changes in the market risks from those described in the Annual Report on Form 10-K for the fiscal year ended April 30, 2020[142](index=142&type=chunk) [Controls And Procedures](index=29&type=section&id=Item%204.%20Controls%20And%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Based on an evaluation as of January 31, 2021, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **effective**[144](index=144&type=chunk) - There were no significant changes in internal control over financial reporting during the quarter ended January 31, 2021[145](index=145&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings that would materially affect its financial condition or operations - The company is not currently a party to any legal proceedings that would have a material adverse effect on its financial condition or operations[148](index=148&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including COVID-19 impacts, business operational challenges, industry competition, customer dependencies, and stock ownership volatility [Risks Related to the COVID-19 Pandemic](index=30&type=section&id=Risks%20Related%20to%20the%20COVID-19%20Pandemic) COVID-19 pandemic may adversely affect operations through customer disruptions, supply chain delays, and workforce impacts - The COVID-19 pandemic may affect operations through disruptions in customer activities, supply chain delays (especially for materials prioritized for COVID-19 vaccines), and impacts on the workforce[151](index=151&type=chunk) [Risks Related to Our Business](index=30&type=section&id=Risks%20Related%20to%20Our%20Business) Key business risks include a history of losses, customer concentration, reliance on single-source suppliers, geographic concentration, and challenges in managing facility expansion - The company has a history of losses, with an accumulated deficit of **$562 million** as of January 31, 2021[152](index=152&type=chunk) - Revenue is concentrated with a small number of customers, with the top three accounting for **63% of revenue** in fiscal year 2020[156](index=156&type=chunk) - All manufacturing facilities are located in Tustin, California, increasing exposure to disruption from catastrophic events in a single geographic area[162](index=162&type=chunk)[163](index=163&type=chunk) - The company is in the early stages of a major manufacturing expansion that could strain organizational and operational infrastructure[167](index=167&type=chunk) [Risks Related to Our Customers](index=36&type=section&id=Risks%20Related%20to%20Our%20Customers) Company success depends on customer product demand, regulatory approvals, and overall R&D spending, with approval failures impacting revenue - Business success depends on consumer demand for customers' products, which can be affected by regulatory approvals, competition, and marketing strategies[192](index=192&type=chunk) - A delay or failure by customers to receive regulatory approval for their product candidates could adversely affect the company's revenue and profitability[194](index=194&type=chunk)[195](index=195&type=chunk) [Risks Related to the Industry in Which We Operate](index=37&type=section&id=Risks%20Related%20to%20the%20Industry%20in%20Which%20We%20Operate) The company operates in a highly regulated and competitive industry, facing compliance risks with CGMPs and intense competition from CDMOs and large pharma - The company is subject to extensive regulation by the FDA and other bodies, and noncompliance with CGMPs can lead to production stoppages, facility closure, and other penalties[201](index=201&type=chunk)[203](index=203&type=chunk)[205](index=205&type=chunk) - The contract manufacturing market is highly competitive, with competition from other CDMOs and the internal manufacturing operations of large pharmaceutical companies[206](index=206&type=chunk) [Risks Related to the Ownership of Our Common Stock](index=38&type=section&id=Risks%20Related%20to%20the%20Ownership%20of%20Our%20Common%20Stock) Risks for common stockholders include potential dilution, stock price volatility, anti-takeover provisions, and no anticipated dividends - A significant number of shares are issuable upon exercise of options, RSUs, and conversion of Series E Preferred Stock, which could **dilute existing stockholders**[207](index=207&type=chunk)[208](index=208&type=chunk) - The company's stock price has been highly volatile, ranging from **$2.24 to $8.44 per share** over the last three fiscal years ended April 30, 2020[209](index=209&type=chunk) - The company has never paid a cash dividend on its common stock and does not anticipate doing so in the foreseeable future[219](index=219&type=chunk) [Other Information](index=40&type=section&id=Item%205.%20Other%20Information) Mr. Patrick Walsh resigned from the Board of Directors effective March 2, 2021, for other opportunities, not due to disagreements - On March 2, 2021, director Patrick Walsh resigned from the Board of Directors, with the resignation not due to any disagreements with the company's operations, policies, or practices[222](index=222&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) The exhibits filed include CEO and CFO certifications required by Sarbanes-Oxley Act, along with XBRL data files - The exhibits filed with the report include CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act, along with XBRL data files[218](index=218&type=chunk)[223](index=223&type=chunk) [Signatures](index=41&type=section&id=SIGNATURES) The report is signed by President and CEO Nicholas S. Green and CFO Daniel R. Hart on March 8, 2021 - The Form 10-Q was signed on March 8, 2021, by Nicholas S. Green (President and CEO) and Daniel R. Hart (CFO)[228](index=228&type=chunk)

Avid Bioservices, Inc. (NASDAQ:CDMO) Q2 2021 Earnings Conference Call December 2, 2020 4:30 PM ET Company Participants Tim Brons - IR, Vida Strategic Partners Nick Green - President and Chief Executive Officer Dan Hart - Chief Financial Officer Timothy Compton - Chief Commercial Officer Conference Call Participants Matt Hewitt - Craig-Hallum Capital Group Paul Knight - KeyBanc Jacob Johnson - Stephens Operator Good day, ladies and gentlemen, and welcome to the Avid Bioservices Second Quarter Fiscal 2021 Fin ...

Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.001 par value per share CDMO The NASDAQ Stock Market LLC 10.50% Series E Convertible Preferred Stock, $0.001 par value per share CDMOP The NASDAQ Stock Market LLC Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2020 or o TRANSITIO ...

Financial Data and Key Metrics Changes - Revenues for Q1 fiscal 2021 were $25.4 million, a 66% increase compared to $15.3 million in Q1 fiscal 2020, driven by increased manufacturing runs and fees from a customer [14][20] - Gross margin for Q1 fiscal 2021 was 34%, significantly up from 7% in Q1 fiscal 2020, attributed to increased manufacturing revenue and customer fees [15] - Consolidated net income for Q1 fiscal 2021 was $3.3 million, or $0.06 per share, compared to a net loss of $4.6 million, or $0.08 per share, in Q1 fiscal 2020 [17] - Cash and cash equivalents decreased to $28.2 million from $36.3 million due to loan repayments and changes in operating assets [19] Business Line Data and Key Metrics Changes - The company added three new customers during the quarter, contributing to a total of $20 million in new business [22] - The backlog at the end of Q1 fiscal 2021 was $60 million, down from $65 million at the end of fiscal 2020, but consistent when accounting for deferred batches [18] Market Data and Key Metrics Changes - The company is well-positioned to benefit from industry trends in biologics, which are growing faster than other sectors [7][8] - Despite the pandemic, there has been no interruption in operations or production programs, and employee health remains a priority [30] Company Strategy and Development Direction - The company is focused on expanding capacity to meet growing customer demand, with potential revenue capacity increasing from $100 million to $200 million with facility expansions [47] - Management is reviewing design plans for expansion, which typically takes up to 24 months to complete [33] - The company is exploring opportunities for both internal improvements and external service enhancements [50] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about continued revenue growth but cautions against using Q1 revenues as a new benchmark due to one-time factors [20] - The company expects to recognize the majority of its backlog in fiscal year 2021 [18] - There is a commitment to maintaining operational safety and productivity during the pandemic [30] Other Important Information - The company has entered into co-marketing agreements with Aragen Biosciences and Argonaut Manufacturing Services to enhance service offerings [26][27] - The management team is open to new ideas and strategies for future growth [50] Q&A Session Summary Question: Regarding the three new customer wins and pipeline opportunities - The new customers were acquired through typical business development activities, and the pipeline continues to grow with various opportunities [37][38] Question: Thoughts on gross margin for the remainder of the year - Gross margin is expected to track with revenue growth, with a target range of 20% to 24% in future quarters [39][40] Question: Capacity expansion and meeting projected demand - Current installed capacity can support over $100 million in revenue, with potential expansion to double that capacity [47][48] Question: High-level thoughts on Avid's strategy going forward - The management is in the process of developing a strategy and sees plenty of opportunities for growth [49][50] Question: Reason for not raising guidance despite strong Q1 performance - Guidance was reiterated due to uncertainties related to the pandemic and the seasonal maintenance shutdown in Q2 [51]

PART I - FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Presents unaudited condensed consolidated financial statements for the quarter ended July 31, 2020, covering balance sheets, operations, and cash flows - Avid Bioservices operates as a **CDMO** specializing in biopharmaceutical drug substances from mammalian cell culture[17](index=17&type=chunk) Condensed Consolidated Balance Sheets (in thousands) | Assets & Liabilities | July 31, 2020 | April 30, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $57,018 | $59,763 | | **Total Assets** | **$105,561** | **$107,620** | | **Total Current Liabilities** | $38,111 | $44,480 | | **Total Liabilities** | $59,022 | $65,724 | | **Total Stockholders' Equity** | $46,539 | $41,896 | | **Total Liabilities and Stockholders' Equity** | **$105,561** | **$107,620** | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended July 31, 2020 | Three Months Ended July 31, 2019 | | :--- | :--- | :--- | | **Revenues** | $25,392 | $15,254 | | **Gross Profit** | $8,544 | $1,086 | | **Operating Income (Loss)** | $4,719 | $(3,373) | | **Net Income (Loss)** | $4,730 | $(3,164) | | **Net Income (Loss) Attributable to Common Stockholders** | $3,288 | $(4,606) | | **Basic EPS** | $0.06 | $(0.08) | | **Diluted EPS** | $0.06 | $(0.08) | Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended July 31, 2020 | Three Months Ended July 31, 2019 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(2,273) | $(2,468) | | **Net cash used in investing activities** | $(489) | $(38) | | **Net cash used in financing activities** | $(5,289) | $(901) | | **Net decrease in cash, cash equivalents and restricted cash** | $(8,051) | $(3,407) | | **Cash, cash equivalents and restricted cash, end of period** | $28,561 | $30,094 | Revenue by Stream (in thousands) | Revenue Stream | Three Months Ended July 31, 2020 | Three Months Ended July 31, 2019 | | :--- | :--- | :--- | | Manufacturing revenues | $24,063 | $12,908 | | Process development revenues | $1,329 | $2,346 | | **Total revenues** | **$25,392** | **$15,254** | - The company received a **$4.4 million PPP loan** in April 2020, fully repaid in May 2020 following new SBA guidance[48](index=48&type=chunk)[49](index=49&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 FY2021 financial performance, emphasizing a 66% revenue increase, return to profitability, and operational achievements - Key strategic objectives include investing in manufacturing capacity, broadening market awareness, expanding the customer base, and increasing operating profit margins[77](index=77&type=chunk) - First quarter highlights include a **66% revenue increase to $25.4 million**, **net income of $3.3 million**, new CEO appointment, three new customers, and validated equipment remediation[79](index=79&type=chunk) Results of Operations Comparison (in thousands) | Metric | Three Months Ended July 31, 2020 | Three Months Ended July 31, 2019 | Change ($) | | :--- | :--- | :--- | :--- | | **Revenues** | $25,392 | $15,254 | $10,138 | | **Gross Profit** | $8,544 | $1,086 | $7,458 | | **Operating Income (Loss)** | $4,719 | $(3,373) | $8,092 | | **Net Income (Loss)** | $4,730 | $(3,164) | $7,894 | - Revenue increased by **$10.1 million (66%)**, primarily from an **$11.1 million rise in manufacturing revenues**, including **$3.1 million** for unused capacity and **$4.3 million** from postponed runs[89](index=89&type=chunk)[91](index=91&type=chunk) - Gross margin significantly improved to **34% from 7%**, driven by higher revenues and **$3.1 million** in unused capacity fees[92](index=92&type=chunk) - SG&A expenses decreased by **$0.6 million (14%) to $3.8 million**, mainly due to a **$0.8 million** reduction in separation-related expenses[93](index=93&type=chunk) - Backlog was approximately **$60 million** as of July 31, 2020, down from **$65 million** as of April 30, 2020, with most expected to be recognized within 12 months[112](index=112&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in the company's market risks during the three months ended July 31, 2020, compared to prior disclosures - No material changes in market risks occurred during the quarter ended July 31, 2020[113](index=113&type=chunk) [Item 4. Controls And Procedures](index=25&type=section&id=Item%204.%20Controls%20And%20Procedures) Management concluded disclosure controls and procedures were effective as of July 31, 2020, with no significant changes in internal control over financial reporting - Disclosure controls and procedures were deemed effective as of July 31, 2020, by principal officers[116](index=116&type=chunk) - No significant changes in internal control over financial reporting occurred during the quarter ended July 31, 2020[117](index=117&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to materially impact its financial condition or operations - The company is not party to any legal proceedings expected to materially affect its financial condition or operations[120](index=120&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported in this period - No material changes to risk factors were reported compared to the prior Annual Report on Form 10-K[121](index=121&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the CEO's employment agreement, officer certifications, and XBRL data files - Exhibits include the CEO's employment agreement, officer certifications, and XBRL data files[122](index=122&type=chunk)

Avid Bioservices, Inc. (NASDAQ:CDMO) Q4 2020 Earnings Conference Call June 30, 2020 4:30 PM ET Company Participants Tim Brons - IR Richard Hancock - Interim President and CEO Daniel Hart - CFO Timothy Compton - Chief Commercial Officer Conference Call Participants Matt Hewitt - Craig-Hallum Capital Group Joe Pantginis - H.C. Wainwright Jacob Johnson - Stephens Operator Good day, ladies and gentlemen and welcome to the Avid Bioservices' Fourth Quarter and Year-End 2020 Financial Results Conference Call. At t ...

Part I [ITEM 1. BUSINESS](index=5&type=section&id=ITEM%201.%20BUSINESS) Avid Bioservices is a dedicated CDMO for biopharmaceutical drug substances, expanding capacity and market presence - Avid is a dedicated CDMO providing a comprehensive range of services from process development to CGMP clinical and commercial manufacturing for biopharmaceutical drug substances derived from mammalian cell culture[20](index=20&type=chunk) - In fiscal 2018, the company transitioned to a dedicated CDMO, changing its name to Avid Bioservices, Inc., selling its R&D technologies, and ceasing research and development activities[21](index=21&type=chunk) - The company's growth strategy includes investing in additional manufacturing capacity, expanding its customer base, and increasing operating profit margins[22](index=22&type=chunk) Customer Revenue Concentration | Fiscal Year | Revenue from Top 3 Customers | | :--- | :--- | | 2020 | 63% | | 2019 | 64% | | 2018 | 86% | Backlog Growth | Date | Backlog (approx.) | | :--- | :--- | | April 30, 2020 | $65 million | | April 30, 2019 | $46 million | [ITEM 1A. RISK FACTORS](index=10&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces risks from historical losses, customer concentration, operational complexities, and potential stock dilution - The company has a history of losses, incurring a net loss of **$10.5 million** in fiscal 2020 and having an accumulated deficit of **$571.1 million** as of April 30, 2020[64](index=64&type=chunk) - A significant portion of revenue comes from a limited number of customers, with the top three customers accounting for approximately **63%** of revenues in fiscal 2020[66](index=66&type=chunk) - The business is exposed to risks from global health epidemics, such as the COVID-19 pandemic, which could disrupt customer operations, supply chains, and clinical trials[61](index=61&type=chunk) - The company relies on third parties for most necessary raw materials, and an inability to obtain these supplies, particularly from single-source suppliers, could adversely impact operations[92](index=92&type=chunk)[93](index=93&type=chunk) - Ownership of common stock is subject to risks including dilution from the potential issuance of up to **6.8 million** shares upon conversion of Series E Preferred Stock and **6.9 million** shares under equity plans[117](index=117&type=chunk)[118](index=118&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=20&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments - Not applicable[131](index=131&type=chunk) [ITEM 2. PROPERTIES](index=20&type=section&id=ITEM%202.%20PROPERTIES) Avid leases 158,000 square feet of office and manufacturing space in Tustin, California - The company leases a total of approximately **158,000 square feet** of office, manufacturing, laboratory, and warehouse space in Tustin, California[132](index=132&type=chunk) - The leases are non-cancellable operating leases with termination dates in 2023 and 2027, all containing options to extend[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=20&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) No material legal proceedings are currently pending against the company - The company is not currently a party to any legal proceedings expected to have a material adverse effect on its financial condition or operations[136](index=136&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=20&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) The company has no mine safety disclosures - Not applicable[137](index=137&type=chunk) Part II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=21&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Common stock trades on NASDAQ with no dividends, while Series E Preferred Stock pays a 10.50% cumulative cash dividend - The company's common stock is listed on The NASDAQ Capital Market under the trading symbol **"CDMO"**[140](index=140&type=chunk) - No cash dividends have ever been declared or paid on common stock, and none are anticipated in the foreseeable future[142](index=142&type=chunk) - Holders of Series E Preferred Stock are entitled to cumulative cash dividends at **10.50%** per annum, with approximately **$4.3 million** paid each year in fiscal 2018-2020[143](index=143&type=chunk)[145](index=145&type=chunk) [ITEM 6. SELECTED FINANCIAL DATA](index=23&type=section&id=ITEM%206.%20SELECTED%20FINANCIAL%20DATA) This section summarizes five years of financial data, including fiscal 2020 revenues of $59.7 million and a net loss of $10.5 million Selected Financial Data (in thousands) | Metric | FY 2020 | FY 2019 | FY 2018 | | :--- | :--- | :--- | :--- | | Revenues | $59,702 | $53,603 | $53,621 | | (Loss) income from continuing operations | $(10,466) | $(5,056) | $(20,563) | | Net loss | $(10,466) | $(4,215) | $(21,813) | | Net loss attributable to common stockholders | $(15,152) | $(8,901) | $(26,499) | | Cash and cash equivalents | $36,262 | $32,351 | $42,265 | | Total assets | $107,620 | $78,395 | $95,760 | [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=24&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Fiscal 2020 revenues reached $59.7 million, up 11%, but gross profit declined to $3.9 million due to production issues Fiscal Year 2020 vs. 2019 Results (in millions) | Metric | FY 2020 | FY 2019 | Change | | :--- | :--- | :--- | :--- | | Revenues | $59.7 | $53.6 | +11% | | Gross Profit | $3.9 | $7.2 | -46% | | Gross Margin | 7% | 13% | -6 p.p. | | Operating Loss | $(10.9) | $(5.6) | +95% | - The increase in FY 2020 revenue was driven by an **$8.6 million** increase in manufacturing revenue, partially offset by a **$2.5 million** decrease in process development revenue[178](index=178&type=chunk) - The decrease in gross profit was primarily due to higher costs related to a production interruption, planned growth in payroll, and increased depreciation[179](index=179&type=chunk) - As of April 30, 2020, the company had **$36.3 million** in cash and cash equivalents and believes it has sufficient liquidity for at least the next 12 months[201](index=201&type=chunk)[202](index=202&type=chunk) - The company received a **$4.4 million** PPP loan in April 2020, which it subsequently repaid in full in May 2020[201](index=201&type=chunk)[213](index=213&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=34&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Primary market risk is credit exposure from cash at one bank, with no material interest rate impact expected - Cash and cash equivalents are primarily held in money market funds at one major commercial bank, creating credit risk as deposits exceed government insurance limits[223](index=223&type=chunk) - The company does not believe that changes in U.S. interest rates would materially affect its financial condition or results of operations[223](index=223&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=34&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the company's audited consolidated financial statements for fiscal 2020 and the independent auditor's unqualified report [Report of Independent Registered Public Accounting Firm](index=35&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued an unqualified opinion on the consolidated financial statements and internal control over financial reporting - The auditor, Ernst & Young LLP, expressed an unqualified opinion on the consolidated financial statements for the three years ended April 30, 2020[228](index=228&type=chunk) - The auditor also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of April 30, 2020[229](index=229&type=chunk) [Consolidated Financial Statements](index=36&type=section&id=Consolidated%20Financial%20Statements) Fiscal 2020 statements show total assets of $107.6 million, liabilities of $65.7 million, and a net loss of $10.5 million Consolidated Balance Sheet Highlights (in thousands) | As of April 30, | 2020 | 2019 | | :--- | :--- | :--- | | Total Current Assets | $59,763 | $51,318 | | Total Assets | $107,620 | $78,395 | | Total Current Liabilities | $44,480 | $23,162 | | Total Liabilities | $65,724 | $25,327 | | Total Stockholders' Equity | $41,896 | $53,068 | Consolidated Statement of Operations Highlights (in thousands) | For Year Ended April 30, | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Revenues | $59,702 | $53,603 | $53,621 | | Gross Profit (Loss) | $3,932 | $7,224 | $(2,924) | | Operating Loss | $(10,940) | $(5,622) | $(20,638) | | Net Loss | $(10,466) | $(4,215) | $(21,813) | [Notes to Consolidated Financial Statements](index=40&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, customer concentration, lease obligations, the $4.4 million PPP loan, and significant NOL carryforwards - The company adopted new lease accounting standard ASC 842 on May 1, 2019, recognizing right-of-use assets of **$23.3 million** and lease liabilities of **$25.5 million**[291](index=291&type=chunk) Customers Accounting for ≥10% of Revenue | Customer | FY 2020 | FY 2019 | FY 2018 | | :--- | :--- | :--- | :--- | | Halozyme Therapeutics, Inc. | 28% | 30% | 55% | | Gilead Sciences, Inc. | 24% | – | – | | Acumen Pharmaceuticals, Inc. | 11% | * | – | | IGM Biosciences, Inc. | 11% | * | – | | Coherus BioSciences, Inc. | 10% | 13% | 22% | | ADC Therapeutics America Inc. | * | 21% | * | - In April 2020, the company received a **$4.4 million** PPP loan, which it repaid in full in May 2020 after new SBA guidance created uncertainty about qualification[298](index=298&type=chunk)[299](index=299&type=chunk) - As of April 30, 2020, the company had federal and state net operating loss (NOL) carryforwards of approximately **$427 million** and **$277 million**, respectively[349](index=349&type=chunk) - The company sold its PS-targeting and r84 R&D assets in fiscal 2018 and 2019, respectively, and is eligible for future milestone payments and royalties[362](index=362&type=chunk)[364](index=364&type=chunk)[367](index=367&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES](index=64&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURES) The company reported no changes or disagreements with its accountants on financial matters - None[375](index=375&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=64&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management and auditors affirmed the effectiveness of the company's disclosure controls and internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of April 30, 2020[376](index=376&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of April 30, 2020, based on the COSO 2013 framework[380](index=380&type=chunk) - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of April 30, 2020[385](index=385&type=chunk) [ITEM 9B. OTHER INFORMATION](index=65&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) The company reported no information for this item - None[392](index=392&type=chunk) Part III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=67&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2020 Proxy Statement - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2020 Definitive Proxy Statement[395](index=395&type=chunk)[396](index=396&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=67&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Executive compensation information is incorporated by reference from the 2020 Definitive Proxy Statement - Information regarding executive compensation is incorporated by reference from the 2020 Definitive Proxy Statement[397](index=397&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=67&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) This section details equity compensation plans, showing 3.2 million securities for issuance and 4.9 million shares available for future grants Equity Compensation Plan Information as of April 30, 2020 | Plan Category | Securities to be Issued Upon Exercise (a) | Weighted-Average Exercise Price (b) | Shares Remaining Available for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by stockholders | 3,193,204 | $6.17 | 3,738,015 | | Employee Stock Purchase Plan approved by stockholders | – | – | 1,148,735 | | Total | 3,203,034 | $6.20 | 4,886,750 | [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=69&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Related party transactions and director independence information is incorporated by reference from the 2020 Proxy Statement - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2020 Definitive Proxy Statement[402](index=402&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES](index=69&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Principal accounting fees and services information is incorporated by reference from the 2020 Proxy Statement - Information regarding principal accounting fees and services is incorporated by reference from the 2020 Definitive Proxy Statement[403](index=403&type=chunk) Part IV [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](index=70&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all documents filed as part of the Form 10-K, including financial statements and an exhibit index - This item contains the index to the Consolidated Financial Statements and lists all exhibits filed with the Form 10-K[406](index=406&type=chunk)[407](index=407&type=chunk) [ITEM 16. FORM 10-K SUMMARY](index=70&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) The company provided no summary for this item - None[408](index=408&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q3 2020 was $13.6 million, slightly lower than the anticipated figure but consistent with $13.8 million in Q3 2019, primarily due to production interruptions [8][11] - Gross margin decreased to 6% in Q3 2020 from 15% in the prior year, attributed to production interruptions and increased depreciation expenses [9] - Consolidated net loss attributable to common stockholders was $3.5 million or $0.06 per share, compared to a loss of $2.6 million or $0.05 per share in Q3 2019 [11] - For the first nine months of fiscal 2020, revenues increased by 29% to $47.2 million from $36.5 million in the prior year [13] - Cash and cash equivalents as of January 31, 2020, were $30.7 million, down from $32.4 million at the end of the previous fiscal year [16] Business Line Data and Key Metrics Changes - The backlog at the end of Q3 2020 was $58 million, a 12% increase from $52 million at the end of Q2 2020 and a 26% increase from $46 million at the end of the last fiscal year [12] - Total SG&A expenses for Q3 2020 were $3 million, down from $3.2 million in Q3 2019, primarily due to decreased accrued bonuses [10][14] Market Data and Key Metrics Changes - The company faced production challenges due to a specific piece of equipment, impacting revenues and profits for Q3 and expected to affect Q4 as well [4][5] - Despite the challenges, the company reported progress in operational projects and business development activities [5][6] Company Strategy and Development Direction - The company is focused on enhancing its project pipeline and backlog while addressing production challenges [4][5] - A new Chief Commercial Officer has been appointed to strengthen business development efforts and improve customer engagement [6][18] - Plans for facility expansion and upgrades are in place to support anticipated growth in fiscal 2021 and beyond [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth potential despite the operational setbacks in Q3 [26][29] - The company anticipates recovering lost revenue in fiscal 2021 and is taking steps to resolve production issues [28][29] - The health of the biologic CDMO industry is described as robust and growing, with strong client relationships [58] Other Important Information - The company is actively searching for a permanent CEO and hopes to fill the position within the next few months [25][57] - The company has launched a new website to enhance visibility and generate qualified sales leads [21] Q&A Session All Questions and Answers Question: Can you provide more details on the production issue? - The production issue is related to a specific piece of equipment, and the company is working closely with clients to resolve it, ensuring that no work has been canceled and will be made up once repairs are completed [32] Question: How is the company addressing the impact of the coronavirus? - The company has seen cancellations of planned conferences but maintains contact with clients and has not experienced significant disruptions in supply chain or client orders [35][37] Question: What is the anticipated timeline for recovering lost revenue? - The company expects to hit production runs early in the year and be through them by the first half of the next year [52] Question: How did the new customer come on board? - The new customer was in the queue prior to the new Chief Commercial Officer's arrival, and various avenues such as trade shows and the company's website contributed to landing the customer [56]