Avid contemplates pulling the trigger on capacity expansion

With new customers on board and a significant backlog, Avid Bioservices says it is making incremental expansions in its network ahead of a major investment.

Contract development and manufacturing organization (CDMO) Avid Bioservices presented its Q1 FY2020 financials this week. Revenues stood at $15.3 million (€13.9 million) for the quarter, up 21% year-on-year, while revenue backlog increased 34% to $61 million.

“The highlights for the first quarter of 2020 were new customer contracts, significant backlog growth and another successful process validation,” interim CEO Rick Hancock told stakeholders. “We believe that each of these accomplishments will contribute significantly to the future growth and expansion of the business, and we are eager to build on this momentum.”

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Hancock was asked on a conference call about possible expansions within its manufacturing network to cope with the – and prepare for further – high growth.

“We do have tentative plans for building out the remainder of our Myford [California] facility, where we have quite a large area essentially equivalent to what’s currently in production right now,” he said. “We are in active discussion with our clients in terms of when we pull the trigger on that and exactly what capabilities we put in.”

His words reflect those spoken to Bioprocess Insider by Tracy Kinjerski, VP of Business Operations at BIO in Philadelphia earlier this year regarding a “tentative design that has been put forth a year or so ago” at a 42,000 square-foot shell next to the facility.

But before beginning this large project, Avid will first look to incremental expansions to improve efficiency, Hancock said.

“We’re looking at over the next 12 months making some of those incremental improvements, adding some additional downstream capability. Our focus right now today is really to process development area that we’re very excited about, bringing that on line, and once that is fully operational, then we’ll turn our attention back to our GMP manufacturing capabilities.”

New customer

During the quarter, the CDMO added two new contract manufacturing service agreements to support the development of novel drug candidates.

“The agreements include the addition of one of the world’s leading pharmaceutical companies to Avid’s growing list of customers, as well as the expansion of the relationship with one of the company’s existing biotechnology customers,” Kinjerski said on the call

She added that on top of revenue generated by expanded client relationships, “new project wins from existing customers are incredibly valuable for several reasons.

“Early phase projects represent opportunity for manufacturing work up to and including commercial production, onboarding follow-on molecules from existing customers, maybe later phased, leading to validation in commercial stage with more certainty and providing assurance of need for long-term manufacturing.”

The quarter also saw Avid complete a client’s process validation campaign for a scaled up manufacturing process in anticipation of future commercial manufacturing, representing the prospect of future commercial business.

“Once the process validation is completed, the associated specifications of that process are incorporated into global regulatory filings, if approved. The customers then required to manufacture in a specified facility using that specified process,” said Kinjerski.

“Therefore, for those products approved using processes validated at Avid, it’s anticipated that the commercial manufacturing will be conducted at Avid. For this reason, we see each process validation completed today as a great opportunity to build commercial business in the future.”