Avid Bioservices has attributed its strong third quarter to the diversification of its customer base and the return of demand from its largest customer Halozyme.
When Avid Bioservice became a pure contract development and manufacturing organization (CDMO) in early 2018, it stated the expansion and diversification of its customer base as one of its near-term strategic objectives.
A year on and Avid has reported a robust third quarter fiscal year 2019 driven by an increase in the number of manufacturing runs in process and completed over the period due to the growth in demand from a more diversified client base. Revenues stood at $13.8 million (€12.2 million) for the quarter, up 102% on the previous year.
“Going forward, we expect client concentration to play less of a role in the business as we diversify our customer base and continue to hire top talent, refine our business practices, systems, and other conditions necessary to operate as a preferred biologics CDMO,” CEO Roger Lias told stakeholders.
Lias made the need to continue to diversify its customer base clear as sales for the first nine months FY19 dropped 22% year-on-year, due to “the temporary reduction in demand from our largest customer, which primarily impacted the first six months of the fiscal year.”
The firm’s largest customer is Halozyme Therapeutics. Avid first entered into a manufacturing contract with the firm in 2004 and produces recombinant human hyaluronidase enzyme for both Halozyme and its partners.
The reduction in demand from Halozyme in Q1 and Q2 was, as Lias said, temporary, as the customer has since upped its partnership with Avid.
“Halozyme has recently announced that Avid manufacture its products not only for their current collaboration products but also for collaboration product candidates currently in development,” Lias told stakeholders.
“We believe the strength and forecast was driven by both key Halozyme partners for who Avid is the exclusive supplier, depleting inventory as previously anticipated, and perhaps more importantly, new launches and market growth for that partner’s commercial products and their expanding list of newer partners and partnered projects in development.”
And looking into fiscal 2020, Lias said the surge in demand from Halozyme and its partners will continue as they advance their clinical programs. “We certainly maintain an extremely good relationship with Halozyme and we look forward to continuing to support their growing needs.”
According to annual reports, Halozyme was responsible for 91% of Avid’s revenue in FY2014, 79% in FY2015, and 69% in FY2016. The figure continues to drop as new customers come onboard, though the firm no longer breaks down this figure publicly.
“As such, even with Avid expecting the Halozyme business to continue to grow, the company anticipates that its percentage of the overall business with continue to decrease with the client base diversification,” spokesperson Tim Brons told Bioprocess Insider.