Daniel Hart

Thank you, Nich. Before I begin, in addition to the brief financial overview, I’ll provide on the call today for additional details on our financial results are included in our press release issued prior to this call and in our Form 10-Q, which was filed today with the SEC.
I'll now provide an overview of our financial results from operations for the quarter ended July 31, 2024, revenues for the first quarter of fiscal 2025 were $40.2 million, representing a 6% increase as compared to revenues of $37.7 million recorded in the same prior year period. The increase was primarily attributed to an increase in process development revenues during the period.
Gross profit for the first quarter of fiscal 2025 was $5.7 million or 14% gross margin compared to $4.1 million or 11% gross margin in the first quarter of fiscal 2024. The increase in gross profit for the first quarter ended July 31, 2024 compared to the same prior year period was primarily driven by the increased revenues and lower material costs used for customer programs, partially offset by increases in compensation and benefit related expenses, facility manufacturing and other related expenses and depreciation expense.
SG&A expenses for the first quarter of fiscal 2025 were $8.2 million, an increase of 30% compared to $6.3 million recorded in the first quarter of fiscal 2024. The increase in SG&A for the first quarter ended July 31, 2024 compared to the same prior year period was primarily due to increases in compensation and benefit related expenses and audit, legal and other consulting fees.
During the first quarter of fiscal 2025, the company's net loss was $5.5 million, or $0.09 per basic and diluted share compared to a net loss of $2.1 million or $0.03 per basic and diluted share for the first quarter of fiscal 2024. For the first quarter of fiscal 2025, the company had an adjusted EBITDA of $3 million. Our cash and cash equivalents on July 31, 2024, we're $33.4 million compared to $38.1 million on April 30, 2024.
This concludes my financial overview. I'll now turn the call over to Matt for an update on commercial activities during the quarter.

Matthew Kwietniak

Thanks, Dan. Q1 2025 was a highly productive quarter for our team as we signed $66 million net in new project agreements and ended the quarter with a backlog of $219 million backlog sets another record high for the Company, and the net new wins are the highest since the third quarter of fiscal 2023.
We are also pleased with the composition of these signings as a significant majority are projects with new customers, including the addition of another large pharma customer. As we've discussed previously, the sales cycle with big pharma companies is generally long and involves.
I'm very proud of our team and the professionalism they showed in showcasing Avid's exceptional service skills and quality throughout this process. As we deliver for our new large pharma clients. We expect to capitalize on the reputation we built and increase our exposure to more large pharma over time.
Our new signings also have a good mix of early and late-stage programs, though we continue to be weighted more toward late-stage during the first quarter, we were successful in bringing in programs at both ends of the development spectrum. As we've discussed on prior earnings calls, a mix of early and late-stage programs provides the balance between near and longer term revenues as well as the opportunity to grow with new and existing customers.
With respect to our newest late-stage programs, we are very pleased to report that to our PPQ programs, one of which is a Phase 3 program advancing towards commercialization. And the other is a commercially approved product currently on the market. As we've discussed in the past, PPQ programs are particularly attractive as they are a pre-commercialization requirement and while we caution that the execution of a PPQ campaign is only the beginning of a one to two year journey toward a potential commercial approval and subsequent manufacture.
We cannot underestimate the importance that we believe such programs may have in our growth now and in the future, as we expect, they will drive an increase in revenues, capacity utilization and ultimately, our margins. In conclusion, I am extremely pleased with our performance during the first quarter of fiscal 2025, and we are looking forward to the balance of the year with great optimism.
This concludes my overview of commercial activities. I will now turn the call back over to Nich, for an update on operations and other achievements during the quarter.

Nicholas Green

Thanks, Matt. During the quarter, we achieved several important high marks for the company, including strong revenues, new business signings, both of which continue to drive a robust backlog and improving margins. The investments of the last few years in infrastructure facilities, capacity and the expansion of our capabilities continue to attract new business and a wider range of opportunities.
Our new infrastructure and organization are now better equipped to support the needs of large pharma with the same excellence and agility that we provide to smaller biotech companies. And we look forward to the continued diversification of our customer base and our project pipeline with key programs from early stage to commercialization.
We're excited that our story has continued to unfold just as we have laid out in the past and I'd like to thank all my colleagues at Avid Bioservices for their part in executing this strategy. Looking ahead, our primary focus is on filling our remaining capacity as we continue to sign new business and execute on our backlog. We expect revenues and capacity utilization to increase, generating stronger margins and positioning Avid to achieve strong growth going forward.
This concludes my prepared remarks for today, and we can now open the call for questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Sean Dodge, RBC Capital Markets.

Sean Dodge

It's a good afternoon and congratulations on the strong bookings quarter on those bookings. Sumit mentioned lots of different contributors there, new customers, early stage stuff, late stage and then the cost of progressing towards commercial. I guess if we think about the mix there and compare it to your current backlog, including these the $66 million of new wins would just accelerate or decelerate your backlog burn rate over the next, call it four or five quarters or is the makeup of this pretty similar to what's already in backlog. So really shouldn't affect backlog conversion if that makes sense.

Nicholas Green

Yes, Sean, and it does make sense, Sam, I don't think it's going to have a dramatic effect, but it is going to be probably slightly more accelerating and decelerating, just due to the fact that we've got, I think a better proportion of early phase clients in the core in the quarter than we have in prior quarters. As you know, the the prior quarters were in the high watermark.
So I am but I think this is it was nice to see as I think Matt articulated to see a sort of a nice balance to the to the signings of slight slightly accelerating But I wouldn't say it was worth the work being notable in that regard.

Sean Dodge

Okay, great. And then you mentioned two PPQ campaign you won in the quarter. I guess is there any more detail you can share on those? Or are these something you took away from another CDMO? Or are you going to be serving as a secondary supplier in those cases?
And then any detail or bookends you can share on once these things get fully ramped, what they could contribute kind of roughly in terms of annual revenue?

Nicholas Green

Yes, we don't really go forward too much in terms of forecasting the future revenues. But in terms of that and where they came from, interestingly, one of them actually is a commercial product that is being outsourced from internal manufacture. So it's already approved, which is quite exciting.
And so that one probably a little a little more advanced than most in that regard. As I say, it's already on the market and the other one by virtue of the fact that it is coming in, it's coming in from an another CDMO and Phase three, obviously, Phase 1 and Phase 2 have been manufactured somewhere else. And so that's kind of a, I guess, a win to some degree. I am not looking nor second suppliers as far as I'm aware.

Sean Dodge

Okay. Got it. Thanks and congratulations again.

Nicholas Green

Thanks very much. Appreciated.

Operator

Jacob Johnson, Stephens.

Unidentified Participant

Good afternoon. This is Matt on for Jacob. Just a few quick questions for me. Just on the large pharma strategy, I know you called out another addition there, but given there's been some noise around large pharma turning some earlier-stage pipelines in recent months.
I guess there's two questions here. Is there any update on how your large pharma strategy is progressing as compared to your internal expectations and to any changes in demand from these customers as of late?

Nicholas Green

And on your second question first, Matt, no changes from a from them as late. So I think getting to your point of whether their strategies or issues have changed there, their demand from us personally, then that wouldn't seem to be the case. I think Cam, in terms of the strategy as a whole, it's one of those strategies is this long and as Mark has alluded to, it's very involved.
There's a lot of audits visits, establishing your reputation, et cetera. And I think we're on track for where we are, where we'd like to be in general, I think there are it has some areas we'd like to have moved a little bit quicker in some accounts, but there are other accounts that have developed that we didn't necessarily expect to develop this quake. So on the whole roughly in line am I being in it rather inpatient individual, though?
I would say I always wanted to be faster if we could have. I can assure you though, however, that speed is not down to anything that where we're not trying to do ourselves.

Unidentified Participant

Appreciate the color there. And then just quickly on the cell and gene therapy side of things. I think you mentioned last quarter, this was a bit behind traditional biologics demand. And in terms of coming back, given your early phase comments, is this still the case or what are you seeing in those those end markets?

Nicholas Green

Yes, I think that that still is the case. I certainly don't see it is I haven't seen a catch up in any way shape or form at the moment. I do think the vast majority of the driver is in the mammalian conversations continue to be pretty pretty nicely developing in the cell and gene therapy area.
But I wouldn't say that the activity, the funding or what our view is power is flowing back into that cycle. And so mammalian ahead for sure, I don't think it's that cell and gene caught up anything on from where we were last quarter. We do have some interesting conversations and hopefully in the next quarter or two, we can start to convert conversations into orders, but that's kind of where we are at the moment.

Unidentified Participant

Thank you. I appreciate you taking the questions.

Nicholas Green

Appreciate.

Operator

Matt Hewitt, Craig-Hallum Capital Group.

Matthew Hewitt

Good afternoon and congratulations on the strong quarter and maybe first up and I apologize, I am I think the vote was happening right as we were coming on, but the Bio Secure Act made it to the house floor.
I did not hear, but I'm just curious what your thoughts are on that. And I know that your customers don't always call it and say, hey, because of this potential law, we're going to sign up. But I'm just curious if you're seeing any change or any increase in conversations that could possibly be tied to that act.

Nicholas Green

Yes. I mean a very high level. I think we obviously compete in that marketplace and we compete against Asian competitors and Chinese competitors, in particular on a regular day-to-day basis. I would say that of the of the pipeline that we get from the numbers that we've managed to scratch to do and be able to tried to get some definition about half of the ones that we see from China are probably biased secured associated to date.
And there's an element of that. Some of them were the others that we've already won or have been in progress with were prior to any via secure conversation that they initiated. So I think it's fairly safe to say the other half would have nothing to do with that and how that builds up is going to be interesting.
I think there are two fundamental fundamental elements is that while over the there's no definition about it, there's obviously concern and fear so that can drive decision making. And although I do think there's also in the absence of the law, there's also people who feel that, can we get in and out or can we can can we progress as we might do in the past until it's more defined.
So it's going to be interesting to see how that actually pans out. I mean, it's difficult to say that it's a it's a bad thing for a US-based CDMO with capacity like we are. So and so it will be certainly interesting to see how that pans out over there, linear term.

Matthew Hewitt

Got it. And then second question regarding seasonality. Obviously, this is the quarter we're currently in is normally the quarter you're shut down and kind of going through some cleaning and all that.
But given the newness of the facilities and the equipment, is it safe to expect that that shutdown period will be lighter this year than then you witnessed the last few years and if that's the case, you just maybe that normal seasonality isn't as big of a deal this year. Is that am I thinking about that?

Nicholas Green

Right. I mean, in general terms, I think you are what I would say for this year is I wouldn't be I wouldn't be looking at it that way right off the bat. We've got to we've just got the new facilities online. So we do still need to maintain those facilities. We still do need to do certain activities and to make sure everything's up to date and any calibrations and things like that are all done.
So we are trying a few things that we think we'll be able to in the longer term, reduce the scope of that shutdown. But I on the basis that it's our first year with the new facilities, I would I wouldn't be building in too much to that effect. If you know what, I mean.

Matthew Hewitt

Got it. Understood. Thank you.

Operator

Paul Knight, KeyBanc Capital Markets.

Paul Knight

Hi, Nich. Were you did you spell out how much of the new orders are? Maybe Matt were in the cell and gene therapy area.

Nicholas Green

A small proportion that fall and we don't break that one out but it's certainly not material in the overall scheme of things. So we don't we don't segment those two just yet, but nothing owns.

Paul Knight

A company in the not kind of kind of in the media market has said they expect to four quarter lag on the on cell therapy funding. Do you think that's kind of in the ballpark?

Nicholas Green

And I'm sure I'll go quite as far as four quarters, it depends on it's a difficult way to look at. We've seen some pickup and I think developed it from looking bucket [mammalian] side I think November was the low from the end of October, beginning of November was below. And so we're not gone for four quarters.
I think I've seen some pickup in certainly our activity in terms of the cell and gene therapy. But I wouldn't say it's accelerating at the level that we saw from November in the mammalian side and even in the mammalian side, we are getting some sort of conflicting data. I think Charles River has indicated that they were seeing a reduction in early phase. So I think it's coming through.
I think it would be a probably a little more optimistic from what we've seen, but we're certainly no bellwether for the overall industry. So I'm not going to argue it somebody else sees years four quarters, and we might see it at two or three, but and that's where we are at the moment, Thank you,

Paul Knight

And Nich, you would previously indicated that sometimes the backlog now would be extended beyond a year. I'm assuming that that's still the case, but is it stretched even more in terms of duration of the project? Or is it kind of similar to what you've been seeing?

Nicholas Green

No, I think that was kind of the [crux] of Sean's question at the beginning. Was that I think the mix of the signings that we've got this this quarter are a little richer in the early phase than than traditionally still, but still the majority of them are late phase, but the there's a higher proportion than we are on a higher number of early phase than we had seen in the last two or three quarters of last year.
So if anything, it's slightly accelerating it and maybe reducing it from 15 to a little bit less, but it's not material. So but yes, I would say it's a definite not extending as it were.

Paul Knight

And then lastly, I know there's Bioservices here in the United States, but is there anything new on the regulatory front in Europe that puts you in a bit better of a position?

Nicholas Green

No. I mean, I've heard some rumblings that people might some might believing that they may be. It may take similar actions in Europe. I haven't seen anything definitive that suggests that that's going to be the case. And so really all we have today as far as I can see in the immediate horizon is the is the biosecurity here in the US.

Paul Knight

Okay. Thanks.

Operator

Max Smock, William Blair.

Max Smock

Hey, guys. Good afternoon and thanks for taking our questions. So I'd just echo John's commentary and say congrats on the nice bookings quarter here in the first quarter. I wanted to ask a follow-up on Matt's question on biosecurity. It sounds like you have some customers are still waiting to see how it plays out before moving away from China.
But is it fair to say that most of the companies you're talking with are already committed to changing their behavior and moving away from China kind of regardless of what happens with the bill here near term? And in your conversations, are you picking up on any material differences in terms of how small biotech and large pharma are currently reacting or planning to react to the biosecure?

Nicholas Green

And good questions, Max. I think, when people are talking to as we obviously get a, I guess, a more biosecure view of the of the impacted biosecure because if you are in China and you come into, so obviously, you're talking to me about it and that suggests that you've already got caused the problems or the person who is looking to move won't even call me, so I won't even hear their voice.
So that was always a little bit difficult to judge on a on the total pipeline of customers are they how is what we're seeing? Obviously, you're thinking of moving or are moving. And so I'm not sure how much I would actually rely on that as a data point but I think we've certainly seen an increasing number of conversations around that area.
And Big Pharma to emerging pharma, I think goes it is not necessarily the easiest one idea again, I don't deal with all big pharma, but I am I would say that we've seen interest in Avid is that interest in Avid more because they're looking at getting rid of somebody else or looking at other alternatives that may be backups, it could well be.
And I think also it depends what phase that you're in in the in the biotech Phase I think you're hearing early phase then maybe it is the view that you could get in and out before that occurs, in which case then you could still sourced from from that region or those people in the case of the later phase, then that obviously becomes a little bit more concerning you may have a regulatory filing and that could get caught up in the outcome of whatever the outcome ends up being.
So I think I would see the larger concern from what we can see it would be probably the later phase clinical candidates that are probably getting more attention than anybody else. But I do hasten to point out that we are not the bellwether of the whole industry. So it's a microcosm that we see.

Max Smock

Yes, fair enough. And thanks for that comment and a lot of good stuff in there. And maybe following up on an unrelated one, I wanted to ask about Halozyme, which obviously a key customer was over half your revenue in fiscal '23, but that was down to about a third and fiscal 2024.
Can you just give us an update around what exactly happened in fiscal 2023, how Halozyme revenues trended so far are trended so far in the first quarter and kind of what you're baking in for Halozyme revenue here in fiscal 2025 and just your overall level of visibility into revenue this year from this key customer?

Nicholas Green

Yes. Again, I obviously do know what went on between ourselves and Halozyme. I don't think any of it's negative in any way, shape or form. But I have I tried to avoid commenting on somebody else's business, particularly in a public environment or the public company.
But rather and so I think that I'll leave that one as it is. But what I can say is I think the relationship remains strong. I think that what's been going on over the last few years is nothing but positive. As far as I can see, we continue to be the best supplier. We possibly can be.
And the service that as well as our other clients are the highest possible standard that we can. And what I've said it publicly in the past, I've looked to see the Halozyme revenues continue to grow, and I'd love to see them become a smaller proportion of our business as we continue to grow ourselves and diverse, diversify our customer base and there and we remain pretty much the same.
So I think the what I would take out of the last year is that we were still growing compared to where we were over the last few years and it is becoming a smaller number over the long term than that. I think the direction that we've been articulating and again, I just hope that we can continue to grow along with Halozyme.

Max Smock

Yes, understood. And again, not necessarily a bad thing. I think it speaks to the strength of your rest of your customer base there. And can you just sneak in a final one in here for me? I wanted to ask about on the margins and just whether or not there's any color you can give us just in terms of expectations for adjusted EBITDA or adjusted EBITDA margin here in fiscal 2025?
And from a modeling perspective, is it reasonable to think about this quarter is going to be in a good jumping point for the rest of the year and assuming something like that 40% to 60% drop-through rate on incremental revenue that you pointed to in the past?

Nicholas Green

Yeah, Max. Good question. It was nice to see that we've built off the momentum of we're coming off of Q2 of last year. Looking into Q3 and Q4 increase as we can see where we ended up for for Q4 as far as fall through of overall gross margin sorry, kind of EBITDA margin as we continue to grow in approach the guide for this year.
I'd like to see on EBITDA continue to grow, but as we always say, the quarters can be lumpy. So we will have some pluses and minuses as we grow. But I'd like to see something similar and continue to grow as we go forward.

Max Smock

Thanks again for taking my questions.

Nicholas Green

Thanks Max.

Operator

Thank you. And that does conclude today's Q&A session. I would like to turn the call back over to Nich, for closing remarks. Please go ahead.

Nicholas Green

Thank you, operator, and thank you to everyone participating on today's call. We are highly encouraged by the progress during the first quarter, and we look ahead to the remainder of fiscal 2025 with some optimism.
We thank our customers for their trust and partnership our investors for their continued support, and we wish to recognize the exceptional employees who continue to drive the success. Thank you again for participating.
Today and for your continued support of Avid Bioservices .

Operator

This does conclude today's conference call. You may all disconnect.