Avid Bioservices, a contract development manufacturing organization (CDMO) specializing in biologic drugs, is going private in an M&A deal that values the company at $1.1 billion.
The buyers are two private equity firms, GHO Capital Partners and Ampersand Capital Partners. According to terms of the definitive merger agreement announced after Wednesday’s market close, those firms will pay $12.50 in cash for each Avid share, which is a 13.8% premium to Avid’s closing stock price on Wednesday. That price also represents a 21.9% premium to Avid’s average stock price for the 20 days prior to the announcement of the deal.
Tustin, California-based Avid was the CDMO subsidiary of the former Peregrine Pharmaceuticals, a developer of antibody drugs for cancer. In 2018, Peregrine decided to end its drug R&D and focus the business on CDMO work under the Avid Bioservices name. Its customers include biotech and pharmaceutical companies in the early stages of development all the way through to commercialization.
For the fiscal year ended April 30, 2024, Avid reported $139.9 million in revenue, down 6.2% from the prior fiscal year. Avid’s net loss for fiscal 2024 was $26.9 million. The company attributed the revenue decline to fewer manufacturing runs, a reduction in process development services, and an increase in costs. That revenue comes from a limited number of customers. In its annual report, Avid said its top three customers accounted for about 55% of the revenue for the latest fiscal year. Avid said the purchase price represents about 6.3 times the company’s estimated revenue for fiscal 2025.
In a prepared statement, Avid President and CEO Nick Green said the CDMO’s board of directors considered a range of alternatives and determined acquisition by the private equity firms provides stockholders significant, immediate, and certain cash value for their shares. In a letter sent to employees after the acquisition announcement, Green wrote that “now is the right time to move forward as a private company with new owners that will support our next phase of growth.”
“With a transatlantic focus, GHO brings a collaborative approach to partnering with great companies like ours,” he wrote. “GHO’s mission is to support innovation to deliver better, faster and more accessible healthcare to make a difference to patients, healthcare systems and society. GHO has a deep understanding of the CDMO sector and an impressive track record in helping businesses in our sector drive value. Ampersand is a healthcare and pharma-focused private equity firm with more than 30 years of experience dedicated to the life sciences sector.”
GHO and Ampersand each already have CDMOs in their portfolios, and the two firms have previously struck CDMO deals with each other. In 2022, GHO and The Vistria Group acquired CDMO Alcami from Ampersand and Madison Dearborn Partners. Financial terms of that acquisition were not disclosed.
The Avid acquisition has already been approved by the company’s board of directors, but still needs approval from shareholders. Details about a shareholder meeting are forthcoming. The companies expect to complete the transaction in the first quarter of 2025. When that happens, Avid will continue to operate under the Avid name and brand.
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