AVID BIOSERVICES, IN

CDMO
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AVID BIOSERVICES : Management's Discussion And Analysis Of Financial Condition And Results Of Operations (form 10-K)

06/30/2020 | 06:04pm


The following discussion and analysis should be read in conjunction with "Item
6-Selected Financial Data" and our audited Consolidated Financial Statements and
the related notes thereto set forth in "Item 8-Financial Statements and
Supplementary Data". In addition to historical information, this discussion and
analysis contains forward-looking statements, including statements regarding the
anticipated impact of the ongoing COVID-19 global pandemic on our business
operations that involve risks, uncertainties and assumptions. Our actual results
could differ materially from those anticipated in these forward-looking
statements as a result of various factors including, but not limited to, those
set forth under "Item 1A-Risk Factors" and elsewhere in this Annual Report.



For discussion related to changes in financial condition and our results of
operations for fiscal year 2019 compared to fiscal year 2018, refer to "Part II,
Item 7-Management's Discussion and Analysis of Financial Condition and Results
of Operations" included in our Annual Report on Form 10-K for the fiscal year
ended April 30, 2019, which was filed with the SEC on June 27, 2019.



Overview



We are a dedicated contract development and manufacturing organization ("CDMO")
that provides a comprehensive range of services from process development to
Current Good Manufacturing Practices ("CGMP") clinical and commercial
manufacturing, focused on biopharmaceutical drug substances derived from
mammalian cell culture. With 27 years of experience producing monoclonal
antibodies and recombinant proteins, our services include CGMP clinical and
commercial product manufacturing, bulk packaging, release and stability testing
and regulatory submissions support. We also provide a variety of process
development services, including upstream and downstream development and
optimization, analytical methods development, testing and characterization. All
our services are available as either stand-alone or bundled for full development
and manufacturing programs.



Strategic Objectives




The following are our near-term strategic objectives:



· Invest in additional manufacturing capacity and resources required for us to



achieve our long-term growth strategy and meet the growth-demand of our



customers' programs, moving from development through to commercial



manufacturing;



· Broaden our market awareness through a diversified yet flexible marketing



strategy;



· Continue to expand our customer base and programs with existing customers for



both process development and manufacturing service offerings; and



· Increase our operating profit margin to best in class industry standards.







Fiscal Year 2020 Highlights




Reported revenues of $59.7 million for fiscal 2020, an increase of 11%, or $6.1
million
, from fiscal 2019, representing an all-time high for us.






Increased our customer base and expanded the scope of work with multiple
existing customers to increase the number of manufacturing batches and/or scale
of production, including entering into a new contract manufacturing agreement
with one of the world's leading pharmaceutical companies to provide process
transfer and clinical manufacturing services to the support the development



of a
novel therapeutic candidate.







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Personnel




Added key members to our executive leadership team with the appointments of
Timothy Compton as our Chief Commercial Officer and Richard Richieri as our
Chief Operations Officer. Mr. Compton is focused on driving the continued growth
of our CDMO business, including the ongoing expansion of our commercial and
clinical customer base. Mr. Richieri oversees our process development, clinical
and commercial manufacturing, technical support and facilities functions, and
focuses on streamlining operations, building internal efficiencies and strategic
planning for future growth.




Appointed Catherine Mackey, Ph.D. to our board of directors as an independent
member.






Facilities



Initiated the pre-engineering, design and permitting work required that will
allow us to break ground on a facility expansion when we determine it is
appropriate. We expect that such expansion could take 12 to 18 months to
complete. While a specific kick-off date has not yet been established for this
expansion, we believe that customer demand will require additional capacity in
the next 12 to 24 months and we expect to be prepared to accommodate that
demand.




Advanced the construction stages of the installation of a pharmaceutical-grade
water system within our Myford Facility. We expect the installation and
validation of the pharmaceutical grade water system to take place in late
calendar year 2020.






Completed the expansion of our total available process development laboratory
space, upgraded the infrastructure and equipment within our existing process
development laboratories, and implemented new state-of-the-art technologies and
equipment designed to facilitate efficient, high-throughput development of
innovative upstream and downstream manufacturing processes.



Impact of COVID-19 Pandemic



In March 2020, the World Health Organization declared the global novel
coronavirus disease ("COVID-19") outbreak a pandemic. To date, the COVID-19
pandemic has not had a significant impact on our operations, as we have been
able to continue to operate our manufacturing facilities and provide essential
services to our customers. Additionally, in an effort to protect the health and
safety of our employees and in compliance with state regulations, we have
instituted a work-from-home policy for employees who can perform their job
functions offsite, implemented social distancing requirements and other measures
to allow manufacturing and other personnel essential to production to continue
work within our manufacturing facilities, and suspended all non-essential
employee travel.



The full extent to which COVID-19 will directly or indirectly impact our
business, financial condition, and results of operations will depend on future
developments that are highly uncertain and cannot be accurately predicted,
including new information that may emerge concerning COVID-19, the actions taken
to contain it or treat its impact and the economic impact on local, regional,
national and international markets. We will continue to assess the potential
impact of the COVID-19 pandemic on our business, financial condition, and
results of operations. For a further discussion of potential risks to our
business from the COVID-19 pandemic, see "Part I, Item 1A-Risk Factors" of



this
Annual Report.




Performance and Financial Measures



In assessing the performance of our business, we consider a variety of
performance and financial measures. The key indicators of the financial
condition and operating performance of our business are revenues, gross profit,
selling, general and administrative expenses and operating income.










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We intend for this discussion to provide the reader with information that will
assist in understanding our consolidated financial statements, the changes in
certain key items in those consolidated financial statements from period to
period and the primary factors that accounted for those changes.



Revenues



Revenues are derived from services provided under our customer contracts and are
disaggregated into manufacturing and process development revenue streams. The
manufacturing revenue stream generally represents revenue from the manufacturing
of customer products derived from mammalian cell culture covering clinical
through commercial manufacturing runs. The process development revenue stream
generally represents revenue from services associated with the custom
development of a manufacturing process and analytical methods for a customer's
product.



Gross Profit



Gross profit is equal to revenues less cost of revenues. Cost of revenues
reflects the direct cost of labor, overhead and material costs. Direct labor
costs include personnel costs within the manufacturing, process and analytical
development, quality assurance, quality control, validation, supply chain and
facilities functions. Overhead costs include the rent, common area maintenance,
utilities, property taxes, security, materials and supplies, software, small
equipment and deprecation costs of all manufacturing and laboratory locations.




Selling, General and Administrative Expenses






Selling, general and administrative ("SG&A") expenses are composed of
corporate-level expenses, including personnel and support costs of corporate
functions such as executive management, finance and accounting, business
development, legal, human resources, information technology, project management,
and other centralized services. SG&A expenses include corporate legal fees,
audit and accounting fees, investor relation expenses, non-employee director
fees, corporate facility related expenses, and other expenses relating to our
general management, administration, project management, and business development
activities. SG&A expenses are generally not directly proportional to revenues,
but we expect such expenses to increase over time to support the needs of our
growing company.



Results of Operations



The following table compares the operating results from our continuing
operations for the fiscal years ended April 30, 2020, 2019 and 2018 (in
thousands):



Fiscal Year Ended April 30,
2020 2019 2018
Revenues $ 59,702 $ 53,603 $ 53,621
Cost of revenues 55,770 46,379 56,545
Gross profit (loss) 3,932 7,224 (2,924 )

Operating expenses:



Selling, general and administrative 14,517 12,846



16,456
Loss on lease termination 355 - -
Restructuring charges - - 1,258
Total operating expenses 14,872 12,846 17,714
Operating loss (10,940 ) (5,622 ) (20,638 )



Interest and other income, net 474 282



75



Loss from continuing operations before
income taxes (10,466 ) (5,340 ) (20,563 )
Income tax benefit - 284



-



Loss from continuing operations, net of tax $ (10,466 ) $ (5,056 )



$ (20,563 )








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Fiscal Year 2020 Compared to Fiscal Year 2019






Revenues



Revenues were $59.7 million in fiscal 2020, compared to $53.6 million in fiscal
2019, an increase of approximately $6.1 million, or 11%. The increase in
revenues can be attributed to a $8.6 million increase in manufacturing revenue
primarily due to an increase in the number of manufacturing runs in-process
and/or completed in fiscal 2020 compared to fiscal 2019, partially offset by a
decrease in process development revenue. The increase in revenues was attributed
to the following components of our revenue streams:



$ millions


Net increase in manufacturing revenues $ 8.6
Net decrease in process development revenues (2.5 )
Total increase in revenues


$ 6.1




Additionally, growth in manufacturing revenue during fiscal 2020 was impacted by
a production interruption related to a problem with a specific piece of
equipment, which resulted in the termination of certain in-process manufacturing
runs and the postponement of other manufacturing runs scheduled to commence
during fiscal 2020. During the fourth quarter of fiscal 2020, we implemented
what we believe was the necessary remediation for the specific piece of
equipment that resulted in the production interruption. We are currently
progressing through the confirmation stage of this remediation during which we
are running multiple revenue-generating production campaigns to confirm the
successful remediation of the equipment issue. We expect the confirmation stage
of this remediation to be completed in the coming months.



Gross Profit



Gross profit was $3.9 million in fiscal 2020, compared to $7.2 million in fiscal
2019, a decrease of approximately $3.3 million, and gross margins for fiscal
2020 and fiscal 2019 were 7% and 13%, respectively. The $3.3 million decrease in
gross profit for fiscal 2020 was primarily attributed to higher facility and
equipment related costs primarily related to the production interruption noted
above, planned growth costs associated with payroll and related costs, and
increased depreciation expense from the acquisition of new equipment, which were
partially offset by an increase in revenues.




Selling, General and Administrative Expenses



SG&A expenses were $14.5 million in fiscal 2020, compared to $12.8 million in
fiscal 2019, an increase of approximately $1.7 million, or 13%. As a percentage
of revenue, SG&A expenses for the fiscal years 2020 and 2019 were both 24%. The
net increase in SG&A expenses was attributed to the following components:



$ millions


Increase in separation related expenses $ 0.8
Increase in payroll and benefit costs


0.6
Increase in stock-based compensation expense 0.5
Decrease in accrued bonus expense (0.5 )
Net increase in all other SG&A expenses 0.3
Total increase in SG&A expenses $ 1.7








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Loss on Lease Termination




In the second quarter of fiscal 2020, we terminated an operating lease for one
of our non-manufacturing facilities that was primarily utilized for warehouse
space. The lease termination was primarily driven by our efforts to reduce costs
by leveraging available warehouse space in our other facilities, which we expect
will save us approximately $1.3 million in the aggregate over a period of four
years. In connection with the termination of this lease, we removed the
corresponding operating lease right-of-use asset and liability balances from our
consolidated balance sheet and recognized a loss of $0.4 million. Additionally,
the lease termination released $0.3 million of restricted cash that was pledged
as collateral under a letter of credit required by the terminated lease.


Operating Loss




Operating loss was $10.9 million for fiscal 2020, compared to an operating loss
of $5.6 million for fiscal 2019. Of this $5.3 million increase in operating loss
for fiscal 2020, approximately $3.3 million was attributable to a decrease in
gross profit, combined with an increase in SG&A expenses of approximately $1.7
million
and a $0.4 million loss recognized in connection with the termination of
the operating lease discussed above.



Income Tax Benefit



In fiscal 2019, we recognized a $1.0 million gain in discontinued operations,
before taxes, for the sale of our r84 technology (as described in Note 11 of the
Notes to Consolidated Financial Statements). In accordance with the "Intraperiod
Tax Allocation" rules under ASC 740, Income Taxes, which requires the allocation
of an entity's total annual income tax provision among continuing operations
and, in our case, discontinued operations for fiscal 2019, we recorded a tax
benefit in continuing operations, with an offsetting tax expense of $0.3 million
recorded in discontinued operations.



Discontinued Operations




As a result of the sale of our PS-targeting and r84 technologies in fiscal 2018
and fiscal 2019, respectively (as described in Note 11 of the Notes to
Consolidated Financial Statements), the abandonment of our remaining research
and development assets, and the strategic shift in our corporate direction to
focus solely on our CDMO business, the operating results of our former research
and development segment have been excluded from continuing operations and
reported as income (loss) from discontinued operations, net of tax, in the
accompanying consolidated financial statements for all periods presented. The
gains of $1.0 million and $8.0 million that were recorded in connection with the
aforementioned sales of our PS-targeting and r84 technologies, respectively, are
included in income (loss) from discontinued operations, net of tax, in the
accompanying Consolidated Statements of Operations and Comprehensive Loss for
the fiscal years ended April 30, 2019 and 2018, respectively. There were no
operating results from discontinued operations during the fiscal year ended
April 30, 2020.




Critical Accounting Policies and Estimates






Our discussion and analysis of our consolidated financial condition and results
of operations are based on our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States
("U.S. GAAP"). The preparation of our consolidated financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, expenses and related
disclosures. We review our estimates and assumptions on an ongoing basis. We
base our estimates on historical experience and on assumptions that we believe
to be reasonable under the circumstances, the results of which form the basis
for our judgments about the carrying value of assets and liabilities that are
not readily apparent from other sources. Actual results may vary from what we
anticipate and different assumptions or estimates about the future could change
our reported results. While our significant accounting policies are more fully
described in Note 2 of the Notes to Consolidated Financial Statements, we
believe the following accounting policies to be critical to the assumptions and
estimates used in the preparation of our consolidated financial statements.










25






Revenue Recognition




On May 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from
Contracts with Customers (Topic 606), and its subsequent updates (codified as
ASC 606), using the modified retrospective method. Accordingly, results for
reporting periods after May 1, 2018 are presented in accordance with ASC 606,
while prior period amounts have not been adjusted and continue to be reported
under the accounting standards that were in effect prior to our adoption of



ASC
606.



Under ASC 606, we recognize revenue when we transfer promised goods or services
to customers in an amount that reflects the consideration to which we expect to
be entitled in exchange for those goods or services. To determine revenue
recognition for contracts with customers we perform the following five steps:
(i) identify the contract(s) with a customer; (ii) identify the performance
obligations in the contract; (iii) determine the transaction price; (iv)
allocate the transaction price to the performance obligations in the contract;
and (v) recognize revenue when (or as) we satisfy a performance obligation.



Revenue recognized from services provided under our customer contracts are
disaggregated into manufacturing and process development revenue streams.






Manufacturing revenue



Manufacturing revenue generally represents revenue from the manufacturing of
customer products recognized over time, utilizing an input method that compares
the cost of cumulative work-in-process to date to the most current estimates for
the entire cost of the performance obligation. Under a manufacturing contract, a
quantity of manufacturing runs is ordered and the product is manufactured
according to the customer's specifications and typically only one performance
obligation is included. Each manufacturing run represents a distinct service
that is sold separately and has stand-alone value to the customer. The products
are manufactured exclusively for a specific customer and have no alternative
use. The customer retains control of its product during the entire manufacturing
process and can make changes to the process or specifications at its request.
Under these agreements, we are entitled to consideration for progress to date
that includes an element of profit margin.



Process development revenue



Process development revenue generally represents revenue from services
associated with the custom development of a manufacturing process and analytical
methods for a customer's product. Process development revenue is recognized over
time, utilizing an input method that compares the cost of cumulative
work-in-process to date to the most current estimates for the entire cost of the
performance obligation. Under a process development contract, the customer owns
the product details and process, which has no alternative use. These process
development projects are customized to each customer to meet its specifications
and typically only one performance obligation is included. Each process
represents a distinct service that is sold separately and has stand-alone value
to the customer. The customer also retains control of its product as the product
is being created or enhanced by our services and can make changes to its process
or specifications upon request.



The timing of revenue recognition, billings and cash collections results in
billed trade receivables, contract assets (unbilled receivables), and contract
liabilities (customer deposits and deferred revenue). Contract assets are
recorded when our right to consideration is conditioned on something other than
the passage of time. Contract assets are reclassified to accounts receivables on
the consolidated balance sheet when our rights become unconditional. Contract
liabilities represent customer deposits and deferred revenue billed and/or
received in advance of our fulfillment of performance obligations. Contract
liabilities convert to revenue as we perform our obligations under the contract.



The transaction price for services provided under our customer contracts reflect
our best estimates of the amount of consideration to which we are entitled in
exchange for providing goods and services to our customers. In determining the
transaction price, we considered the different sources of variable consideration
including, but not limited to, discounts, credits, refunds, price concessions or
other similar items. We have included in the transaction price some or all of an
amount of variable consideration, utilizing the most likely method, only to the
extent that it is probable that a significant reversal in the amount of
cumulative revenue recognized will not occur when the uncertainty associated
with the variable consideration is subsequently resolved. The actual amount of
consideration ultimately received may differ.



Management may be required to exercise judgement in estimating revenue to be
recognized. Judgement is required in identifying performance obligations,
estimating the transaction price, estimating the stand-alone selling prices of
identified performance obligations, and estimating the progress towards the
satisfaction of performance obligations. If actual results in the future vary
from our estimates, the estimates will be adjusted, which will affect revenues
in the period that such variances become known.



We apply the practical expedient available under ASC 606 that permits us not to
disclose the value of unsatisfied performance obligations for contracts with an
original expected length of one year or less. As of April 30, 2020, we do not
have any unsatisfied performance obligations for contracts greater than one



year.







26






Prior to our adoption of ASC 606 on May 1, 2018, revenue was generally
recognized when all of the following criteria were met: (i) persuasive evidence
of an arrangement exists, (ii) delivery has occurred or services have been
rendered, (iii) the seller's price to the buyer is fixed or determinable, and
(iv) collectability is reasonably assured.



Stock-based Compensation




We account for stock options, restricted stock units and other stock-based
awards granted under our equity compensation plans in accordance with the
authoritative guidance for stock-based compensation. The estimated fair value of
stock options granted to employees in exchange for services is measured at the
grant date, using a fair value based method, such as a Black-Scholes option
valuation model, and is recognized as expense on a straight-line basis over the
requisite service periods, which is generally the vesting period. The fair value
of restricted stock units is measured at the grant date based on the closing
market price of our common stock on the date of grant, and is recognized as
expense on a straight-line basis over the period of vesting. Forfeitures are
recognized as a reduction of stock-based compensation expense as they occur. As
of April 30, 2020, there were no outstanding stock-based awards with market



or
performance conditions.



The use of a valuation model requires us to make certain estimates and
assumptions with respect to selected model inputs. The expected volatility is
based on the daily historical volatility of our common stock covering the
estimated expected term. The expected term of options granted reflects actual
historical exercise activity and assumptions regarding future exercise activity
of unexercised, outstanding options. The risk-free interest rate is based on
U.S. Treasury notes with terms within the contractual life of the option at the
time of grant. The expected dividend yield assumption is based on our
expectation of future dividend payouts. We have never declared or paid any cash
dividends on our common stock and currently do not anticipate paying such cash
dividends.




Liquidity and Capital Resources






Our principal sources of liquidity are our existing cash and cash equivalents.
As of April 30, 2020, we had cash and cash equivalents of $36.3 million.
Excluding the cash loan proceeds of $4.4 million received in April 2020 under a
promissory note pursuant to the Paycheck Protection Program (the "PPP")
established pursuant to the Coronavirus Aid, Relief, and Economic Security Act
of 2020 (the "CARES Act") administered by the U.S. Small Business Administration
("SBA"), which proceeds were subsequently repaid in full to the lender in May
2020
(as described in Note 3 of the Notes to Consolidated Financial Statements),
we would have had cash and equivalents of $31.9 million as of April 30, 2020.
Our ability to fund our operations is dependent on the amount of cash on hand
and our ability to generate positive cash flow to sustain our current
operations.



We currently anticipate that our cash and cash equivalents as of April 30, 2020,
excluding the aforementioned $4.4 million in loan proceeds that were returned to
the lender thereof in May 2020, combined with our projected cash receipts from
services to be rendered under our existing customer contracts, will be
sufficient to fund our operations for at least the next 12 months from the



date
of this Annual Report.




In the event we are unable to generate sufficient cash flow to support our
current operations, we may need to raise additional capital in the equity
markets in order to fund our future operations. We may raise funds through the
issuance of debt or through the public offering of securities. There can be no
assurance that these financings will be available on acceptable terms, or at
all. Our ability to raise additional capital in the equity and debt markets is
dependent on a number of factors including, but not limited to, the market
demand for our common stock. The market demand or liquidity of our common stock
is subject to a number of risks and uncertainties including, but not limited to,
our financial results and economic and market conditions. Further, global
financial crises and economic downturns, including those caused by widespread
public health crises such as the COVID-19 pandemic, may cause extreme volatility
and disruptions in capital and credit markets, and may impact our ability to
raise additional capital when needed on acceptable terms, if at all. If we are
unable to fund our continuing operations through these sources, we may need to
restructure, or cease, our operations. In addition, even if we are able to raise
additional capital, it may not be at a price or on terms that are favorable to
us. Any of these actions could materially harm our business, financial
condition, results of operations, and future prospects.







27






The following table presents our cash flows from operating, investing and
financing activities for the fiscal years ended April 30, 2020, 2019 and 2018
(in thousands):



Fiscal Year Ended April 30,
2020 2019 2018
Cash, cash equivalents and restricted cash
(1) $ 36,612 $ 33,501 $ 43,415
Net cash provided by (used in) operating
activities 5,827 (11,595 ) (25,992 )
Net cash (used in) provided by investing
activities (3,812 ) 4,544 (793 )
Net cash provided by (used in) financing
activities 1,096 (2,863 ) 22,251


___________




(1) As of April 30, 2020, 2019 and 2018, cash, cash equivalents and restricted



cash included $0.4 million, $1.2 million and $1.2 million, respectively, that



was restricted from general use, related to cash that was pledged as



collateral under letters of credit under the terms of certain facility lease



agreements.





Net Cash Provided by (Used in) Operating Activities



During fiscal 2020, net cash provided by operating activities increased by $17.4
million
to $5.8 million from $11.6 million of net cash used in operating
activities during fiscal 2019.






Net cash provided by operating activities during fiscal 2020 was a result of an
$10.5 million net loss, as increased to account for non-cash adjustments to net
loss of $5.6 million primarily related to depreciation and amortization and
stock-based compensation, and cash flows from the net change in operating assets
and liabilities of $10.7 million.



Net cash used in operating activities during fiscal 2019 was a result of a $4.2
million
net loss and a $1.0 million gain on the sale of certain research and
development assets, offset by other non-cash adjustments to net loss of $4.5
million
primarily related to depreciation and amortization and stock-based
compensation, a $4.6 million net change in the assets and liabilities of
discontinued operations, and a net change of certain other operating assets and
liabilities of $6.3 million.




Net Cash (Used in) Provided by Investing Activities



During fiscal 2020, net cash used in investing activities increased by
$8.4 million to $3.8 million from $4.5 million of net cash provided by investing
activities during fiscal 2019.



Net cash used in investing activities during fiscal 2020 consisted of $3.8
million
used to acquire property and equipment primarily related to our
manufacturing and development operations.






Net cash provided by investing activities during fiscal 2019 consisted primarily
of proceeds of $6.0 million related to the sale of certain research and
development assets associated with our discontinued research and development
segment, offset by cash used to acquire property and equipment of $1.5 million.




Net Cash Provided by (Used in) Financing Activities



During fiscal 2020, net cash provided by financing activities increased by $4.0
million
to $1.1 million from $2.9 million of net cash used in financing
activities during fiscal 2019.










28






Net cash provided by financing activities during fiscal 2020 consisted primarily
of $4.4 million of loan proceeds received in April 2020 from the PPP (which loan
was subsequently repaid in full in May 2020, as described in Note 3 of the Notes
to Consolidated Financial Statements), $0.9 million attributable from the
exercise of stock options, and $0.2 million attributable from the issuance of
common stock under our employee stock purchase plan, offset by $4.3 million of
cash used to pay preferred dividends to holders of our Series E Preferred Stock.



Net cash used in financing activities during fiscal 2019 consisted primarily of
cash used to pay preferred dividends to holders of our Series E Preferred Stock
of $4.3 million, partially offset by proceeds from the exercise of stock options
of $1.3 million and proceeds from the issuance of common stock under our
employee stock purchase plan of $0.3 million.



Capital Expenditures




Our capital expenditures were $3.8 million during fiscal 2020, which included
laboratory and manufacturing equipment, software and enhancements, and
enhancements to our laboratory and manufacturing facilities.






Contractual Obligations



The following table summarizes our contractual obligations as of April 30, 2020
(in thousands):



Payments Due by Period
Less than 1 More than 5
Total year 1-3 years 3-5 years years



Operating leases (1) $ 34,001 $ 2,972 $ 6,005 $ 6,257 $ 18,767
Finance lease (2) 103 103 - - -
Note payable (3) 4,379 4,379 - - -



Total contractual obligations $ 38,483 $ 7,454 $ 6,005



$ 6,257 $ 18,767


______________




(1) Primarily represents future minimum lease payments under our facility



operating lease agreements as further described in Note 4 of the Notes to
Consolidated Financial Statements.



(2) Represents our obligations under a capital lease agreement to finance certain



software.



(3) Represents our obligations under a promissory note entered into in April



2020, evidencing an unsecured loan of $4.4 million (the "PPP Loan") from the



PPP pursuant to the CARES Act. As further described in Note 3 of the Notes to



Consolidated Financial Statements, we elected to repay the PPP Loan in full



in May 2020.





Off-Balance Sheet Arrangements.






As of April 30, 2020, we did not have any off-balance sheet arrangements, as
defined in Item 303 of Regulation S-K, that have or are reasonably likely to
have a current or future effect on financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.







29







Recently Issued Accounting Pronouncements



For a discussion of recent accounting pronouncements applicable to us, please
see Note 2, Summary of Significant Accounting Policies, of the Notes to
Consolidated Financial Statements.

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