Halozyme is a key client for Avid. In Avid’s 2018 financial year, Halozyme accounted for 55% of total revenues at the contract development and manufacturing organisation (CDMO).
By 2019, the figure was down to 30%, in part because of the emergence of ADC Therapeutics as a big client, but Avid remains reliant on business from Halozyme to a significant degree.
That reliance meant recent changes at Halozyme caught the attention of the analysts who track Avid. Last month, Halozyme revealed it was laying off more than half its workforce, stopping work on its lead candidate and dropping its oncology pipeline.
Asked about the changes on a recent quarterly results conference call, Richard Hancock, interim CEO at Avid, downplayed the likelihood of Halozyme’s actions negatively impacting his business.
Hancock said, “We've obviously had significant discussions with Halozyme. As we understand it, we won't have any negative impact for the discontinuation of one of their products.”
The changes underway at Halozyme will result in an organisation focused squarely in Enhanze, a drug delivery technology that has landed the biotech deals with companies including Pfizer and Roche.
As Hancock sees it, the overlap between Halozyme’s new focus and the type of work Avid does with the company means the changes could benefit his business.
Hancock said, “Halozyme, as they have stated, will be very, very focused on their Enhanze platform and the materials that we produce here at Avid support that Enhanze platform. So, no negative impact can be anticipated there. And in fact, they'd probably be more focused on expanding efforts in that area.”
The comments followed Avid’s reporting of an 80%-increase in second quarter revenues. Avid attributed the performance to an increased number of manufacturing runs.
Despite the top-line growth, Avid took steps to control costs during the quarter, notably by striking an agreement to terminate the operating lease on a space it used primarily as a warehouse. The action reduced Avid’s future lease and related payments by $1.3m (€1.2m) over the next 40 years.
Avid terminated the lease in the belief the warehouse was “redundant” as it has 42,000 square feet of space in its facility in Myford, California.