CryoPort, Inc.

Welcome to the Cryoport First Quarter 2023 Earnings Conference Call. Our host for today's call is Todd Frommer, KCSA. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. I would now like to turn the call over to your host, Todd Frommer. You may begin.

Thank you, Operator. Before we begin today, I would like to remind everyone that this conference call contains certain forward-looking statements. All statements that address our operating performance, events, or developments that we expect or anticipate occurring in the future are forward-looking statements. These forward-looking statements are based on management's beliefs and assumptions and not on information currently available to our management team. Our management team believes that these forward-looking statements are reasonable as and when made. However, you should not place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results, events, and developments to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Item 1A, Risk Factors and Elsewhere in our annual report on Form 10-K, filed with the Securities and Exchange Commission, and those described from time to time in other reports which we file with the Securities and Exchange Commission. It is now my pleasure to turn the call over to Mr. Jerry Shelton, Chief Executive Officer of CryoPort. Jerry, the floor is yours.

Thank you, Todd. Good afternoon, ladies and gentlemen. We appreciate you joining our earnings call today. With us this afternoon is our Chief Financial Officer, Robert Stavanovich, who is joining us remotely as he just discovered he had contracted the COVID virus, and our Chief Scientific Officer, Dr. Mark Zawicki, and our Vice President of Corporate Development and Investor Relations, Thomas Heinzen. As a reminder, we have uploaded our first quarter 2023 in-review document to our website, It can be found under investor relations in the events and presentation section. This document provides a review of our financial and operating performance and a general business outlook. If you have not had a chance to read it, I would encourage you to go to the website and download it. I'll provide a brief update on the business and then we'll move on to your questions and our answers. Crowdport reported first quarter results today with revenue of $62.8 million. This represents top-line growth of 20% or 22% at constant currency, which was fueled by continued demand for our temperature-controlled supply chain solutions for the life sciences. We achieved double-digit growth in each of our markets, including biopharma, reproductive medicine, and animal health. We continued to produce consistent growth in biopharma, with revenue increasing 19%. The regenerative medicine market continued its momentum in 2023 and drove commercial revenue growth of 28% for the first quarter. Patient demand has been robust in cellular therapy and continues to outpace commercial cellular therapy supply, which is restricted by the industry's current manufacturing capacity constraints. Having said that, we continue to see biopharma companies and CDMOs working to increase capacities. For example, Kite Pharma has announced plans to expand its global cell therapy supply chain operations located in Frederick, Maryland, with a 70,000 square foot warehouse adjacent to its existing facility for the purpose of centralizing its raw materials storage and testing. As industry manufacturing capacities increase to meet demand, Cryoport is in an excellent position to benefit from the anticipated growth in the cell and gene therapy industry with our advanced temperature control supply chain solutions, as well as our continued investment in new technology and facilities to support this demand. Turning to animal health, revenue increased 30% year over year. This growth was driven by the rising animal population, increased demand for animal protein, and increased ownership of companion animals in developed and emerging markets. These favorable trends are driving greater demand for therapeutic innovation in this industry. We're seeing higher activity from top global animal health pharmaceutical companies, and Crowdport is well positioned to serve the supply chain needs of this industry. We believe animal health is a solid market and has significant growth potential for the future. We also see significant growth potential in the reproductive medicine area, which grew 12% for this quarter. This market is primarily driven by IVF technology advancements and a rising number of fertility clinics supporting increasing fertility across the globe due to demographic and environmental challenges to childbearing. Crawford is strengthening its presence here, and our growth during this quarter was primarily driven by our continued progress in contracting with key reproductive clinic networks, as highlighted in our recent announcements regarding our support for Inception Fertility and Boston IVF, Cryoport Systems Reproductive Medicine Solutions, which are sold under the brand name Cryostork. Our financial performance for the first quarter reflected the strength and dedication of our team around the world. The saying goes, you're only as good as your people. And at Crowdport, we believe that. The results also reflect the breadth of our diversified operations, the depth of our technologically advanced supply chain solutions, as well as the strength and potential of the end customers we serve. Looking to the months ahead, recognizing current manufacturing capacity constraints for cell and gene therapies and macroeconomic headwinds, we plan to continue our momentum through the remainder of 2023. We expect to benefit from attractive trends and medical advancements that are driving growth in the cell and gene therapy industry. As of the end of the first quarter, Crowdport supported 10 commercial therapies and a total of 652 clinical trials globally, with 82 of these in Phase III. We expect up to an additional 18 anticipated application filings, 10 new therapy approvals, and an additional 11 label or geographic expansion approvals in 2023. We are a clear leader in the development of advanced therapy and advanced temperature control supply chain solutions for the life sciences industry. And we intend to further enhance our competitive advantages by remaining at the forefront of innovation. Along those lines, we recently launched the crowd portal version two logistics management system. The CrowdPortal version 2 is an ISPE GAMP 5 validated solution and provides many new features and enhancements. In fact, to our knowledge, it is the first ISPE GAMP 5 validated logistics management system serving the life sciences industry. This month, we began rolling out our next generation CrowdPort Elite Shipper. line beginning with the Elite Ultra Coal. The Elite Cryosphere will follow with introduction near the year end. These cutting-edge advanced therapy shippers will provide additional de-risking, longer-term, longer-temperature hold times, more advanced communication features, and new security controls for our customers. We're pleased with the early feedback on the launch of the Elite Ultracol. Customer feedback has been quite positive. SkyTrack Condition Monitoring System, a revolutionary condition monitoring system, is scheduled for release by year-end. This sophisticated technology platform is a generational leap to an advanced condition monitoring system that supports temperature ranges from control room temperatures to cryogenic temperatures inclusively. Turning to cryo PDP, we continue to build out one of the world's most advanced global biopharma logistics networks. This includes increased build-out in the United States and further expansion in India, Ireland, Japan, the Philippines, Poland, and Spain. Additionally, CryoGene, our biostorage operations, will be expanding into the San Antonio and Philadelphia regions during the course of the year. In addition to these activities, we also continue to increase our growth prospects through other means, such as our partnerships with Cineos, which provides for integration with our new IntegraCell platform. This platform, that is, IntegraCell, is intended to supply autologous and allogeneic cell therapies, a standardized apheresis collection process, and end-to-end cryopreservation services for leukapheresis-derived therapies. We are very excited about IntegraCell and believe it has potential to be transformative for the cell and gene therapy industry. In summary, through our many actions, our teamwork, and our commitment to make sure that Cryoport can deliver the best solutions supporting temperature control supply chain solutions for the life sciences, which in turn support life-saving cell and gene therapies, Crowdport is stronger than ever before. I want to thank you and open the floor for questions. Operator, please open the lines.