CryoPort, Inc.

Good afternoon and welcome to CryoPort fourth quarter and full year 2023 earnings conference call. All participants will start in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. As a reminder, this call is being recorded. I will now turn the call over to your host, Todd Frommer from KCSA Strategic Communications. Please go ahead.

Thank you, Operator. Before I get started with this, I just want to correct the record. This is the crowd for first quarter during this conference call. Before we get started, 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 results 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. Gerald Shelton, Chief Executive Officer of CryoCorp. Jerry, the floor is yours.

Thank you, Todd. Good afternoon, ladies and gentlemen. Thank you for joining our first quarter earnings call today. With us this afternoon is our Chief Financial Officer, Robert Stefanovich, 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 2024 in review document to our website. It can be found under investor relations in the news and events section. This document provides a review of our financial and operational performance and a general business outlook. If you've not had a chance to read it, I would encourage you to go to our website and download it. I will provide you with a brief update on our business and then we will take your questions. For the first quarter of 2024, we continue to experience a difficult environment globally. Our quarterly results were disappointing across the board, particularly our life science products. However, as we stated when we initially provided our annual guidance, we anticipate our total revenue will progressively improve throughout the year, and we maintain our full year revenue guidance of $242 to $252 million. I am sure some of you are asking what makes us confident. Well, there are several things. For example, despite the near-term challenges, we're still quite positive based on the momentum we're seeing from our cell and gene therapy clients and from the growth of our biostorage bioservices revenue. If you look at our results, you'll see that our first quarter, commercial therapies rose 9%, while biostorage bioservices revenue also rose by the same amount. Both these services areas should continue to be growth drivers for crowd port in 2024 and beyond. We're also encouraged by new clients slated in the biopharma market and some positive signs recently in the cryogenic systems market. As I indicated, our life science services revenue growth for the first quarter was softer than anticipated, increasing 3% year over year. There is, however, a bright spot as the cell and gene therapy market seems to be gaining some momentum again. To date, this year, three new therapies have been approved. Three existing commercial therapies were approved to move to an earlier line of treatment, and two therapies were approved to expand their label or geographic territory. By combining the expected revenue ramps of existing and new commercial therapies, we believe we should see revenue acceleration from our cell and gene therapy clients over the remainder of the year. Currently, we think an additional 16 global regulatory filings will be completed before year-end. As of March 31st of this year, Proudport supported a total of 675 global clinical trials, a net increase of 23 clinical trials over the same time last year. As of the quarter end, 77 of these trials were in phase three, along with 312 of them in phase two. As we have said before, our clinical trial portfolio represents a substantial long-term revenue growth opportunity for Crowdport as more therapies advance through the clinical trials toward commercialization. Our outlook for the rest of the year with commercial therapies looks strong, with potentially five additional new therapy approvals and three additional label or geographic extensions. Turning to our life science products. Similar to last quarter, this business revenue was lower than in prior years. This was due to decreased demand for MVE Biological Solutions cryogenic systems. This in turn was attributable to a continued slowdown in capital equipment investment that began last year. Although global in nature, as we have reported previously, the most severe pullback in demand continues to be in China. While we expect MBE's cryogenic systems sales to be challenged throughout the remainder of this year as biotech funding, government budgets, and academic budgets are constrained, we expect to see gradual improvement in demand in the ensuing quarters. MVE is a well-managed business, and we want to remind investors that even in this difficult time, it continues to produce free cash flow for our company. MVE is the leading manufacturer of cryogenic systems worldwide, and we're confident in the long-term prospects of our product's business. And when demand normalizes, and we believe it will, we will benefit from our position as the global leader in this space. In summary, and to put it plainly, there is simply no other company with the extensive resources Crowdport has in providing a full array of innovative, reliable end-to-end supply chain solutions to the life sciences. With advanced services, products, and information systems focused on reducing risk and located in 50 locations in 17 countries, Crowdport is well prepared to support the expansion of the life sciences and especially the growing cell and gene therapy market. Based on our client's forecast and fueled by industry indicators for cell and gene therapies and the life sciences, we continue to build out services, products, and infrastructure to prepare ourselves to provide comprehensive and dependable supply chain support for these lifesaving treatments. However, considering the current macroeconomic challenges and their impact on our financial results, we are implementing a number of initiatives to drive toward positive adjusted EBITDA and cash flow in the near term. These include improved alignment of our global organization, reduction in our workforce, leveraging lower cost shared services, refining and reprioritizing planned initiatives, and delays in capital spending as a result of reprioritization, all of which should possibly impact the second half of 2024. We're mindful of our need to maintain a strong balance sheet to support our future growth. And we ended the quarter with $448,500,000 cash balance. This concludes my prepared remarks. Now we're going to be happy to take questions from you. Operator, please open the lines for questions.