Cryoport (CYRX) – Commercial is Key
Cryoport is a life sciences services company providing temperature-controlled logistics and end-product fulfillment to the biopharmaceutical, reproductive medicine, and animal health markets. Using proprietary information technologies, the company’s personnel can monitor conditions of the internal shipping environment, location and other specified variables for each shipment in real-time. The information is recorded and archived for each shipment for scientific, quality assurance and/or regulatory purposes in a secure cloud-based system that can be accessed globally to provide a complete audit trail.
With earnings scheduled for after the close today, I wanted to take a quick look at this company for the first time.
Shares jumped just over 10% last earnings after reporting the following:
-EPS of ($0.08) vs ($0.08) estimate – In-Line
-Revenue of $6.7M vs $6.56M estimate – Beat
-Total Revenue increased 65% Y/Y and 17% Q/Q
-Biopharma segment (~85% of Total Revenue) increased 72% Y/Y
-Commercial Revenue (25% of Total Biopharma) increased 374% Y/Y
Management would add that $1.4M of the quarter revenue was derived from commercial agreements with Novartis (NVS) and Gilead (GILD), representing a 374% increase in commercial revenue compared with the same quarter in the prior year (Revenue from commercial agreements is now 25% of total biopharma revenue).
Also, the company continued to add to the number of clinical stage therapies they support. A net addition of 26 new clinical trials were added in the first quarter, bringing the total number of trials, they now support to 383, which includes 45 in the EMEA region, and 49 in Phase III. Finally, they discussed the recent openings of their two new logistics centers located in Amsterdam and Livingston, New Jersey.
Then, on May 14th, Cryoport announced that it had expanded its suite of temperature-controlled solutions to include biostorage for the life sciences through its acquisition of Houston-based Cryogene Partners. Cryogene operates a recently expanded 21K sqf biostorage facility, specializing in the storage of biological specimens, materials and samples.
Roth Capital was out with a note saying that acquiring an operating entity with biostorage assets already in place and with contracted, long-term customers, makes sense as an entry point to the storage market. Adding operational expertise in addition to working physical assets reduces CYRX’s launch execution without damaging its financial profile. “We view this overall as a business accelerator for CYRX and believe it should accelerate Cryogene’s growth via cross-selling to CYRX’s existing customer base.”
At the onset of this report, we highlighted that commercial revenue last quarter jumped a whopping 374%, aided by Novartis and Gilead, specifically from KYMRIAH and YESCARTA.
KYMRIAH – Back in May 2017, Cryport signed an agreement with Novartis to manage the global clinical and commercial shipments of the company’s CAR T-cell therapy, KYMRIAH (Tisagenlecleucel) for children and young adults with B-cell acute lymphoblastic leukemia (ALL) that is refractory or has relapsed at least twice.
YESCARTA – Back in July 2017, Cryoport signed an agreement with Kite Pharmaceuticals (acquired by Gilead Sciences on October 3, 2017) to manage the clinical and commercial shipments of its CAR T-cell therapy, YESCARTA (Axicabtagene Ciloleucel).
Needham, in a note from July 1st, said that commercial revenues represent the key opportunity for long-term investors, as it is extremely difficult to change a logistics services provider after adding them to approved patient treatment protocols. In Q1, Cryoport supported 383 active regenerative medicine clinical trials (~36% of global total), demonstrating an ability to establish relationships across the biopharmaceutical landscape. As these products advance through the pipeline and are ultimately commercialized, the use of the company’s logistics solutions should continue with established patient treatment protocols. “As such, we see Cryoport providing logistic services for 1-in-3 regenerative medicine product approvals going forward.”