Cryoport, Inc. (NASDAQ:CYRX) Q1 2023 Earnings Call Transcript May 5, 2023
Operator: Welcome to the Cryoport First Quarter 2023 Earnings Conference Call. Our host for today’s call is Todd Fromer, KCSA. [Operator Instructions] I would now like to turn the call over to your host, Todd Fromer. You may begin.
Todd Fromer: 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 do believe that these forward-looking statements are reasonable as and when made. However, you should not place undue reliance. Such statements speak only as of the date we 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 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 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. I will now turn the call over to Mr. Jerrell Shelton, Chief Executive Officer of Cryoport. Jerry, the floor is yours.
Jerrell Shelton: 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 Stefanovich, who is joining us remotely as he just discovered he contracted the COVID virus, and our Chief Scientific Officer, Dr. Mark Sawicki; 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 Presentations section. This document provides a review of our financial and operating performance and the 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. Cryoport 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 control 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 continue 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 material storage and testing. As industry manufacturing capacity has increased 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 therapy, 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 Cryoport 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 IPO technology advancements and a rising number of fertility clinics supporting increasing fertility across the globe due to demographic and environmental challenges to child bearing.
Cryoport 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 CryoStore. Our financial performance for the first quarter reflected the strength and dedication of our team around the world. The saying goes you are only as good as your people. And at Cryoport, 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, Cryoport supported 10 commercial therapies and a total of 652 clinical trials globally, with 82 of these in Phase 3. 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 – 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 Cryoportal Version 2 logistics management system. The Cryoportal Version 2 is an ISPE GAP 5 validated solution and provides many new features and enhancements. In fact, to our knowledge, it is the first ISPE GAP 5 battle dated logistics management system serving the life sciences industry. This month, we began rolling out our next-generation Cryoport Elite Shipper line, beginning with the Elite Ultra Cold. The Elite Cryosphere will follow with introduction near year-end. These cutting-edge advanced therapy shippers will provide additional derisking longer-term – longer temperature hold times, more advanced communication features and new security controls for our customers. We are pleased with the early feedback on the launch of the Elite Ultra Cold.
Customer feedback has been quite positive. SkyTrax 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 CRYOPDP. 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 Syneos, which provides for integration with our new IntegriCell platform. This platform that is IntegriCell 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 IntegriCell and believe it has potential to be transformative for the cell and gene therapy industry. In summary, through our many actions, our team work and our commitment to make sure that Cryoport can deliver the best solution, supporting temperature-controlled supply chain solutions for the life sciences, which in turn support life-saving selling gene therapies, Cryoport is stronger than ever before.
I want to thank you and open the floor for questions. Operator, please open the lines.
Q&A Session
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Operator: Thank you. [Operator Instructions] Our first question today comes from Puneet Souda with SVB Securities.
Operator: Your next question will come from Brandon Goulard with Jefferies.
Operator: Your next question will come from John Sourbeer with UBS.
Operator: Your next question will come from David Larsen with BTIG.
Operator: Your next question will come from Paul Knight with KeyBanc Capital.
Operator: Your next question comes from David Saxon with Needham & Company.
Operator: [Operator Instructions] And we will go next to Jacob Johnson with Stephens.
Operator: Your next question will come from Yuan Zhi with B. Riley Financial.
Operator: [Operator Instructions] It appears there are no further questions at this time. I would like to turn the conference back to our hosts for any additional or closing remarks.
Jerrell Shelton: Thank you for your questions and our discussion. It’s always a pleasure. In summary, Cryoport delivered another strong quarter with double-digit revenue growth across all markets. We also continued to invest in innovation, introduce new products and take strategic actions to support our company’s long-term growth. As we move forward in 2023, while being mindful of global macroeconomic headwinds, we anticipate that favorable industry trends will continue to help drive our future growth. At the same time, we are always looking at strategic opportunities to increase our footprint and supply chain support for life sciences. Our team is dedicated to being the essential supply chain company serving the life sciences. Thank you for joining us today. We appreciate your continuing support of our company, and we look forward to updating you on our progress again next quarter. We hope you have a good evening.
Operator: And this concludes today’s conference call. Thank you for attending.
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