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I remember someone (cold?) posting something a while back about stem cells, and the potential $40M - $60M contract but I was busy at the time. Here’s the (edited) question from the cc:
Matthew Frankel (Cowen)
. . . I Just want to know if there is any way you feel comfortable quantifying the revenue potential, revenue opportunity from BLA. The BLAs you expect to be filed over the next year, the commercialization opportunities to the next year. Anyway to puts some numbers around that? And what it means for you guys?
Mark Sawicki
Yeah, I can give some color on it. You know guys, so as we had stated, we anticipate an addition two to four filing next year which obviously would have a lead time in regards to commercialization. But I think using the same measure in particular for any of the autologous treatments as you would observe with either than Novartis or the Kite expectations which Jerry commented about in the earnings calls is probably reasonable. Ramp rate and timing would be similar to any of these types of launches. But we also have a number of programs which are allogeneic in nature and if those allogeneic therapies you know filed and are approved, the volumes of these units will be in order of magnitude or too higher than that of a say autologous therapy. So, we would anticipate seeing numbers that could easily drive into the $40 million to $60 million range at full absorption if they were approved and were approved through a broader application. And it depends on the nature of the therapy approved in the timing of it.
Is he talking about their client Tigenix (TiG) and Cx601? It’s an allogenic stem cell treatment for patients with Crohn's disease that could receive a decision by the CHMP at its next meeting December 11th-14th and then by the EMA in Q1 2018. In the U.S., this is one of the 20 phase 3 trials Cryoport supports that launched in June or July and has recently been granted orphan status by the FDA and now has an expedited pathway for the submission and review process. I think the trial was reduced from 52 to 24 weeks, so this may be one of the anticipated BLA filings next year. I don't think it's that large of a patient pop though.
I think Cryoport is also supporting another phase 2 trial for their allogeneic cardiac stem cells for acute myocardial infarction.
I think Bellicum's BPX-501 allogenic stem cell treatment is in a phase 2 trial that should have a read out next year but probably won't file until 2019.
Pretty sure the visit with Deutsche Bank wasn’t to open a checking account. Cryoport is about to get very busy and there is going to be a very large need for eastern US and European expansion to support both Novartis and Kite approvals and prepare for multiple other client approvals in Europe in the coming year or two. (more on that later) They said as much on the conference call. The question is what type of financing are they looking at? I could make a case for either debt or equity. Deutsche is really known as the go-to bank for debt deals in Europe.
This is the relevant (edited) exchange during the Q&A:
Sean Hannan (Needham)
. . . What's being shared with you in terms of ramp-up in activity? How does this materialize timing-wise for cash outlays on your ends and into that something, how that impact is for the investments in the support of the facilities you'd reference that a little bit earlier? . . .
Jerry Shelton
. . . we've been building out our infrastructure to support these therapies and to support our growth. . . . So, you know that we clearly will have to you know finance inventories and accounts receivable and infrastructure and so forth. And we're on the pathway to doing that. As I mentioned there, two facilities, two logistic centers under planning right now and we'll be implementing. But Robert, would you like to add anything to that?
Robert Stefanovich
. . . we want to make sure, we leverage this opportunity that we have, part of leveraging those opportunities is to make sure that we have the infrastructure to support our current commercial clients as well as those that we see in the pipeline. Certainly, all of our clients that are moving from a Phase II to a Phase III or more importantly from a Phase III moving towards BLA filing are expecting us to have the right infrastructure within the U.S. as well as outside of the U.S. and Europe and some of the other countries to support their expected growth. And so those are things that we're carefully evaluating to make sure that we have the infrastructure in place to do so.
Awe CB, don't worry. You'll still be able to afford a new one. . . or two
H2R, that is a very good point. Cryoport doesn’t have the huge risk of failure that their clients have. They now have clients running 20 phase 3 trials and that is a lot of shots on goal for an advanced pipeline and many potential commercial contracts in the near future. The secondary point is that Cryoport is dependent on their customer’s timelines and can’t speed up the process or revenues.
CN, from $2 to $10 in 5 months? Yeah, it got ahead of earnings. It really shouldn’t have been $2 anyway, but that was the price of admission to the big leagues, and Cowen et al. definitely made theirs. There was a lot of good news justifying the run up to the $8-$9 (fair value) range though, so it really wasn’t that overvalued, and I didn’t sell either. I bought more today, and my guess is that there will be multiple trading opportunities on CYRX in the future. This is a tiny developmental stage company that is still losing money, who’s stock has a relatively small float, low volume, and a very large percentage of retail investors; that is a recipe for manipulation. In this case it really was a perfect storm, with institutions taking profits, shorts selling, the Maxim “article,” and management meeting with investment bankers.
BTW - The tunnel didn’t get longer; it’s the same size it always was. Some people here just want to believe it’s shorter than it really is.
Yes, revenues should be just over $12M this year. This is up over 50%! There are a lot of companies who would LOVE to be growing revenues at 50%. This company has come a long way in a short time. Remember what the revenues were in 2014? They were $2.7M and a gross margins were a whopping 16%. And in 2015? $3.9M and margins doubled to a big fat 30%.
Cold, I would agree that CYRX is fundamentally and operationally sound but I didn't think Bluebird or Juno are close to a BLA filing (although Juno did just announce some good results).
Management is not just sitting on their hands and it is not a failure of leadership. They flat out denied the "report" and called it an article and laid out a very detailed answer to all of the false claims on their conference call. And It is not a crisis. Stocks go up and stocks go down. Was it a crisis when it went up? And really, how painful is it if you take advantage of this "holiday gift?"
Thanks techson. I haven't seen that website before. Welcome to the board.
Welcome grass1973. The place I usually begint my DD is with the quarterly reports and reading the transcripts of the earnings conference calls. A lot of good info there, but probably not as interesting as the message boards for a non-business person. I’m not sure what you mean about “management and the CEO.” Could management be better? Maybe. They certainly could be a lot worse. But really, how many top notch management teams do you see in nano-cap companies?
In the 5 years this management team has been here, they have invested in and improved their product offerings, and repositioned them to be more client focused. This has been a very good business strategy and they have earned an excellent reputation, developed long-standing relationships with all of the top names in the cell therapy and pharma industry, and now have established a commanding leadership position and a very long list of loyal clients. This year revenues have increased over 50%, they have reduced expenses, increased margins, transitioned outsourced sales and marketing staff in-house, prepared for at least 2 commercial launches, and hired executives to focus on landing large pharma and consulting contracts. And yes, they have landed 68 new biopharma accounts, netted 66 new clinical trials, and signed the first 2 commercial CAR-T contracts this year. How’s that for “executing a successful business plan?”
Yes, there are some here who are complaining that management is not providing enough information during the conference calls to maintain the stock price It’s a legitimate complaint, but that’s not really management’s job is it? I think in general, some analysts like to be spoon fed earnings estimates from the company rather than doing some of the work themselves. But in this case, it’s difficult to project earning for Cryoport right now because they are still at the developmental stage and transitioning into a commercial stage company and earnings can be unstable and analysts are a little more dependent upon guidance from management. Almost 75% of their revenues are from clinical trials which can vary widely, and management hasn’t given the exact figures to be able to accurately calculate expected revenues from these trials. In addition, management has been rather tight lipped about some of the critical aspects of the recent commercial contracts they have signed. The timing and amount of expected revenues will help analysts accurately project revenues in the following quarters and years and write reports and advise their clients to purchase the stock which supports the price. The problem is that Cryoport supports a number of very large clients who are competing directly with each other and therefore cannot disclose all the information that analysts and investors would probably like.
In my opinion, Cryoport’s management is decent, and is not the reason the stock price has fallen. If management concentrates on running the company, and “executing a successful business plan” as you say, the stock price will take care of itself. I’m very confident your investment is safe and the stock price will make new highs again.
The board is certainly better with more information shared from many people with different backgrounds, expertise, and experiences and I look forward to your contributions.
I just read the earnings call transcript and there is so much interesting info and I have a lot of thoughts, but not much time to post, so it’ll have to wait. First, I would agree that there was a lot of dancing around during the Q & A. Second, It was interesting that the same peak annual revenue of $8M-10M was given for the KITE contract even though the patient population is about 7 times the size of Novartis’s patient population for pediatric r/r ALL. Was this the first time that the $ size of the first indication of the Kite contract was shared?
Third, one of the things I was most interested in is the Bristol Myers and other Big Pharma outsourcing contracts. This is all Jerry had to say about it:
“Cryoport has been successful in landing a large pharma support project, supporting the global biologics manufacturing. Although the transition of these types of projects has been complex and slower than anticipated they are approaching completion on the contractual and quality related aspects before onboarding to be finalized. Once fully converted, these will ramp throughout the next fiscal year. Cryoport anticipate additional program adds in this space in the coming quarters as the market awareness in this space develops.”
Well it’s nice to know that they are finally nearing completion (after a year and a half) and will fully ramp within the next year, but I have to say that answer (and many others) was disappointing. On the bright side, I guess now that it’s known how difficult and lengthy the conversion is, it is very unlikely they will change to a competitor once transitioned. I wonder if it’s a little concerning to other potential Pharma customers considering outsourcing though. I anticipated AT LEAST one more contract (Merck?) signing in the last 2 quarters.
Cryoport has now signed 4 CAR-T contracts? Anyone see this article on BioSpace? Not much new except that tidbit, but at least they are getting some exposure.
And really Jerry? “It’s been like a flower unfolding,” That’s the best analogy you can come up with?
https://tinyurl.com/yd39f89e
Cryogenic Logistics Company CryoPort Grabs Contracts for Gilead, Novartis CAR-T Products
Published: Nov 03, 2017 By Alex Keown
IRVINE, Calif. – In the world of developing and manufacturing cell-based therapeutics an approved medication for any indication is only part of the business plan. The other aspect is delivering the product to patients. That’s where logistics companies like CryoPort, Inc. come into play.
CryoPort has consistently been one of the top cryogenic logistics companies serving the life sciences industry and that is only likely to continue. In May, the company reported robust financial growth driven by biopharma. That type of growth it likely to maintain for some time.
CryoPort handles the products for more than 172 of the more than 800 immunotherapy trials underway. CryoPort is the logistics provider for 17 Phase III trials and 199 trials in the regenerative medicine. The company also secured the logistics contracts for Novartis Pharmaceuticals Corporation’s Kymriah and Kite Pharma(now Gilead’s) Yescarta, the first two commercialized CAR-T cell therapies that were approved earlier this year.
With its success, CryoPort Chief Executive Officer Jerrell Shelton said the company is adding employees and expanding its physical footprint across the United States. While he would not provide specifics as to the company’s expected growth, Shelton told BioSpace that the company will add logistics centers in order to be closer to clients and their therapies.
“It’s remarkable. It’s been like a flower unfolding,” Shelton said in an exclusive interview with BioSpace.
Currently, contracts from biopharma makes up about 75 percent of CryoPort’s annual revenue. The company also has a strong position handling reproductive medicine products, as well as in the animal health space.
Although Shelton said the company does not “make forecasts or give guidance in the marketplace,” he pointed to the expected number of therapies forecast for approval over the next several months that CryoPort has secured contracts to handle.
Historically, Shelton said cryogenics logistics, the transportation of biopharma products under extreme cold conditions, has been handled “in-house.” However, as therapies become more complex, biopharma companies are no longer capable of handling the cold shipments and associated extensive delivery systems.
CryoPort uses liquid nitrogen in a dry liquid form to make things safer and more easy to use in transfer.
“Cryogenic temperatures indicate liquid nitrogen. Why is that important? The cells are dying. Every cell dies on regular basis. If you’re going to work with cells you have to have a way of stopping the metabolic activity. That’s done through cold temperatures. Generally speaking, when you bring cells into the range of -136 degrees Celsius, cells are suspended, not alive or dead. If there’s no change, they’re the way they were when they were initially frozen,” Shelton said.
In the case of the Novartis and Gilead CAR-T therapies, the logistics is extensive. Blood is drawn from patients, customized in a lab and then sent back to the patient. That makes the successful back-and-forth delivery highly critical.
As immunotherapies like CAR-T and similar gene therapies look to become more commonplace, CryoPort is in a strong position for growth, Shelton said. As an example Shelton said CryoPort has won four CAR-T contracts so far.
He also pointed to a forecast from the Alliance for Regenerative Medicine, which indicated three more Biologics License Applications are likely to be approved by the end of the first quarter of 2018 by the FDA.
“We have a robust future ahead of us,” Shelton said.
Cryogenic logistics contracts can run anywhere from about $50,000 per year for Phase I products to between $2 million and $20 million for a commercial product, Shelton said.
“The volume really increases after commercialization,” Thomas Heinzen, vice president of corporate development, said.
Shelton said he knows of no other cryogenic logistics companies that “can go head-to-head” with CryoPort.
When shipping its products, CryoPort includes localized Wi-Fi and GPS tracking so the shipments can be monitored in real time.
“We can measure the temperature and barometric pressure of a shipment. That gives real time feedback and offers a lot of information as to chain of custody that can be presented for regulatory concerns,” Shelton said. “That gives the customers comfort. It’s a distinguishing characteristic in what we do.”
As therapies continue to morph over the next few years, Shelton predicted CryoPort would also adapt to the changing needs of the industry.
“What happens today in immunotherapy won’t likely happen in the future as it’s refined,” Shelton said.
It was a solid quarter, and the numbers were in line with my expectations across the board, so I’m not disappointed. It’s good to see 20+ new customers and programs added and biopharma revenue (which increased 76% YoY) continue to grow. For those expecting more of a quarter over quarter growth, there is a quarter revenue lag, so the trials added in the 2nd quarter don’t show up until the 4th, but many of these are small, phase I trials so it may be only a small bump. I also doubt that Novartis started dosing many patients before the end of the quarter since it wasn’t approved until August 30th.
Analyst's consensus revenue estimates for the full year are around $11M-12M, but don't include any revenue from Novartis and Kite. My estimate is ~$4M next quarter due to the contracts signed in Q2 and a small boost from Novartis and Kite commercialization ($500k), so ~$12.5M for the year. Bottom line is that CYRX is a longer-term play (2-3 years) and for those expecting to see that hockey stick earnings growth in the near-term, you will continue to be disappointed. Unless of course, the inevitable buyout happens.
On a personal note: I’ve severely underestimated my taxes this year and have almost $100k in profit in my taxable account just from the KITE buyout. I’ll take it, but I prefer to manage my profits a little better for tax purposes rather than getting slammed with a big tax bite from a buyout. As the saying goes; be careful what you wish for.
One more thought: I’m taking advantage of the price decline. I think it’s very likely that CYRX will be double digits next year, and I can’t think of another stock that will double within a year with as little risk. I had a full position in the $3-4 range but now have some extra trading shares and I’m looking for more. On my recommendation, my father bought 10k shares at the end of August ~$6.50 and he sold everything @ $10.40 a month later and now thinks he’s a genius, the next Warren Buffett as he says. I don’t have the heart to tell him Warren’s an investor, not a trader.
Cold, it may have been from this Barron’s article: Gilead: Congratulations…But You Still Overpaid for Kite
https://tinyurl.com/y8sz5lcj
Cowen’s Phil Nadeau says physician checks suggest Yescarta will launch much faster than investors appreciate. He explained in detail in a note out today:
Prior to our recent Therapeutics conference we conducted a survey of 18 hematologists/oncologists from 13 clinical centers, and at the conference we hosted a panel discussion with 2 KOLs with experience administering CD19 CAR T cell therapies to patients with a range of B cell malignancies including ALL, DLBCL, FL, and MCL. The panelists and surveyed physicians believe that ZUMA-1 represented significantly better efficacy than alternative therapeutic options for these conditions. In fact, the physicians anticipate rapid adoption.
In the U.S. ~10K patients die of aggressive NHL each year, though not all of these patients are expected to be good candidates for CAR therapy...The surveyed physicians estimate 53% (~5300 patients) of relapsed/refractory patients will be good candidates for commercial CD19 CAR T cells therapy. Kite and Novartis are planning a staged roll out of commercial therapy that will begin at centers participating in clinical trials before expanding to other large medical centers that did not participate in Kite’s ZUMA-1 trial and/or Novartis’ JULIET trial. Given the capacity constraints at these hospitals, physicians anticipate 1233 aNHL patients will be treated with a commercial CD19 CAR T cell therapy in 2018. Importantly, this is nearly double investors’ expectation of 677 patients treated in 2018. In addition to the national view, we also asked physicians to describe their expectations for treatment patterns at their clinic. In 2018, the physicians expect to treat an average of 3 commercial patients/month. This is anticipated to increase to 8 commercial patients/month in 2022. Both panelists reported that their centers are currently capable of treating up to 10 patients/month inclusive of clinical trials, but did note that their centers (University of Pennsylvania and Massachusetts General Hospital) are evaluating further expansion of their cell therapy capacity.
Whether it’s 600 or 1300, or somewhere in the middle, it’s likely significant revenue for Cryoport. I think 2018 will be a good, solid year of growth for Cryoport, but I think the growth that you are taking about won’t come until 2019-2020. These are brand-new, extremely expensive treatments in limited medical centers. There are a lot of constraints and issues to be worked out before really ramping up, not the least of which is managed care. And yes, at some point they may need that much capital, but I doubt they will be looking to raise that much now, and may just be preparing for the European approvals.
I know Kite has been anxious and is well prepared for this launch with a waiting list of patients. This early approval should give them a little extra time to get the payers onboard for next year. I saw an analyst’s estimate of $200M-$250M in 2018 for Yescarta revenues, which means they are estimating about 600-700 patients at $373k per. This should mean sizable revenues for Cryoport, but unfortunately we will have to wait a few weeks for the Q3 conference call for any details.
Thanks for the information Robert. If management is preparing for another offering, it could explain the lackluster response to the Kite approval. While it is not totally unexpected, I thought they were in a pretty good financial position to prepare for a couple commercial launches.
I agree with most of your points. Volume has certainly tapered off without the institutional support. (I think it was actually Q2-Q3 though) While I agree that short interest and price action in CYRX is fairly normal, many retail investors have experienced manipulation by hedge funds and market markers in many of our microcaps and have a difficult time distinguishing between normal sell-offs and manipulated sell-offs, so they often chalk it all up to manipulation.
I don’t necessarily agree that new big name contracts are necessary to maintain the current ~$8 price, but agree it could languish until the actual revenues roll in from the contracts that have already been signed, and management provides some further insight into reasons for additional funding. It could indicate that more commercialization preparations are needed that have yet to be announced, or they are finally nearing the takeover of logistics handling for their BP customers and need to build out that cold chain area.
cold, thanks but I’ve moved on from that idea.
I agree that GE Healthcare is interesting, and a very likely suitor as others have postulated. They are in far more than the prep side though and intend to be a dominant player in cell therapy. They’ve also been on an acquisition and partnership spree as this article and timeline shows:
https://tinyurl.com/yd4gukn5
and note the last sentence ”One should expect more acquisitions and alliances to occur as GE strives to execute its long-term strategy to industrialise Cell Therapy in the same manner as BioManufacturing.”
Like him or not, you have to give Rob credit for showing up and letting everyone know that the game’s afoot.
“I came to IHUB to get a feel for retail sentiment” “it's important for institutions to understand what retail's doing, and why”
That’s tute speak for “let’s see what the dumb money thinks so we can raise the price targets and get them to buy while we take some profits and trade around our positions again.”
Cold, the article that I was working on actually went into more detail about the unique niche that Cryoport has carved out for themselves in the market, and why it is NOT just another logistics company like the ones mentioned. It was geared toward an audience that is unfamiliar with the company, and it included why the regenerative therapy logistics solutions need to integrate the patient scheduling, the chain of identity, chain of custody, complete data monitoring across all portals, etc. etc., and it also included the partnerships with Fed Ex, UPS, and DHL (who account for 85% of the global airfreight business) and noted that they ALL have chosen to license Cryoport’s solutions rather than develop their own. The point of my post was to show that Cryoport is actually in a very strong competitive position, but I was lazy and simply used cut and paste on some relevant portions of the article. It was difficult to do this while also trying not to post info that is already well known to this board and I readily admit that the post was abbreviated and some of the competitive strengths of Cryyoport were not included, so it “only scratched the surface.”
I saw a comment about competition in18 months and have to disagree. I apologize in advance if this has been discussed. I had planned to write an article for Seeking Alpha on CYRX but had disagreements with the editors, so this is an edited portion of it.
The global regenerative therapy market was $18.9 billion in 2016, and according to Cryoport’s Q2 investor presentation, it is expected to reach $53.7B by 2021. Pharmaceutical Commerce’s Sourcebook estimates Pharma cold-chain logistics (refrigerated and frozen) will total $13.4 billion this year, and it estimates by 2021, it will be worth $16.6 billion.
Since Cryoport is expected to have revenues around $12 million this year, and the market is $13.4 billion, I think it would be safe to say that significant competition already exists. Some of the largest competitors to provide cold/cryogenic logistics and biologic clinical trial services are World Courier Group, (acquired by AmerisourceBergen in 2012 for $500 million) Fisher BioServices (a division of Thermo Fisher Scientific) and Marken (acquired by UPS in 2016). Despite the vast resources and capabilities of these competitors, all of the leading-edge, top names in the regenerative therapy market; Novartis, Kite, Bluebirdbio, Juno have chosen to partner with Cryoport. As of last year, they were supporting 23 of the 28 CAR-T clinical programs, and as of last quarter were supporting 172 of 899 clinical trials (18%) in regenerative therapy. This number would actually be higher, but a number of trials are kept in-house by the companies running the trials at a single site, so shipping is not required.
It has taken Cryoport years to build its cryologistics product offerings, establish its name, and build relationships with these companies, and prove their capabilities, reliability, and trustworthiness over time. Cryoport claims to have more advanced, proprietary, and non-hazardous products than their competition who are using older technology, hazardous dry ice and liquid nitrogen logistic solutions. That all of these blue chip clients chose Cryoport over any other company clearly demonstrates that they prefer the personalized products and services that Cryoport offers, and it’s a HUGE competitive advantage. The cryogenic logistics service that Cryoport provides are a critical and integral part of the regenerative therapy process and they have literally become imbedded with these companies, and therefore, the growth that is to come in the industry. This presents a very high barrier to entry since these companies are very unlikely to turn over such a critical part of the process to an upstart or even another established company, because it would also require new qualifications and extensive bridging studies. In addition, the validation from being selected to handle the logistics for the first 2 commercial CAR-T therapies, really raised Cryoport’s profile, and it sends a powerful marketing message, which will attract new business and put further distance between Cryoport and the competition.
Although I have discussed this already, I think Cryoport will also be able to compete very effectively in the rapidly growing cold-chain logistics market. It currently brings in little revenue to Cryoport, but is an area that they are now targeting because it represents a HUGE opportunity for future growth. It’s estimated that a third of all newly approved drugs are biologics that require cold-chain transportation and storage, which are rapidly becoming more complicated to handle. Last month, Cryoport revealed the newly developed C3 shipper for this 2 - 8°C temperature range, expanding its product offering to attack this huge and growing area of the market. So far, three of the largest and most successful pharmaceutical companies in in the world have decided to outsource some or all of their in-house cold-chain logistics functions. Not one or two, but ALL three of the BP companies chose Cryoport over all the other competitors, once again proving the preference for Cryoport’s offerings. In July, Cryoport hired a highly successful sales and marketing executive, who has previous relationships with Pfizer, Merck, and many other Big Pharma companies. This hire was no coincidence, and I fully expect more announcements of big name clients signing with Cryoport.
Congrats! WOW pretty bold there mike. Really went out on the ledge on that one What was it $9.95?
Will insiders buying on the open market improve your confidence? Awwwww do you need some reassurance again CYRXorbust? I promise, I'll make another post very soon. Okay?
And really 12% institutional ownership is great? Why? I want this to be the other way around; 88% institutional and 12% retail. I will be interested to see the next report of ownership because I think it's already happening. The volume is increasing and it doesn’t base or pull back very long.
Yes I agree. I LOVE the business model. The time has finally arrived for CYRX. I know it has been a long and difficult time getting to this point. I got a sense of uncertainty and disbelief when I read the board before I joined, like everyone is watching the price go up, but half expecting the worst after years of conditioning. The only uncertainty I have is how accommodative the FDA will be after the first 2 approvals. I wonder if they will take a wait and see approach to see how safe the CAR-T therapy will be on a large scale before opening up the flood gates.
And yes, I read your 21 month cash flow number but think there will be some fluctuations on spending depending on the speed and number of commercializations, so I wouldn’t go that far. I said they would be profitable next year but I meant they will be cash flow positive next year, and I think profitable by the end of 2019.
Thanks CYRXorbust. That’s about what I remember; another ~10M shares of common reserved for warrants/options.
Sorry, I should have been more clear especially regarding this sore subject. I only meant dilution coming from the warrants/options, NOT another capital raise. As of June 30, they had $13 million in cash, and working capital of $12.5 million. Warrant exercises brought in another $1.8M at the end of July, and ~$6M in August, so Cryoport is financially very solid (also debt-free) for the foreseeable future.
You have a good point that management could have timed the capital raise better and should have been better prepared. I read somewhere that NVS requested that Cryoport have a better financial position in preparation for the commercialization.
I think it may be too early to expect management to provide sales forecasts at this point, but it’s entirely reasonable to hold them accountable for their performance. In their defense, margins are improving (all-time high last quarter), and operating expenses as a percentage of revenues last quarter was at an all-time low.
Thanks Rev
I guess I misunderstood “cool surprises” as something negative occurring. My view may be different than some here because I’m looking at the company with a fresh set of eyes and haven’t been through the past turmoil, but I’m interested to hear the thoughts and history of those who have, who are more knowledgable about the company and more aware of potential red flags. I understand investor psychology, and have been down in a stock and said to myself “just get me back to even and I’m out” despite what changes might be happening in the company. Everyone has different perspectives and experiences, and their own investment rules, time horizons, and financial needs, so I don’t judge.
I threw that billion dollar figure out there, but I think it seems reasonable given that it’s a wide timeframe (3-5 years) and think Cryoport will gain a significant share of the overall growth in the cryogenic and cold chain logistics market going forward. Whether the value of CYRX gets to this value in 3 years or 5 years will depend upon how quickly the newly approved treatments ramp and their markets and labels are expanded, and the timing and ramping of BP outsourcing revenues, and other approvals and new contracts. And yes, I would anticipate warrants and options being exercised (not sure of expiration dates) over that time for an outstanding share count ~35M.
I haven’t done a full financial analysis of CYRX, but have looked at some research reports and analyst projections and think they are overly conservative because analysts are reluctant to add in the new revenue streams until they are more certain. For 2017, the consensus revenue estimate is ~$12M, and for 2018 it’s ~$19M. This is a good starting point. I think this year’s revenues might be closer to $13M-$14M due to the 33 new trials added (17 were estimated) in the 2nd quarter (1 quarter revenue lag) and initial revenues from NVS (and potentially KITE). In 2018, I think new therapies could ramp faster than analysts expect, trial revenues could nearly double, BP outsource revenues ramp, and I estimate revenues ~$23M. Based on this, my target price next year is mid to high teens. The following year, 2019, analysts estimates range between $25M and $38M. I think 2019 will be the breakout year for CYRX revenues and think they will be closer to $40M and my price target is mid 20’s. By 2020, revenues from NVS and KITE could be close to peak for the initial indications and Europe, with other indications and new contracts ramping up, so revenues could be $60M+ and a share price target of mid 30’s. So $35 x 30-35M shares outstanding = about 1B - 1.2B market cap.
And longer term, I can see this trend continuing; the contracts with NVS and KITE alone are potentially each worth more than $40M annually, so a CYRX stock price in the $40’s and $50’s within 5 years is entirely possible considering multiple other therapy approvals and new contracts. This is why I personally don’t want to see a buyout in the next couple of years unless it's at a huge premium. Anyway, it will be interesting to see what the future holds.
I know some here would justifiably say that in the past, management has underperformed, (especially relative to their compensation) but Cryoport is not exactly resting on their laurels. Last quarter they brought in 2 executives for strategic sales and consulting, and converted a previously outsourced marketing and sales force in-house. They added 46 new biopharma accounts during the first six months of the year, and this was BEFORE they were FDA approved with Novartis. The logistics services are an integral part of the CMC section of the BLA filing, so passing that regulatory hurdle and validating their expertise and capabilities is YUGE! I think this will pay big dividends and help their sales and marketing efforts going forward. Cryoport has established a commanding leadership position and is attracting business from the largest and most successful pharmaceutical companies in the world. I fully expect this to continue, if not snowball.
I think 2017 is really the year of validation, not only for Cryoport, but also the “experimental” cell therapies. There were a lot of doubters with the approval process, safety, CMC manufacturing issues, etc. That has been answered, but now there are concerns about the costs of these new therapies, pushback from payers, and the abilities of all the companies to roll out these new therapies at scale. So 2018 will be the year of commercialization, and execution. Novartis seems well prepared, and because of the life-saving efficacy of Kymriah and agreement with payers, the uptake should be fairly quick. Actually, I think the same can be said for KITE; they are very well managed, and there is no standard of care for r/r DLBCL, so once approved, the ramping should also be quick. This means higher initial revenues for Cryoport than the analysts are projecting and I’m pretty sure they will be profitable next year.
I think you may be disappointed about dilution though, as I anticipate more. BTW, Is 9.5 million total warrants correct?
CYRXorbust
Ha ha. Just wanted to say that I’m highly qualified with many years of experience with a girlfriend who needs constant reassurance. May I inquire about the salary range?
And BTW - Oh CYRXorbust you are going to be SO RICH!
Rev3lation
Wow 9 years! When I congratulated the long-term investors, I was thinking a few years. I didn’t discover CYRX until June.
What did you mean by cool surprises? More warrant dilution? Market downturn?
Maybe you have a shorter timeframe, but I sure wouldn’t take $20 for a buyout and I doubt the BOD would either. In 3-5 years, this company will be worth well over $1B
Sls
Yeah that would be helpful, but they disclose some of their clients and trial info on their Twitter feed.
With regard to near-term commercialization; this is from the Q1 conference call:
“The industry anticipates several commercial filings and/or launches during the current year, which include Kite’s KTE-C19, Spark Therapeutics’ Voretigene Neparvovec, Novartis’ CTL-019, TiGenix’s Cx601, and Kiadis Pharma’s ATIR101, many of which Cryoport is actively supporting. . .
We are now actively supporting one commercial program; have been selected as primary cryogenic logistics provider for three late stage Phase III programs, which are tracking towards commercialization; and, if progression takes place as anticipated, adding at least another four additional Phase III programs to our support portfolio over fiscal year 2017.
Of the 18 Phase III programs, we are engaged in commercialization discussions with several of these companies regarding their respective commercial launch requirements, three of which have already been awarded to Cryoport.”
Off the top of my head, Spark Therapeutics has a PFDU in January for its gene therapy for an eye disease with a patient population ~3k. TiGenix’s Cx601 is a stem cell therapy that has filed for approval in Europe and has a SPA from the FDA for its phase 3 in the US. I think Kiadis Pharma has already filed for approval in Europe.
I won’t speculate on which of those companies are Cryoport clients or the probability of approval or potential revenues. I’m much more interested in what is known but COMPLETELY underestimated:
Novartis CTL-019 (Kymriah) is approved in pediatric r/r ALL with a patient population ~1k and sales beginning this year. They completed a phase 2 trial with positive results and have breakthrough status and likely will be approved for r/r DLBCL and begin sales in 2018. The patient population is about 9000 but will likely be shared with KITE’s KTE-C19 (axi-cel). Peak sales for CYRX for the first indication are estimated to be $8-10 million and could be reached by 2020. Peak sales for the second indication is believed to be at least $8-10 million (probably higher) and could be reached by 2020-2021. NVS plans to file this year for r/r ALL and r/r DLBCL in Europe which has patient population of ~7,000 and also likely to be shared with KITE. This market is also likely to have peak sales for Cryoport of at least $8-10 million. In addition, NVS is conducting studies for Kymriah in adult ALL, CLL, TFL, MCL and PMBCL.
Kite’s KTE-C19 (axi-cel) is currently under priority review for r/r NHL with a FDA decision expected on or before Nov 29th. Approval is almost certain with the FDA forgoing an adcom meeting. Kite is looking to get Axi-Cel approved for a broader label for aggressive NHL including DLBCL, TFL and PMBCL indications. A regulatory application for Axi-Cel was also filed in Europe in July. Other trials include a phase II study (ZUMA-2) in MCL and two additional pivotal studies (phase I/II) for ALL - ZUMA-3 for adult ALL and ZUMA-4 for pediatric ALL. The ZUMA-5 is a phase ii study in patients with indolent NHL.
With multiple indications, and a patient population of ~32,000, the contracts with KITE could be considerably larger than Novartis.
Do you know what some analysts are modeling for revenues from NVS in 2017? (0) 2018 ($500k) 2019? ($1M) 2020? ($2M)
For KITE? 2017 (0) 2018 (0) 2019 (0) 2020 (0)
For ANY of the other companies above? (0)
For Big Pharma global cold chain logistics support? (0)
Larry Smith combined NVS/KITE 2020 revenues? ($19M) price target $20
Yes, it will take some time for revenues to ramp, but this is why I say that these analyst’s price targets of $8-10 are a joke.
CRYXorbust
I’ve also been very interested to hear about the Bristol Myers “blockbuster monoclonal antibody” which I think is Opdivo. They said the bridging studies should take about a year starting in June or July last year, so results are overdue. Since the contract was already announced, some revenue guidance may be revealed during a quarterly conference call.
This outsourcing of cold chain logistics handling is a significant and fast-growing business opportunity for Cryoport, and I agree that most analysts are overlooking this in their revenue estimates (probably because management has provided zero guidance). Cryoport landed 3 big pharma contracts in the last year which likely represents a trend in the industry, and more contracts to follow. I read somewhere that over 20% of cold shipments are damaged during shipping, and this alone could justify the cost of outsourcing.
From their Q1 10-Q:
The total cold chain logistics market has historically grown 70% faster per annum than the total logistics market. For 2011, global cold chain logistics transportation costs were reported to be $7.2 billion; about $1.5 billion within the cryogenic range of requirements. By 2017, transportation cost alone, for global life sciences cold chain logistics, is forecasted to grow to $9.3 billion, a 41% increase, and twice the growth of the overall market…
While we estimate that our solutions currently offer comprehensive and technology-based monitoring and tracking for a potential of six to seven million deep frozen shipments globally on an annual basis, we also believe that with investment in our services, adaptations of our solutions can be applied to a large portion of an additional fifty-five to sixty million annual shipments requiring ambient (between 20° and 25°C), chilled (between 2° and 8°C) or frozen (minus 10°C or less) temperatures.”
So last month they revealed the C3:
Dr. Mark Sawicki, Chief Commercial Officer of Cryoport, commented, "The C3 ™ solution was developed in response to recurring requests from our clients who wanted to be able to leverage our trusted Smartpak II™ Condition Monitoring System and our Cryoportal™ Logistics Management Platform to manage their shipments, not only for the cryogenic temperature range, but also in the 2-8°C temperature band.
And BTW - Rev3lation's $20 price target is far too low, unless it’s a 1-year target.
He initiated coverage on June 16th with a PT of $5.50, then raised it on August 9th to $7.50 and now a month later to $11.00. Like I said, these “analysts” are clueless. Wonder what it will be next month?
New investor to CYRX and wanted to thank the posters here for some good info and entertainment. For those long-term investors who have patiently held this stock for years, congratulations! I’m not sure if everyone here understands the goldmine that we are sitting on. I have a background in finance and have been investing for nearly 20 years and rarely find a company in the position that Cryoport is in. That is, a tiny company that has quietly built a large moat and developed a leadership position in a critical and growing industry, and is at an inflection point of huge growth and revenues. Despite the run of the past few months, I think Cryoport is still undervalued and is going to run much much further when Wall Street really understands the story. The recent volume and price action indicates the stock is being accumulated, and this is just the beginning. I think the analysts that cover CYRX are unsure of the timing and how to model the revenues of the newly approved, and soon-to-be approved CAR-T therapies, or the conversion of in-house cold chain logistics for BMY, SNY, JNJ and others, and therefore, are far too conservative in their estimates for CYRX. Those $8-$10 price targets are a joke. The only analyst that seems to understand the potential of this business model is Larry Smith and even he is being conservative, but at least he admits it.