Q1 2022 Cryoport Inc Earnings Call
Thank you for standing by this is the conference operator, welcome to the Cryo Port Inc. First quarter 2022 earnings call.
Reminder, to all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask question to join the question queue. You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request.
Do you need assistance during the conference call you may signal, an operator by pressing star zero.
I would now like to turn the conference over to Todd Fromer with KFC USA. Please go ahead.
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 Wendy. However, you should not place undue reliance on any such forward looking statements because such statements speak only as a bit eight were 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 and.
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.
Risks and uncertainties include but are not limited to those described in item one a risk factors and elsewhere in our annual report on Form 10-K filed with Securities and Exchange Commission and those described from time to time and the other reports, which we filed with the Securities and Exchange Commission.
Pleasure to turn the call over to Mr. Jerrell, Shelton, Chief Executive Officer of Kraft.
Jerry the floor is yours.
Thank you Todd good afternoon, ladies and gentlemen, we appreciate your joining our earnings call today.
With us. This afternoon is our chief Financial Officer, Mr. Robert <unk>, Our Chief Scientific Officer, Dr. Mark Sawicki.
And our vice President of corporate development and Investor Relations Thomas Hindsight.
As a reminder, we have uploaded our first quarter 2022 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 recent financial and operational 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 will provide a brief update on the business and then move into answering your questions.
Our first quarter was solid our financial results reflected continued growth and strong performance that was partially offset by the adverse impact of the fire at our new Craig, Minnesota manufacturing plant of approximately $9 $4 million.
We believe the impact from the fires isolated to the first quarter and we havent tuned to recapture the rescue the revenue throughout the remainder of 2022.
The plant is now operating at full capacity and the demand and backlog in our cryogenic equipment and systems continues to be very strong.
During the quarter, our pipeline of potential commercial customers and regenerative medicine continues to grow with the total number of clinical trials supported by cross border, reaching a record 609 trials at the end of the first quarter 2022, an increase of 12% over the first quarter of 2021 and 30.
Higher than the first quarter 2020.
It is worth noting that a record 81 of these trials are now in phase III up from 69 at the same time last year.
Demand for our cryogenic equipment systems and services continues to be very strong to meet the industry demand, we will be expanding capacities in all business units as well as growing our global footprint.
Following are but a few examples one next month, we will have the grand openings of two global supply chain centers, one in Houston, Texas. The other in Morris Plains, New Jersey.
These new global supply chain centers are at the beginning of a global supply chain centers network, which is complemented by our acquisition of selling co.
Which is located in Vermont.
France and will be expanding to Paris.
We want to we will continue making acquisitions to expand our first choice Courier network for Biopharma.
Three our world class bio storage platform will be expanded from Houston into San Antonio and Philadelphia, and four we will continue to increase our cryogenic systems manufacturing capacities, both incrementally and Peru plant expansions.
These expansions will be augmented with the.
Watch up multiple new services products across new services and products across our company such as expansion of consulting services. The introduction of a fully validated our cryo sphere.
And a new model of diffusion cryogenic freezer.
Through these and other initiatives, our vision of becoming the most comprehensive and compelling supply chain provider, serving the life Sciences industry is coming to fruition and we are further strengthening our position as the partner of choice for our markets and especially in supporting regenerative medicines from concept to.
Market.
Global markets are facing many diverse challenges today and Wow.
Well, while we are not totally immune to global macro conditions, we continue to see strong demand for our products systems and services.
And that is reflected in the guidance that we've provided for full year 2022 revenue of 260 million to $265 million.
This revenue guidance represents solid growth of 17% to 19% and is driven by current and expected demand across our business units.
Further reflection of our confidence is our business and our business outlook can be seen in the $100 million share repurchase program authorized by our board of directors.
Through April 30, as we repurchased approximately $23 million in shares and remain in the market.
Our financial position remains strong with approximately $600 million in cash to support our growing business, we see opportunities to continue executing our strategy of building the most comprehensive and compelling supply chain provider, serving the life sciences industry through organic growth acquisitions and partnerships.
Despite the current turmoil in the capital markets, we are well positioned to continue our track record of strong growth and market share gains for the foreseeable future.
Now, we'll be happy to entertain your questions. So operator, if you. Please open the lines for questions.
Certainly.
We will now begin the question and answer session to join the question. Karen You May Press Star then one on your telephone keypad, sorry, Tony acknowledging your request.
I think that particular phone please pick up your handset before pepperoni pizza.
To withdraw your question. Please press Star then two.
Yeah.
Please go colleagues join the queue.
Okay.
Our first question is from Jon <unk> with UBS. Please go ahead.
Hi, Thanks for taking my question and congrats on the quarter and the initial guidance here for 2022, just curious if you could kind of elaborate on some of the puts and takes in the guidance for the year and does that include any of the recapture of the MB Unifier headwinds.
John That's a good question and I'm going to turn that to Robert.
The amount of it yes, yes.
So for the full year guidance.
<unk> hundred 62 or $65 million just a couple of notes on one that does include the revenue that we expect to achieve for the full year. So any revenue that we recapture from from Q1 that resulted from the fire damage from new brake.
Is included there and also if you look at the next nine months or the next three quarters that we're looking at about a 23% to 26% growth based on that annual guidance. So obviously, we are quite bullish about the prospects for the full year 2022.
Got it and then I guess, just a little bit about that.
Fire and you Craig.
Recapture there is that recapturing from it.
Apart from ourselves or is there insurance payments of ALDA any way just to think about the cadence there for the rest of the year.
Yes, John .
I mean, we we won't we won't have a financial impact because on the bottom line because the insurance will take care of that but our manufacturing team is committed to make up that nine point for $9 5 billion dollar loss that we had in the first quarter over over the over the rest of it.
The year.
Progress in getting that plant back up and running is going very smoothly.
People are really dedicated.
Two two making up.
The lost revenue.
And making sure that our customers are served in the way that they have traditionally been served for 60 years.
I appreciate it and I guess just lastly.
Public market biotech funding has been a little light year to date, we're coming off a record year as the last two years.
Have you noticed any changes or impacts in your clinical trial business. There just from maybe emerging biotech type players.
Let me start the answer and then I'll turn it to Mark So wiki.
We haven't really noticed any any changes in our clinical trial activity as you know the number we report every quarter is a net number there's always action.
Of new starts and then and then terminations of trials. So the net number is what we report every.
Every quarter end.
U S.
As I mentioned earlier, we ended up with 81.
600, not trials in phase III. So so.
Mark you might want to add to that.
Yes, Jerry Thanks, I'll, just add a little bit here. Yeah. So you know if we actually take a look at our core competency as it relates to clinical support we focus on the cell and gene space and in fact, the activity level. There has been very strong if not.
Actually increasing a little bit.
We think that.
Detail yeah.
It's a good question Brandon because you know we up to this point of not giving guidance on revenue and we think you know.
First of all it's a we're right at the preferences of of expectations of guidance. I mean, we are going to be you know.
Cheeping 260 to 265 billion in revenue.
And so so that was one aspect. The other aspect is just to get the market's a certainty of the confidence that that to share the confidence that we have with the market.
The it's it's very easy to read a lot of negative things into the turmoil that's happening today.
And I I think that we're vastly oversold. The you know where we are in the market is absurd and so.
You know, we want to share <unk>, our confidence with the market.
Let folks know what what what the <unk> does look like from our point of view. So that was that was a bit that those are the two big bigger factors as far as empty egos, we don't give guidance one on units so I I don't.
Can't talk about that except to say that the backlogs are strong at M. D. E. N. There's been no dimunition of of of of demand. In fact, it's continued to be very very strong and has been strong for a good while Robert you might wish to add to what address it.
Yeah, maybe he can you know just just yeah. What you already said nervously, where we're confident and we wanted to give investors and analysts say all kind of that level of confidence for 2022, you may recall brand in the past we did talk about the business units really to reflect the acquisition of quite a Pvp N M.
And to look at organic growth versus the acquisitions. Now. This is really one one operating platform with the <unk>, specifically talk about revenue guidance for M. The biological fluids or quiet P. D b, but made them both expected to grow meaningfully and contribute to the overall risk.
<unk> and then as you would expect to your credit card systems in terms of growth rates is expected to lead the pack.
Yeah Robert.
Might I might add one more brand and I wanted to comment on your commercial question here, So you're aware.
And we were just talking about it you know we focus on a portfolio approach to the clinical and commercial space.
And our focus has historically been I'm growing a clinical trial pipeline and supporting those through commercial launch. That's you know obviously demonstrating success and we expect that commercial grocery continue for for primary reasons. One we're gonna see and continued number of of approved therapies that expand out on a global.
Basis, which we're seeing evidence of already with additional approvals of folks like Novartis and others.
He is approved therapies you can move in earlier lines of treatment.
Gilead type product has moved a second line BMS will be filing per second line for example, which substantially increases the addressable patient population.
And these approved therapies continuing to expand indications right mm.
As well as new therapy launches. So so the four of those obviously bold very well from a commercial standpoint for us over.
The foreseeable future.
That's that's helpful and then.
On M. B he listened to supply constraints does that mainly a cost dynamic or is that also limiting your ability to ship product and then secondly, you talked about and.
And.
Packet expanding capacity in the U S.
The more students about the timeline for that new capacity coming on board.
Yeah. It made the leap capacity expansion is taking place.
As we speak on an incremental basis I mean, we we've added ships. We've added people we rearranged some some some some processes. So that's incremental but we also are planning.
An actual plant expansions and that will take a year or so but it's in it's in the process.
Okay and your last one Jerry.
Jerry.
And a million cash on the balance sheet about finding that much. Unlike a lot of other smaller companies.
Companies.
You put a little bit to work on the share repurchase front, but just curious.
Get an update on.
What you see in terms of the acquisition pipeline and.
Your priorities would be right now thanks.
Well you know the acquisition pipeline is made up of those those.
Those areas that we've talked about it in the past and of course, we're filling in gaps in and we do intend as I mentioned in my remarks to to be the most compelling most comprehensive supply.
Chain support system for the life Sciences in the World and so.
Well, if you look at our acquisitions.
Strategic acquisitions take a much longer time, and they're very they're rare they don't come along every day.
Tickle acquisitions, you've seen this make several of those and and you will see us continue to make tactical acquisitions.
One that we made this recently selling co is what I call. It tactical acquisition with strategic impact and that it it cut out a couple of years of development that we had to go through to qualify ourselves in India because of its licensing and its position so.
And the confidence that stay outfits, just got a fantastic staff. So we.
We do have a robust acquisition pipeline, we're looking at a lot of opportunities in the space and were eager to announce them as they come along our cash reserves are very important to us and but but we are always mindful of the distance shareholder money and we are prudent and the way we allocate our.
Cash the way, we invest our cash we don't talk about spending cash we talk about investing our cash because we're gonna return on everything.
On every dollar so.
It's a great well you have a great outlook, where we are in a great position as a strong position, but that's about as far as I can go and commenting on on how we will be using that that council other than the.
The purchase.
The repurchase we made on the stock.
Pretty good thank you.
The next question is from Greek soda with SBB security. Please go ahead.
Alright, you got my colon for picking this morning, congrats to take for the question. My first one is about a recent proposal policy proposal from CMS, we saw such.
Suggesting I got three per cent decline to correct, the reimbursement, which continues to be lower than the hospital cause go over all we're just wondering if you have.
Reimbursement updates overall changing your view on uptake or.
430 in the market.
So.
I'm Gonna start start.
Answer a couple of things and then turn it to a doctor's wiki because he's he's more he's closer to this but.
Look this this is a nascent industry and I think for anyone to be two laser focused on any particular element right. Now is is you know it should be taken in context with the fact that this nation is just beginning.
Just taking a long time for us to get to this point, we still aren't to use the baseball metaphor, we still aren't out of the first ending.
So.
That doesn't really concern us all that much because there's a different paradigm is changing on a consistent basis, so from that and I'm Gonna Mark talk talk about his views and what are you seeing in the marketplace.
No I think that's Jerry Scariest, absolutely correct just to add to that the biggest limitation on the space right now isn't reimbursement, it's honestly manufacturing capacity overall.
And you can you can look at this very clearly are a lot of our commercial clients are very candid about you know obviously the impact and shortage of either you know.
Drug product manufacturing capacity or a viral vector manufacturing capacity and they're all investing substantially in this space as it relates to bringing new capacity online.
Some are perspective, that's the biggest impact on scale ability is bringing that capacity online. The second is moving these products into earlier lines of treatment you know the earlier that they bring them online and obviously, there's a cost there's there's a cost justification that they can use.
As it relates to the overall spend against the patient demographic component and and a lot of them are using that as an angle that address of that reimbursement issue. So.
From our perspective does that that's a non issue, it's really going to be the manufacturing capacity that has the biggest impact on an adoption over the next couple of years.
Okay. Thank you get there to help and then my other question is about the new bioterrorist facilities. I was wondering if you had any update on like the revenue ramp up in east <unk> for these facilities and I know last quarter, you said, you're thinking 2023 is windows.
Immediately contributing to revenues just wanted to see if there was any update on the outlook.
Again, I'm gonna start to answer and then turn it to the Doctor So wiki, but.
These so when you think about bio services I want you to think about global supply chain centers because that's what these are this is this is I had a dream.
It's it is a revolutionary service, although some folks don't like to look at it exactly that way but.
Bioservices comes in as a part of the supply chain Center, which will so what that means is we'll have world class.
Just takes services.
Combined with bio services, which includes bio storage secondary labeling kidding fulfillment. It's it's it's may it's made to make to fulfil allogeneic algetic product do you remember about a third of our trials are allogeneic. So.
So it's married there and it and it will provide a lot of a lot of services and that's the core though it it.
Built around fulfilling.
The allogeneic Aloe Jack therapies.
As they as they come to market.
Very few places in fact.
Any that we know are equipped in that way.
We're very excited about these in this describe these these supply chain centers, which include bio services.
These first two orange and Houston and Morris Plains are just the beginning of course, and then sell and co that I mentioned is will be adopted to that system. It's already a bible storage operation and it will be it will it will be converted to that system at net Paris operation that Mark is plan.
Will you know will be a part of that system, but you'll see us opening up more supply chain centers and creating that.
Global supply chain network and and the net network is really important. So my guess is it eventually will have 18 18 to 25 global supply chain centers around the world, forming that network and there's a lot of power and having a network because you have redundancy you have backup.
Have you.
You you you have more sure do you have less risk.
By having a network.
So I'll, let mark take it from there.
Yeah, the only thing I'll add endures, absolutely right healing I'll add on it is both of the facilities and the U S have their foreign La Grande openings in June .
However, there's already robust client activity related to bringing product and activity into both locations.
Obviously, the timing of the reason that we were we were saying that.
You'll see the Ah more material impact in 2023 years.
The validation and onboarding processes of moving clinical activity or commercial activity into a new space take some time and so that that time is you know it.
Ford's quality systems and others from these organizations to make those transitions, but but the client activities extremely robust already in both facilities.
We stand by the fact that these will be very very actively heavily used.
These these organizations complete their validation processes.
Okay. Thanks for the color of their yeah. Thank you very much.
Thank you.
The next question is from David Saxon with tomato. Please go ahead.
Hi, guys. This is Joseph on for David.
Just one from us today.
Appreciate you guys, giving guidance maybe.
If you if you could add some more color on on some of the other financial targets you guys have talked about in the past.
55% gross margin, 30% EBITDA margin.
2025, you guys were talking about Ah, an ambitious target of $650 million to $750 million.
I guess like where where's the timeline for those different targets and kind of what what needs to happen like what what's kind of go into that over the next five or so years for that to happen.
Well you know I'll start and then turn it to Robert [noise].
The.
Our target 650, 750 remains in place about 2025, but we have no reason.
Tobacco off of that target and we think it's we continue to think it's achievable.
The the.
Then what goes into that is gonna be organic growth and acquisitions is just as we you know just the normal thing that we're doing today and it's gonna be it'll be organic rose it'll be talked to or acquisition.
Strategic acquisitions, if we're lucky and then and partnerships and alliances to move us forward.
And Robert you might want to comment on margins and other other other metrics.
Yeah, No just just a few things and you're absolutely right now where the target gross margin 55 per cent of the adjusted EBITDA is 30%.
Again, you have to step back and look at where we are right now.
Only stages of the cell and gene therapy market, where the leader in the space and we're constantly expanding our solutions and without our revenue capture.
And then market your on a global basis, so with us.
<unk> 690 clinical trials, the maturing of that clinical trial base.
Now 81 trials in phase three I mean this is a significant number so we believe that will be resolved in commercial revenue that we can support.
One lead to expansion of Martin's increase economies of scale.
And drive the adjusted EBITDA bottom line.
Right now we're still in that building phase.
There's only a few commercial therapies and neglected so you'll continue to see us build out.
Global.
Supply chain centers, but Jerry was talking about and inspire that we still have.
A positive adjusted EBITDA for the quarter, we expect that to continue overtime. So we do think it's it's you know the the.
The aspirational target set about a year and a half ago is achievable.
And then we're working hard to make that happen.
[noise] okay.
That's that's all.
Alright.
Thank you.
The next question is from Paul Night with Keybank. Please go ahead.
How was the performance cryo gene in the quarter.
Rob.
Good means quite a drink yeah. There's a few things to say on Crier January perfect Cryogen continues to perform well from our from our services and solutions perspective, but I think more importantly is related to highlight the expansion plans that are underway one.
The the expense that already happened in terms of the footprint in Houston.
And then the second.
We talked about the expansion into other geographies, which includes two additional sites in Philadelphia and in Austin.
So that will further asked you bring revenue capture they have a very kind of winning approach to the market and the huge market and will replicate that in those two additional locations.
Should expect to see as it goes out put in place now there'll be further revenue growth profitable revenue growth from the clergy inside.
And cryo P. D. P was how did that perform in the quarter.
Yeah, all all of the the business units performed well cloud CDP had significant growth year over year.
And perform very well, you'll continue to see acquisitions that they've made in the past you'll see more of those as the further expand their geographic footprint in key locations.
So.
Outside of the kind.
One time impact of the fire damaged that impact the MBE revenue revenues were very strong for for Q1.
And our last question is you you seem to pay a pretty Ah night.
Very attractive price for the felon co acquisition, what was behind what was a multiple of revenue price lower than what we've seen before.
Well I think you're right I mean, we do have a very disciplined approach in terms of the acquisitions. Overall. So you look at any of the cell and gene acquisition.
The cell and co acquisition in particular, I think it was attractive, but it's really more of the strategic element that Jerry was referred to related and settled go.
That's really will bring value.
Much more significant value too.
<unk> then the crowd poor family.
So it's really just the approach we're taking we're we're looking for <unk>.
Strong leadership entrepreneurial spirit, which.
Uncle management team certainly brings to the table they have all of the certifications that wouldn't be required.
Allows us to enter into the European market.
Probably two years sooner than we otherwise could have.
Damn it goes up and that's probably a conservative view.
So Paul I understand and just add a cup.
I just have a couple of things there.
Remember a big portion of that purchase prices earn out so number one and number two reinforcing what Robert said about the strategic elements.
In addition to meeting all the strategic elements that we wanted an accelerating us by a couple of years and beyond.
It meant all of our financial hurdles R. R O a C and return on investment criteria. So it's an excellent acquisition and fantastic people.
Yeah, Okay. Yeah, let me also that the acquisition was $606 $7 million in it.
Two $7 billion that is earn audience, reaching specific milestones. The the owners took solve the purchase price in shares of the company.
For the further upside that they see and becoming part of cardboard.
And then last would it be fair to assume that the pharmacy.
Farmers Biopharma clinical trial business revenue was up sequentially with your pickup and trial accounts.
Yeah sure they are they talking about <unk>.
Noncommercial, yes, yeah.
Yes, yes, absolutely.
Okay. Thanks.
The next question is from David last thing with the D. T. I G. Please go ahead.
Hi, congratulations on what looks to me to be like a pretty good quarter could you maybe just talk a bit about the impact of inflation that you're seeing on the business.
Specifically freight can you pass that through to your customers and how quickly can you pass it through and then also steel.
And then also any sort of technology components like semiconductors.
In particular.
And then related to inflation just in terms of the timing of throughput in the labs are you seeing.
Clinical trial activity sort of just kind of like being extended which may lead to some sort of I guess extended timing to recognize certain pieces of your your revenue just any color there would be helpful.
Yeah, they've been let me come in on on in the beginning and then Robert and and Mark May have some additional comments.
Look inflation is my number one worry and and because if it's not if it's not.
Properly controlled internally, then we get margin squeezes and that sort of thing. So we have we we do have some inflation, we end it and hits us and and all of the areas just like it does everyone else cause we're not immune to it I mean.
Stainless steel and aluminum semiconductors, neither are all our materials as well as free.
Great we passed that through that's a pass through on the on the others. We do pass that through also in terms of price increases we look at price increases more frequently now than we've ever done ever in the past we have early warning systems within our company within our companies to let finance know immediately when.
A price increase is suspicion not when the order is placed not one of the purchase order is is written not when the invoice comes in but when they suspicion.
A price increase and so that that goes to finance finance is alerted and we work vigorously to make sure that we address to our pricing in order to reflect the inflation is taking place now that pricing sometimes as permanent if we think it's gotta be permanent and other times it'll be surcharges and and.
So we we work hard to have like we do on every other situation. We work hard to have control over these situations because they exist and we face them head on and we face them intelligently and so far we've been very successful.
And then a junior that way so.
Robert do you want to comment further on that.
Yeah, No just just to say the few few more items and emphasize one that Jerry already mentioned as the.
Transportation piece that is covered.
And that is something that our clients are are okay. So that is passed through but if you look at maybe a different angle you look at our gross margins and we do believe gross margin stabilized, we actually have a slight uptick sequentially over Q for about 180.
And we expect margins to gradually improve over the coming quarters.
Harry mentioned, if you look at MBE, they've improved slightly sequentially, but they are still experiencing increased costs and raw materials inventory, we build up inventory to have safety stock. So some of those costs will take time to pass through.
To to our clients, but we do expect that to continuously improve and like Jerry said, you're very very very careful and analyzing any increases that we see in the market for the products and systems that we developed.
And then there was a clinical trial element to your question that market answer I think David.
Yeah, I think the only thing I'll add to that is that you know when he kind of address this earlier, we have not seen any slowdown in activity and we have not seen intentional extension of programs you know based on market conditions.
The trial environment is still extremely robust and very strong.
And we haven't seen any impact on on obviously, the macro events or inflationary considerations that impact any of those things, but the market seems to be extremely strong at this point in time from everything that we can see.
Oh, okay. So so the activity and like Shanghai in China, that's not having any impact on your business is that correct.
Yeah, we we don't on a global basis, you can see I mean, all three geography's continue to grow the total number of of of trials and trial count No. We have not seen an impact from a.
Geographic standpoint based on any macro environmental conditions at this point in time.
Hey, David Marcus Marcus Marcus.
Typically returning to trials here.
Talking through that so.
Right right, yeah, so yeah, the activity still very strong.
Okay. That's that's great. Thank you and then it sounds to me like backlog in demand, it's still high pipeline growth is good and you're adding capacity.
Thank you you have three MV biologic plants that are actually creating these products are you building. Another plan or are you, adding onto one of those plants in order to add you know more resources.
David That's certainly a <unk> in the in the future.
We will we will look at that but right now I'm focused on asset utilization. So when you have a plant that's running one ship you could run to when you have if you run to you could run three and then if you can go back in and re engineer. The plant sometimes you can add onto the plans. We do have that underway at both plants were examining.
Adding onto the plants and when you do add on sometimes you can put in automation and other labor saving processes. So we're looking at all of those things.
But the first order of business is not to just go build a new plan at the first order of business is to improve our asset utilization and we haven't maxed out there yet so that's that's our focus.
Okay, and then just one more for me with the $9 million in I guess delayed revenue I would imagine some of your competition would be looking at that and trying to.
Get in there and take some of that revenue just any any thoughts on that what what has the competitive response ban if any and just any any color on sort of a competitive.
Environment I've gotten some questions for some investors around you know pricing and capabilities and so forth just any thoughts or would be helpful.
Oh, yeah, absolutely. It's a it's a really good question that I'm eager to address.
M. B E 60 years, becoming the pre eminent supplier cryo systems, cryogenic freezers and do indoors in the world.
It occupies.
<unk> lauded position for the highest quality the parents dealings of any supplier in the world.
Our customers have did.
<unk> that they will write it through with US now it's caused some pain for some of them because we go through a a robust distribution network globally.
But they but they stayed with us now.
I'm sure that the competition has benefited to some degree from the bank logs that we have but we have those backlogs because of the loyalty of our customers and those customers are loyal because they know they're gonna be dealt with fairly and they're gonna get the highest quality product and they're accustomed.
To those to those services no one manufactures a product of higher quality than M. B a.
Okay. Thanks very much appreciate it.
Mmm.
Once again, if you wish to ask a question please press diet than one.
Alright next question <unk> added security. Please go ahead.
Thank you for providing a full year guidance here. So maybe terrorists you plug it balances. The recent now to select New Jersey, and Houston is yard logistic centers.
You can talk about 16 customers and potential customers that that you guys can cover for those two centers that'll be great and also for.
For those two centres will there be any difference in terms of the services provided from them.
You know, it's a it's a really good question.
And is John Dillinger says you know when he was interviewed at one point you said you know why do you Rob banks <unk>, that's where the money is well the corollary to that is we're located in these these in these places because in Morris plains and in Houston, because that's where the customers are we we have [noise].
The huge following in the Houston area and of course, the major campuses of all the major roughly all the major player.
Players in the pharmaceutical industry are right there around the Morris Plains area and that's important for us to be in those locations. So it was a no brainer and that we already have the crowd Jean facility in Houston. So we can create a campus affected the Houston area Morris Plains is very close to the Livingston operation that we have.
Where we can better serve the customers.
Far as the services from these centres there'll be exactly the same the esop's will be the same. This is the the network effect I was talking about earlier, where we where we where we provide redundancy and decrease risk.
We're all about cell viability and about decreasing risk around that cell viability and and we also didn't want to create we are also with the network effect that we have that redundancy, where if if there's a catastrophic situations in one place. The other another node can take over and never Miss.
Anything we reduce the risk because.
We'll be able to store in more than one facility and no. It's treated exactly the same sameness O PS.
And all all those all those facilities, making up the supply chain the global Sponging network.
Mark do you Wanna come in any further on that.
No I think you articulated it really well the only other thing that I would add is as we continue to build out. This network. It provides organizations the ability to truncate supply chains and to shorten them to be able to get product into the hands of the of the patient that much more quickly and some of these products have a very.
Time sensitive aspect to them in particular some of the newer allogeneic portfolio, that's coming through our hours may make the difference between the successful or not successful outcome for things that are related to spinal Florida, cardio and other aspects. So having having a network of facilities that are able to store and distribute.
You know these types of product lines will have a substantial beneficial impact for our client base over time.
Got it thank you Jerry under Mark and.
Another question I have is in the last two quarters.
Called her or call <unk> single day, James and the recently and all that has it has <unk>.
Haven't seen lower demand for their product. So I'm just curious what kind of signals have you guys pick it out from the all customers have you seen may be as a order number you called her on the forest called her a relatively higher than the second called her so far.
So so I'll start and then I'll turn it to Mark [noise].
Remember, we we are the gold standard in terms of in terms of of clinical trials in support of the industry. So it gives us a view that other folks don't have and and and and you know.
Mark is mentioned that there's a manufacturing capacity constrained and I've mentioned too that this is a nascent industry. It's at the very beginning and nothing is a straight line and the development of the industry. So there's nothing concerning there.
To us, but we certainly can see how it could be concerning with other operators, who may not be as involved in the industry and may be looking at it as being more mature than it actually is but it's still in its very early formative stages.
And it's running short of manufacturing capacity I'll turn it to Mark at this point.
Yeah, Jerry's exactly right. There is the biggest issue here is manufacturing capacity issues. You know so if you take a look at you know Gilead Kelly and in Bristol Myers for example, both of those folks have substantial additional manufacturing capacity coming on line and have been intimate at that.
That capacity constraints are are are restricting their ability to to provide.
Provide product for the addressable patient populations, some that they're that they're going after on their product lines Novartis has seen some loss in product revenue due to competitive factors, which they acknowledge.
You know they've been really focused now on moving to rest of the world because of some of those competitive factors.
And they have also you know obviously launched looking at launching this gnocchi charge platform, which which they they believe will reach substantially reduced manufacturing time, which will reduce costs, but also provided a much larger volume addressable.
<unk> for you know for patients potentially over time, so everything is everything that you're going to see over the next one to two years in this space from a commercial standpoint is it really going to be.
Impacted by this capacity coming online as well as the move from third line. The second line and then you know ideally some of them are also starting to target moving from second line. The first line, which will also have a significant impact on the addressable patient population.
Got it and the one last question for me.
Terms of the pressure from supplier channels I haven't seen you guys have a bad her across marketing in this called her compared to last quarter and that's a few years.
Generally speaking is it's getting bad her in the first quarter and that's called her worse than last year.
We can't we can't say that it is.
Is actually getting better what what I can tell you is that we have an incredible sourcing team across all companies and and they do just an incredible job they foresee forecast.
We provide you know put the safety stocks in that Robert referred to earlier, we are in constant contact through our quality organization as well as our procurement organization.
We're not you know I I would say the world is not out of its supply chain issues, yet, but I will tell you. This I think the supply chain will work its way.
Through all of the issues in the next couple of quarters I think it will take that long the biggest issue right now and supply chain as containers as you know container availability, but but that's that's getting better it's not where it needs to be by a long shot in Shanghai Harbor has a lot of you know.
A lot of.
The world's containers stuck in in that harbor, but it will work through and and our folks are on top of things, they're booking things in advance and you know like every other problem, we address forthrightly and and work through it so.
So I guess the bottom line is I think is it is getting better.
But we're not through it yet.
Got it that's a very helpful color I. Thank you for taking my questions.
Yeah.
The next question is from Jacob Johnson with Steven. Please go ahead.
Good evening.
Bigger picture question in modeling follow up just.
Talk about these apply.
Supply chain centers.
Think about those I kind of think about the allogeneic opportunity and I. Just thought you you you made key shipments with autologous, but only one with al genetic but as we think about the potential volumes from al genetic therapies and storage kidding packaging.
Yeah can I also think therapy.
B a larger revenue opportunity for you all vs. Some of these autologous once today.
Jacob.
I want Mark too I'm.
Sort of educate you on on a couple of things there because I think on the surface I think you're exactly right in terms of what you might think.
Think on the surface about tongass versus.
Al genetic but but the fact is that with Jack has to be distributed and and so it's a lot more work a lot more things going on with allogeneic.
Congress, there's duplicate doses made so.
I won't go any further I will just turn it over to Mark because he knows a lot more of the detail and and let you talk to ticket bar.
Yeah, it's a lot more complex than that so.
<unk> right. The bottom line is is that analogy neck therapy can have as many as few as one dose, but it could I have as many as a dozen doses depending on the indication in therapy class that's being addressed so.
May have as few as one shipment you may have as many as 12 based on the nature of that particular allogeneic therapy.
But allogeneic [noise].
Also requires bulk storage.
Gentlemen, secondary labeling considerations, which provide obviously the the supply chain centers have the capacity to support each and every one of those Ah components from the drug product distribution basis.
That doesn't mean that I'll tell her just never had those needs right. So what are the key elements around having a supply chain infrastructure is for drug product importation.
And release for a product manufactured in countries a dose country b.
So you have to go through a drug product release process and that can only occur in a controlled environment. So.
One of the drivers for buying a cell until for example acquisition is the fact that they have two p's on staff that do drug product release.
<unk> assets that are being manufactured in the U S and released in Europe .
And could also support secondary labeling considerations for any country labeling within language related considerations. So there's a lot of different factors that go into drug product distribution in this space that's not as simple as autologous is going to be manufactured in a manufacturer setting and then shipped directly to Pee.
Patient you know you do have backup doses when you do have other related activities occurring.
However, allogeneic does in general have a higher demand need for a supply chain center based on long term storage and other fulfillment related activities in general so.
Hopefully that helps.
And then just just for Robert just the.
The insurance her coverage around the MVA MBE fire any any thoughts about the timing of when you'll receive is endlessly that's closer numbers.
You're talking about.
I couldn't and send the proof of insurance.
Insurance, yet the insurance related to the M B and the fire like the business. Yeah. I mean, that's that's an ongoing process and it covers inventory fixed assets the business interruption, we have adequate coverage we've already received.
I think around $8 million from from the insurance so far.
So that's going very well, we're working really hand in glove with the adjuster.
<unk> their their addresses was to get the plant up and running as quick as we can and we have the same interest. So that's gonna happen over the next quarter's we're probably going to be able to close it off completely by the end of the year.
But most of the work should be done within the second quarter I think.
[noise] helpful. Thank you.
This concludes the question and answer session I'd like to turn the conference back over to Jerry Shelton for closing remarks.
Thank you and thank you for the conversations we just had I think there were there were good.
<unk> eliminating.
In closing first quarter 2022 is yet another quarter, demonstrating our leadership position in temperature control supply chain solutions for the life Sciences industry supporting our markets are biopharma animal health, and reproductive medicine, and especially life saving cell and gene therapies across the clinical and commercial spectrum.
Due to our comprehensive brand portfolio growth initiatives global reach and talented employees located in 15 nations, who flawlessly execute on our winning strategy daily. We believe 2022 will be another year of results, reflecting outstanding growth.
We want to thank you for joining us today, we appreciate your continuing support and interest in our company and we look forward to updating you on our progress again next quarter.
We hope you have a good evening.
This concludes today's conference call disconnect. Your lines, Thank you for participating and how to <unk>.
[music] [noise].
Mmm.
[music].
Mmm.
[music].