Q3 2023 Cryoport Inc Earnings Call
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Good afternoon, and welcome to <unk> third quarter 2020 earnings Conference call.
All participants will start in a listen only mode.
Following the presentation, we will conduct a question and answer session.
Instructions will be provided at the time for you to queue up for the question.
If anyone has difficulties hearing the conference Please press star zero, but the operator assistance.
As a reminder, this call is being recorded.
I will now turn the call over to your host Todd Fromer from Casey S. A strategic communications. 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 it might be however, you should not place undue reliance on any such forward looking statements because such statements speak only as of the date with me, we do not undertake any obligations.
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. In addition forward looking statements are subject to certain risks and uncertainties that could cause actual results events and developments to differ materially from our historical experience and our present.
Expectations or projections. These risks and uncertainties include but are not limited to those described in item one.
Risk factors and elsewhere in our annual report on Form 10-K filed with the Securities and Exchange Commission and those described from time charter and the other reports, which we filed with the Securities Exchange Commission.
It is now my pleasure to turn the call over to Mr. Jerrell Shelton, Chief Executive Officer of Cryo Port Jerry the floor is yours.
Thank you Todd good afternoon, ladies and gentlemen, we appreciate your joining our earnings call. Today. It's this afternoon is our Chief Financial Officer, Robert Jovanovich, Our Chief Scientific Officer, Dr. Mark Sawicki, our vice President of corporate development and Investor Relations Thomas lines.
As a reminder, we have uploaded our third quarter 2023 in review document to our website. It can be found under Investor relations in the events and presentations section.
Document provides a review of our financial and operational performance and general business outlook.
Not had a chance to read it I would encourage you to Devon website and download it.
I'll provide a brief update on the business and then we'll move on to answering your questions.
Earlier today, we reported third quarter results that were consistent with our expectations as discussed on our last earnings call taking into account current and well known global economic and geopolitical challenges, having said that.
We are continuing to see solid and sustained demand from our peak lifesciences and cell and gene therapy customers. Despite the current macroeconomic climate.
What I mean by that is when you take a close look you will see that our quarterly results contain some very promising growth points, including a notable increase in commercial and cell and gene therapy revenue.
In fact commercial revenue increased 54% on year over year basis, and 52% sequentially.
At the same time, our vital services revenue increased 26% year over year.
Regarding cell and gene therapy crowd Port systems Green, 10%, both on a year over year basis, and a quarter over quarter basis.
All of this growth was driven by these sustainable demand we saw during the quarter and we are continuing to see from advanced therapy manufacturers.
We also continued to increase the number of clinical trials supported during the quarter. We added a net 27 trials year over year. This brings our global clinical programs to a record total of 670 with 81 of these trials being in phase III.
A total of six crowd sports support BLA.
Were filed during the quarter.
Looking ahead during the remainder of 2023, we expect up to an additional five anticipated application filings and one new therapy approval.
We think our MBE biological solutions order intake has begun to stabilize and be eased results. This quarter were in line with our expectations and our current guidance, reflecting it reflects this.
During the quarter MBE and some 70% of it with some 70% of the world markets continues to produce healthy financial metrics.
So we remain quite confident about our long term market outlook and the recovery of our China market as the country. Despite its current economic woes is a hotbed for the life Sciences.
Alongside our operating results during the third quarter and in recent weeks, we have continued to execute on our corporate strategy to accelerate our long term growth.
Bashan.
<unk> development projects and small strategic.
And smart strategic acquisitions and partnerships. For example, this includes our collaboration with cell and gene therapy catapult, the premier cell and gene therapy manufacturing innovation Center in Europe to provide integrated logistics support for Stevenage manufacturing innovation center in the United Kingdom father those partners.
Ship from its location on the catapult site will provide other opportunities within the Stevenage Bioscience cluster. This collaboration establishes our UK logistics center, which is which will our first UK logistics center, which will further support our European expansion.
We recently completed the acquisition of Tech for mid Life Sciences.
Technology is a spinoff of the technical University of Darmstadt, located in Darmstadt, Germany <unk>.
<unk> provides next generation pharmaceutical supply chain visibility by integrating advanced condition monitoring.
<unk> and artificial intelligence solutions.
We are excited about integrating tech from edge cutting edge technology for comprehensive Mark Mark monitoring in real time across all cloud companies by doing so we will expand our digital supply chain solutions offerings and be able to provide our life sciences clients with even greater condition monitoring options.
Logistics management capabilities and customer support.
With these latest developments and our leading market positions, we have even greater belief that our long term growth prospects are solid.
There is no other organization in the life sciences with the breadth of capabilities crowd toward hasnt, providing robust dependable end to end supply chain solutions today crowd PDP as the world's third largest specialty couriers, serving the life sciences, covering over 220 countries and territories.
And B E biological solutions is the world's largest manufacturer of vacuum insulated products and cryogenic systems and as the preferred brand for academic government and life Sciences companies worldwide.
While port system supports approximately 70% of all the cell and gene therapy clinical trial market and as we continue building our global supply chain solutions that share continues to grow even in a challenging environment.
And crowding is one of the industry's most trust.
And specializing in the secure storage of biological specimens and supporting MD Anderson dialogues, Texas children, Ouattara wanzer start and many others.
Private board is poised to capitalize on the continued growth of the life sciences, and especially with LNG in the industry.
As more therapies make their way toward commercialization over these coming years.
Even with today's economic and geopolitical environment, the cell and gene therapy industry is expected to grow at a 10 year compounded annual growth rate of approximately 20%.
This concludes our prepared remarks, now I won't be happy to take your questions. Operator, Please open the lines for questions.
Thank you, ladies and gentlemen, we will now conduct the question and answer session.
If you have a question. Please press star followed by the number one on your touch pad.
If you wish to cancel your question. Please press star two.
Please ensure to lift your handset if you're using a speaker phone before pressing the keys.
Your first question comes from Paul Knight from Keybanc.
Your line is now open.
Hi, Gary and congratulations on the quarter.
The.
The vertex sickle cell anemia therapy, I think you've mentioned that in the past what level of involvement.
Will you have there is my first question.
And then the second question is.
If you look back on the <unk>, which has had its period of softness but seems to be.
<unk> was it kind of overstock globally, and then what portion was.
Just tightened capex budgets.
Paul if I understood. The I'll take the second question first.
The first question to Mark.
<unk> sells.
<unk> has a solid position.
Hard for us to dissect exactly how much was overstocking and how much.
Exactly what happened in the market acceptance of conservatism and capital expenditures amongst our customer base.
And then of course, we had the pullback in China, which we think will stabilize so we think we're in a stable position going forward.
The order intake has stabilized it looks it looks like it's in good order and hopefully channels at its bottom and we'll be coming back up.
There couldnt be much further impact on us.
Our China revenue in total this year or for this quarter rather is.
Around 4%. So so it's not going to be any kind of a significant challenge going forward.
From this point forward.
And we think it's stable so.
Does that answer your question Paul.
Yes, very useful thanks.
I mean I guess.
Bottom line is that.
Yeah, we're getting past it.
Yes, maybe yes, Brian let me just.
Let me just add real quick to <unk>, because I think sometimes people overlook that in spite of the revenue level right now in Q2 and Q3. If you look at our product revenue for Q3 product revenue gross margin is up 45% and the <unk> business has been very profitable driving good positive adjusted EBITDA.
And cash flow.
Okay. Thanks.
Thanks.
And your first part of your first question was on sickle cell Dr. So with.
Paul Yes, so we actually had six BLA filings of portfolio companies that were completed in the quarter, which includes ADR immediate buyout rocket.
Christopher vertex program as well as the label expansion for <unk>.
All of which that we are playing a role and it obviously if they are approved.
And the commercial launch activity of it we can't disclose exactly what we're doing due to confidentiality, but we will play a role in all of those products, so assuming that they come to fruition.
So the story is even broader than just the vertex Christopher vertex product because we're seeing an acceleration in the commercial filing an activity space, which we think is going to continue to drive that strong performance, we had in our commercial revenue for the quarter.
And does that filing data in prior press releases Mark.
In prior press releases as it relates to.
The answer we haven't disclosed it until this report it's on there in the review that we posted on our website.
Right.
Right.
Sure.
Sorry.
Thanks for the question is so much Brian.
So we might be we have six BLA is in Q3 five in Q4, why do you think will end up within our range of this year versus last.
Yes.
Tom has that data handy tracks. It really detailed time do you guys get the stats in front of you.
Let me make sure I understand your question are you asking how many filings for the year or how many potential approvals for the year I think filings as a common.
Terminology you used Tom right. So.
11, we will have here in Q3 and Q4 and then the question really is the number of BLA BLA and MAA total this year versus last.
It is higher although it has to be candid lower than what we're forecasting at mid year. A few filings have slipped out into 2024, where we expect 20 filings now that we have.
Visibility on in 2024, so they were about four or five if I remember correctly that slipped from 2023 into 2024.
Okay.
On the.
Approval side for those in 2024, we do have four already that have <unk> dates are FDA dates for decisions in early 2024.
Okay. Thanks.
Yes.
Your next.
<unk> comes from David Saxon from Needham Your line is now open.
Great. Good afternoon, guys. Thanks for taking my questions and congrats on the quarter I did want to just ask a follow up on on the MTA order.
Comments, so what exactly are you seeing.
<unk> stabilized that are like are the orders looking to be flat more sequentially are you, saying things have improved to be flat on a year over year basis.
And then is this.
Worldwide, including China or specific to certain regions.
Hey, David.
Thanks for the question.
We monitor.
A lot of metrics MBE and what I was referring to is the order intake has stabled out its flattened out and we think that it will continue to be stabilized.
Okay.
Alright.
I guess stable flattened out.
The second quarter into the third into the fourth.
And then I'll just add.
Okay. Okay. That's perfect. Thank you.
And then.
You noted strength in commercial revenue that was up fairly significantly and bio services solutions and you said in the document you posted that it's continuing into the fourth quarter. So can you characterize what youre seeing or trends accelerating.
The year end or are they.
Just kind of stable, but but continuing to be strong and then are there any reasons why that wouldn't continue into at least the first half of next year. Thanks. So much.
Go ahead, yes, so I'll comment on that on the broth bio services side things are very very consistent and strong.
We obviously opened the two new facilities in Houston, and New Jersey last year, we've actually on boarded 29, new clients into those facilities over the last 18 months.
They're very very strong base and this is in addition to.
Very very strong demand for that from the Cryogen asset as well. So that's very very positive on the commercial side as Tom had mentioned.
Filing activity is very strong.
We see line of sight on a significant increase in the number of approvals.
And.
Multiple of these products should be.
Fairly decent volume, which will continue to contribute to.
Obviously, our contribution for commercial revenue standpoint and to 24.
Yes, maybe just to look.
If you look at the Q3 performance in commercial revenue.
Always have some some timing where you have a little bit more revenue in one quarter than the other.
But we do expect to see growth overall ongoing in commercial revenue with that in mind that you'll have some quarters that are higher just because of maybe a greater portion of product related sales versus service related sales.
Okay, great. Thanks, so much for taking my questions.
Your next question comes from Jon <unk> from UBS. Your line is now open.
Good evening and congrats on the quarter and thanks for taking the question.
Just maybe dive in a little bit more on the commercial revenues nice growth in the quarter up 50% year over over 50% year over year I guess any additional details I guess you could provide there on this is this additional services you have with some of the previously approved product or is there a ramp from some of the newly approved products here.
Just any additional color you can provide on that.
So the bottom line is we saw contributions from Paul.
Youre seeing additional uptake in revenue acceleration out of our portfolio of existing products and obviously.
Obviously, our support of the sought after product has also been a nice contributor to that number for the quarter.
Thanks, and then I guess, just any color on cryo Pvp in the quarter and how the rollout is going there in the U S.
Yes, that's correct.
Cloud <unk> is doing well the rollout is.
We had to make some adjustments in the U S.
And we've made those adjustments will we.
See that rollout.
Contingent smooth rollout.
Thanks, and I guess last one here on my end.
Any additional color you brought it on like demand trends across large part of that may be emerging biotech I know the total clinical trials are up year over year, but have you noticed any changes in customer behavior, then given some of the funding environment and just broader macro pressures.
As I said during our last.
Quarters call.
I think that.
The development of this industry is.
Similar to <unk>.
So biologics and if you look at biologics and the way it is.
It Hasnt system sweaters in the beginning and then leveled out everyone. Today, we want to be in biologics sits in the pharmaceutical business.
It's a fantastic business and a large business and we are on the same track.
<unk>.
We're in the beginning phases of this development of this industry. We are developing solutions to answer your questions. In this industry to answer answered needs in this industry and to help with propel and move forward and we think we're on the same track as biologics if not better than that track.
Got it thanks for taking the questions.
Your next question comes from Jacob Johnson from Stephens.
Your line is now open.
Hey, Thanks, good evening, congrats on the quarter. Thanks for taking the question maybe not to belabor the point, but just just one more follow up on the commercial revenue.
Really strong growth factors to think if I heard you correctly it sounded like threat to what some portion of that.
At the risk of asking a question you may not want to answer, but any way to tease out how much to raptor was a contribution of grants this quarter.
Yes, we don't we don't break that break it out on a client specific basis.
But it wasn't meaningful contribution I'll leave it at that.
Okay. That's helpful. And then maybe a bigger picture question just on Integra, Sal I think Thats a platform you guys have continued to build out over the last year I'm, just kind of curious where that stands on a revenue basis as we head into next year, what's the opportunity around that offering.
I wanted to start and let it back because when we gave him takeover.
Integra. So it was started during the last year.
And it's progressing but these are the this is a novel solution for the cell and gene therapy industry is something thats needed in the industry. It will have to be.
Really.
Plants built out and finished and.
Mark can comment on that but then they will have to be validated.
Customers will then do their audits, but we have we have we already are seeing demand coming.
Coming in this is a customer driven.
Ever so we know it's going to be successful Martin.
Yes, just to add on that so that the site in Houston as construction complete or just going through all the validation activities as we speak.
At the site in Belgium is nearly construction complete we'll be running a couple of months behind the site in Houston.
As Jerry mentioned, we are seeing very strong interest and you've already had a significant number of clients come through the facility.
During construction.
We also have a already have a robust pipeline as it relates to folks that are evaluating it to be able to step into their clinical and commercial opportunities. So when those facilities come online in 'twenty four.
We believe that there'll be a very very.
Nice and quick uptake.
With that asset as it comes online.
Got it I'll leave it there thanks for taking questions.
Thank you guys.
Your next question comes from <unk> from Morgan Stanley. Your line is now open.
Hello. This is Hugo on for Tito. Thank you for taking my question.
And the demand is starting to stabilize in China.
Are you seeing effects of anti corruption initiatives still continuing and the reason.
What do you think I am sorry, you are coming through where you are coming through on the phone very weak.
I didn't really get your options in China.
So a little bit better.
Yes, that's better better thank you.
You talked about and the demand is starting to stabilize in China are you seeing effects of anti corruption initiatives still continuing in the region and what do you think the ultimate okay. Ultimately happen to begin seeing recovery of that market.
Well, we're not experts on the internal workings of China and what's on the administration's mine, but will be can you is that there has been some reserve as a result of the foreign corrupt practices Act and so people are lying low they don't want to get caught and investigations and that sort of thing. So it is depressing.
The market and hopefully that will open up very shortly.
She is taking initiatives within the economy too to stimulate it but.
It's not.
It's hard to predict exactly when that windows initiatives will have some impact we know one thing we can't discount China because it is a hotbed of activity for the life Sciences, and we intend to participate there.
Great. Thank you for that color and then a separate follow up.
Could you elaborate more on the tech format life Science acquisition, how does their condition monitoring with AI differ from capabilities offered by <unk> and how do you envision incorporating their condition monitoring capabilities into cryo portal and smart Pak II condition monitoring system.
I'll start and then I'm going to turn it over to Mark for further comment.
<unk> is truly a.
Central acquisition with true strategic impact.
Allergies, that's been developed by biotech for med over the last eight years of its existence is.
Is fantastic technology, it's complementary to meet much of the technology that we have within crop port or have underway at port and it is it will boost it it will actually boosted it will have synergistic value.
It has it has a number of features that.
That are going to have significant impact.
Certainly on Cryo Port and we think on the market in the future so with that I'll turn it over to Mark to make further comments.
Yes, Thanks, Terry Terry is exactly right.
It's a very complementary product to our existing smart Pak II condition monitoring platform it will provide us more debt.
Different service levels and competency from obviously high end real time monitoring as well.
All the way down to a disposable lager.
Lagers for one way or unit unit directional transit packaging.
So it's a very complementary product for us.
The product suite itself.
We'll dovetail very nicely into what we built.
Within our existing portfolio of services.
I'll just add just a couple of things just to just a couple of things on that look you asked about AI, we've been using AI for a number of years. AI is is an important technology is advancing very quickly. They have that capability is the other thing is.
Take from it is very communications friendly its enhanced beyond anything on the market today, and we will be taking advantage of that you'll see it.
Great. Thank you.
Thank you.
Your next question comes from.
<unk> <unk> from B Riley Your line is now open.
Sandra Horning, our questions are great. So say the swelling revenue from commercial cell and gene therapies.
We heard some of the cell and gene therapy manufacturers now Rick magazine for Q, How do you see this trend so far in this quarter and the next couple of months.
A follow up question.
I'm, sorry, if you've seen some of the commercial manufacturer <unk> is doing what.
Yeah.
Yes, I'll take it Mark you are right there were mix quarters from the commercial.
Our commercial customers some of them had revenue below street expectations of others exceeded it by a lot, namely J&J legend and <unk>.
It is going to be a mixed bag in Q4 based on what they are telling the street.
So we can't really comment more on on their forecast.
Yes.
Got it and then one follow up question is related to the pack format acquisition does it mean now <unk> would expand.
<unk> to provide logistics to pharmaceuticals outside of the cell and gene therapy.
Yes. The short answer is yes, it's complementary to our cryo PDP.
Logistics offering and it will provide some additional and enhanced competencies as it relates to data monitoring for areas outside of the Celgene space.
Got it thank you.
Your next question comes from David Larsen Martin from <unk>. Your line is now.
Yes.
Alright can you talk about large freezers shipments within MGE.
How is that progressing.
Growth ticked back up or is it steady stable.
Yeah.
Yes, David.
Orders for Freezers are back on track.
<unk>.
I've said on a stabilized basis on and there was a clarifying question asked earlier about second third.
First and second quarter.
So orders have stabilized across the board the patterns are stable.
Okay, and then how many.
Therapies cell and gene therapy products would you expect to get approved each year.
<unk> speaking I think you were supporting around 15.
Last quarter and <unk>.
Commercial revenue is pushing 10% of total revenue.
Inc.
I'm just trying to get a sense for how much of your total revenue do you think that could become.
Like into next year and the following years it seems like it's growing pretty rapidly.
Alright, I'll start to answer your question David but.
<unk>.
Tom.
Should add their comments as well.
Look the whole.
This is no surprise I mean commercial therapies, what it's all about.
We support the most trials with us in order to get to the commercial.
These therapies to the commercial arena and as we start to improve.
10 therapies per year, it's certainly commercial the commercial revenue is going to dwarf depending on the.
The number of patient potential for the indication, but it is going to dwarf.
Revenue from from from clinical trials and that's coming.
That's what we're building the company for it that's why we're investing in all of these initiatives for the future because we have to be there ready to support.
The industry has a commercialized its mark and Ed.
Yes, yes.
The number is actually we're currently supporting 12 commercial products.
And Jerry is exactly right.
Tire strategy has been to capture the clinical space and retain it during commercialization.
Gottlieb set back in 2019 that he anticipated by 2024 to $25 20, commercial approvals a year and we're actually starting to see line of sight on that number.
We're very excited by that especially because we're supporting such a large percentage of the clinical space. We wholeheartedly anticipate an unexpected retained the vast majority of those through commercial and.
We're building out our infrastructure to support that scale.
Alright.
<unk>.
Little bit for you. So it's 12 commercial today.
Two more will get approved before the end of the year that would bring us to 14. Those two do have <unk> dates are FDA dates before the end of the year and then we have six more of are forecasting to commercialize <unk>.
Next year.
That would bring us to 20 total if we're right.
The six that were forecasting for next year for already have <unk> dates in the first little over the first four months of the year and hopefully that number will grow above six but that's what we're seeing today.
Uh huh.
How much revenue do you think those six could contribute to the business.
Yes.
What that slip at anticipated number is but obviously, we expect the commercial growth number to be disproportionate to our overall growth number over time.
Okay, great. Thanks, very much congrats on a very good quarter.
Thanks, David.
Your next question comes from Brandon Couillard from Jefferies.
Your line is now open.
Thanks for taking my question maybe for Robert.
Circling back to the comment that you guys said you saw it.
<unk> cell and gene therapy demand continue here into <unk> is it fair to assume that commercial revenues will be up sequentially in <unk> versus <unk>.
No I think the way you have to look at it is really obviously longer term, we expect to see very solid growth on cell and gene therapy side for commercial revenues as we add more commercial certain therapies to the portfolio. If you look at the quarter and sequential growth just because of the early stage of this revenue stream if you will.
Have just timing wise different revenue streams. So we expect to see growth year over year, clearly, but sequential growth really depends a little bit on the type of services. We provide to type of accessories will provide so that may vary between quarter to quarter sequentially, but ultimately again, we look at.
Growth year over year.
Ongoing.
That's why it's helpful that you guys look at look at commercial on a rolling basis.
We recommend looking at a four quarter Rolling average and that's what you should see very consistent growth.
When you look at that because there is some volatility quarter to quarter based on the timing of certain products and services that we're doing from a commercial standpoint.
Got it I appreciate it and then I guess any more color you guys can add on that 27, new trial as you know pretty impressive just given kind of all the headlines around their funding.
This healthy clip for you guys is that mostly existing customers building out the portfolio anything competitive wins, maybe I haven't talked about this in a while but maybe folks shifting from homebrew on the earlier stage side can you guys just kind of talk about who.
It was kind of driving those 27 net new adds for you guys. Thanks.
Yeah. So.
I guess I could do Thomas line, yes, so all of.
Those were still seeing above average volatility at removals.
We're actually seeing net increases that are higher than that.
But with the volatility in the space, we're seeing still.
A fair deal.
The trials that are either being completed or terminated or suspended on a quarter by quarter basis.
For Q3.
We added 28, we had 26 that wound down about 15 were completed nine are terminating two versus spending a fairly large percentage of those and I don't have the number in front of me or new clients with a very successful pulling share on the new client basis as well as retaining our existing.
Trial base with our existing clients.
Tom Obviously, if you want to add anything else.
No you covered it mark thank you.
Great. Thank you.
Your next question comes from Richard Baldry from Roth MTA Kim Your line is now.
Thanks.
Had a slate of new product and service for upgrades enhancements and Rollouts lately.
I felt like a lot of your R&D projects come to fruition, but this quarter R&D is up about 21% sequentially can you talk about where those incremental investments are going as well.
Was there anything onetime in there or is this sort of a new sustained our extensible level, how do we think about that.
Robert do you want to take that.
Yeah, absolutely look if you look at our R&D expenditures, we have a number of initiatives that are ongoing some obviously have come to fruition such as you have the cryo lead shipper, that's being used for <unk> and ultimately available to other clients in the cell and gene therapy space.
Others are still ongoing we recently launched the cryo portal too.
We have some additional activities related to that cry portal to logistics management system.
We're also working on condition monitoring system Skytrax. So there are some ongoing.
<unk> and R&D activities related to those initiatives that.
We expect to complete during 2024.
Okay.
Rich we have we have.
Global supply chain network, which continues.
To progress nicely, but it certainly is not up to its full maturation.
And so.
All in all it's progressing the way we expected, but it was robust.
We're actually seeing a very nice monetization of the services that have launched I mean, you guys seen that the two new facilities, one in New Jersey, and the one down in Houston, Texas. Those facilities are now averaging one five audits are weak.
We put 29, new bio services clients in those facilities over the last year I mean, so substantial and.
That's that's monetization of those investments.
And there's a lot of talk about the <unk>.
Private equity Nbc's pulling back on their portfolios you can maybe talk broadly about the acquisition environment.
Seeing more opportunities do you think valuations are kind of coming in better zones for for you to go after.
No rich, we actually don't look at it that way, we look at things that.
Given our strategy and get to where we're going and we don't see any big change in that in that area.
Okay.
Lastly.
Looking at the balance sheet and you took out some of the.
Convertibles early and had a gain on that.
And did buybacks same time, how do you think about the capital structure as it sits today.
Is it just opportunistic on the convert side do you think thats, a strategic you'd want to keep that up if at all possible.
Or how what level of cash would you be comfortable with aside from doing the buybacks.
Rich in today's environment I'd say its a question that we constantly yards are asking ourselves and we're constantly monitoring.
But you know we have the geopolitical situations that we have.
We have an industry that's developing very rapidly we have a lot of things going on there's a lot of dynamics, we do have acquisition opportunities that come on vacation you want to be prepared to.
Move on those when they do come up so managing the cash and managing the buybacks as is.
An artful thing and it's one that we didn't look at it on a constant basis, but we were measured in that we do we are open and we're very open to.
To all the information that comes in and we make our decision.
Not much else I can say about that except we are constantly looking at it.
Yes, maybe I can just add some data points to it if you look at you're absolutely right. We did buy equity in the past in this.
Recent third quarter, we did repurchase all of the convertible that sum of the 2026 convertible debt.
So we have actually a gain of about $6 2 million in the income statement gross gain from the repurchase really buying the converts at about 80 cents on the dollar. So we are monitoring that and with the repurchase program. We still have about $36 million remaining to deploy under that program and then so we absolutely.
Ability to repurchase additional convertible debt or equity if.
If we think the timing is right and it's warranted.
Great. Thanks.
Next question comes from Puneet <unk> from Leerink Partners. Your line is now open.
Hi, guys.
Thanks for taking the questions. So first one.
I'm wondering if you're getting any feedback from some of the commercial providers.
The commercial therapies.
Capacity.
We're hearing it sporadically in different with different.
Drugs that the supply is constrained.
Cell therapy side.
Sure you have seen that too so just sort of trying to get a sense of is that gating some of the.
Some of the growth in the near term and how do you see what are you hearing from your end.
Yes, I actually think we're getting over the hump on that to be honest I mean, the nature conversation is shifting from manufacturing capacity now to patient accessibility.
And that's one of the reasons that we did upstream with the Integra assault platform that we're building out is to really drive that patient.
<unk> ability and helped facilitate scalability as it relates to two ensuring that the.
The patients that lots of therapy can get the therapy. So I think that's going to become a a smaller issue.
The contract manufacturers now don't have we don't have these two and three year backlogs on product requirements are met.
Manufacturing.
Backlog, so I think the manufacturing capacity issues.
We largely caught up to it I think.
Okay.
And then on Cryo PDP in MBE, obviously, a large portion of your revenue is still.
So just wondering if you can provide some some guideposts as youre thinking about sort of 2024.
Those businesses.
Anything you could provide would be helpful. Thank you.
Yes, Robert do you want <unk>.
Yes.
In terms of the 24 outlook, we will provide guidance in a more detailed review of the 24 outlook at our year end earnings call.
Look we've talked about the cryo PDP business. They have expanded their geographic platform. They have been very strong in Asia Pac and Europe.
We fell a little bit short on the U S side in terms of driving the revenue synergies between corporate systems crime PDP that is advancing and we are taking steps to really enhance that and youll hear more about that.
Next weeks and months, so thats how far we can go at this point in time, but we'll certainly provide a little bit more of a detailed outlook for 'twenty four at our year end earnings call.
Okay.
And then if I could ask about.
There is.
Some companies are seeing more.
Expansion in EU versus U S in terms of therapies and I'm just wondering.
If youre seeing any logistical challenges with all the.
Obviously, if the war in Europe, and then now Israel Gaza's situations. So I was just wondering if youre seeing any disruptions in logistics on that front.
Nothing of significance right now we've had disruptions in the past.
But they were minor and theres nothing of any significance whatsoever at this point.
Got it okay. Thanks, guys.
Thank you.
Your next question comes from David Larsen from <unk>. Your line is now open.
Alright, one more it looks like your SG&A costs came in maybe up 20% year over year.
All the companies that I cover have talked about sort of.
Paying aggressive attention to their cost structure.
Do you have any thoughts there Robert or Jerry I mean, it just seems to me like there's a lot of EBIT <unk> potential in the business as it stands now.
Just just any thoughts around.
Cost containment efforts that I think a lot of folks have been sort of seeing recently, thank you very much.
Yes, I'll begin and then Robert can conclude on that question, David but Youre right. There is there is a lot of it.
It's a potential in the in the.
SG&A in that SG&A is is inflated because of the number of projects that we have going on these are all customer driven market driven projects with great potential and but they do have an impact as they are under development on the SG&A, but the potential is enormous Robert.
Yes, I will say maybe start maybe first with some of the earlier investments. We've made that we've talked about some of those investments are starting to pay off now we talked about the bio storage bio services revenue that grew 26%.
And then also obviously building our core solutions in terms of the revenue growth on the commercial side.
Noteworthy there is the initiative that we have related to our cryo ported lead shipper supporting <unk> commercial launch. So these are initiatives that you've seen over the last years in terms of building out some of these competencies.
Then we talked about building out the overall global infrastructure and really if you look at the market that we're in and the expected growth that we're seeing.
Based on discussions with the clients that we're currently serving in clinical trials and commercial launches. We do know that this will ultimately drive significant revenue and you're absolutely right as you see that revenue grow and as Youll see us leveraging the assets and the capabilities specifically in the cell and gene therapy space, you will see that EBITDA.
The margin grow with that as well so we are very mindful of.
Cash, we're very mindful of spending and ensuring that we have.
The right Rois.
Our minds and certainly on the investors' minds as you stated, but at the same time, we see a significant opportunity for us really to further bolster our leadership position and to capture more wallet share from these customers that are poised to grow quite significantly over the next years.
Thanks very much.
There are no further questions at this time Gerry. Please proceed with the closing remarks.
First of all I wanted to thank all of you for your joining the call today.
The robust question and answer period they are good questions.
And gave us a chance to talk about some very important things in closing our third quarter results were in line with our expectations showing some growth aspects, particularly in commercial revenue in the same town craft Board has continued to execute on its corporate strategy, increasing its market presence and capabilities through meaningful partnerships and acquisitions.
By continuing to execute on this strategy, we believe crop board will emerge as an even stronger company.
Is well positioned to achieve long term profitable growth. We 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.
For the fourth quarter.
So have a good evening, thank you very much.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation you may now disconnect.