Q4 2023 Cryoport Inc Earnings Call

Good afternoon, and welcome to Cry reports fourth quarter and full year 2023 conference call.

Operator: Good afternoon, and welcome to Cryoport's fourth quarter and full year 2023 conference call. All participants will start in a listen-only mode.

All participants will start in a listen only mode.

Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. As a reminder, this call is being recorded. I would now like to turn the call over to your host, Todd Fromer, from KCFA Strategic Communications.

Following the presentation, we will conduct a question and answer session.

If at any time during this call you require immediate assistance. Please press star zero for the operator.

As a reminder, this call is being recorded.

I would now like to turn the call over to your host Todd Fromer from Tcf.

Strategic Communications. Please go ahead.

Thank you operator before we begin today, we'd 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 oriented campaigns occurring in the future are forward looking statements.

Todd Fromer: Thank you, operator. Before we begin today, I would like to remind everyone that this conference call contains certain forward-looking statements. All statements that address 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.

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 when made however, you should not place undue reliance on any such forward looking statements because such statements speak only as of the date with meat, we do not undertake any obligation to publicly update.

Todd Fromer: Our management team believes that these forward-looking statements are reasonable as and when made. However, you should not place undue reliance on any such forward-looking statements because such statements speak only as of the date when they are 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. 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.

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 pricing expectations or project.

These 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 the Securities and Exchange Commission and those described from time to time and the other reports, which we filed with the Securities and Exchange Commission with nothing story, where it is now my pleasure.

Todd Fromer: These risks and uncertainties include, but are not limited to, those described in item 1A, risk factors, and elsewhere in our annual report on Form 10-K, filed with the Securities and Exchange Commission, and those described from time to time in the other reports which we file with the SEC. With nothing further, it is now my pleasure to turn the call over to Mr. General Shelton, Chief Executive Officer of Cryoport. Jerry, the floor is yours.

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, thank you for joining our earnings call today.

Jerrell W. Shelton: Thank you, Todd. Good afternoon, ladies and gentlemen. Thank you for joining our earnings call today. With us this afternoon is Chief Financial Officer Robert Stefanovich, our Chief Scientific Officer, Dr. Mark Sawicki, and our Vice President of Corporate Development and Investor Relations, Thomas Heinzen. As a reminder, we have uploaded our fourth quarter and full year 2023 in review document to our website. It can be found under investor relations in the news and events section. This document provides a review of our financial and operational performance and a general business outlook. If you've not had a chance to read it, I would encourage you to go to our website and download it.

This afternoon, as Chief Financial Officer, Robert <unk>, Our Chief Scientific Officer, Dr Marks a wiki and our vice President of corporate development and Investor Relations Thomas Hindsight.

As a reminder, we have uploaded our fourth quarter and full year 2023 and review Doc.

Document to our website it can be found under Investor relations in the news and events section. This document provides a review of our financial and operational performance and a general business outlook, if you've not had a chance to read it I would encourage you to go to our website and download it.

Jerrell W. Shelton: I'll provide you with a brief update on our business, and then we'll move into answering your questions. Today, we reported total revenue of $233.3 million for fiscal year 2023, which was within our guidance range. 2023 turned out to be a challenging global operating environment, which impacted revenue across all of our business units. Product revenue was lower than historical levels, even as MVE revenue began to stabilize in the last quarter of the year.

I'll provide you with a brief update on our business and then we'll move into answering your questions.

Today, we reported total revenue of $233 3 million for fiscal year, 2023, which was within our guidance range 2023 turned out to be a challenging global operating environment, which impacted revenue across all of our business units.

Product revenue was lower than historical levels, even as MBE revenue began to stabilize in the last quarter of the year at the same time in 2023, we saw further growth in service revenue as it became a greater part of our business.

Jerrell W. Shelton: At the same time, in 2023, we saw further growth in service revenue as it became a greater part of our business. Our service business is the core driver of our growth, generating over $144 million in revenue, which represents 62% of our total. As part of this growth, we had a year-over-year growth in bio-storage and bio-service revenue of 45% and commercial cell and gene therapy revenue of 33%. As of December 31, 2023, we supported a record of 675 clinical trials worldwide, a net increase of 21 clinical trials over last year, with 82 of these in Phase III, as well as 311 in Phase II.

Our service business is the core driver of our growth generating over $144 million in revenue, which represents 62% of our total.

As part of this growth we had a year over year growth in bio storage bio service revenue of 45% and commercial cell and gene therapy revenue of 33%.

As of December 31, 2023, we supported a record of 675 clinical trials worldwide. A net increase of 21 clinical trials over the last year with 82 of these in phase III as well as 311 in phase II.

Jerrell W. Shelton: I think it's important to point out that our clinical trial portfolio constitutes a significant long-term revenue growth opportunity for Cryoport as most therapies proceed through clinical trials toward commercialization. We currently support 14 commercial therapies, up from 10 the prior year. We expect the number to grow again this year, driven by an anticipated 17 application filings and nine new therapy approvals. In fact, we have already had two new therapies approved and one BLA filing this year. So we're off to a pretty good start, although product revenue in 2023 will be lower than historical levels.

I think it's important to point out that our clinical trial portfolio constitutes a significant long term revenue growth opportunity for cryo port as most therapies proceed through clinical trials toward commercialization.

We currently support 14 commercial therapies up from up from 10 in the prior year, we expect that number to grow again this year driven by an anticipated 17 application filings and an anticipated non new therapy approvals. In fact, we have already had two new therapy approved two new therapies approved in one.

La filing this year, so we're off to a pretty good start.

Product revenue in 2023 was lower than historical levels as reported.

Jerrell W. Shelton: As reported previously, our MBE biological solutions revenue began to stabilize in the latter part of the year. Putting the short-term anomalies in perspective, MBE is a global leader in the manufacture of cryogenic systems. It is a resilient business, and through cost controls, it has been able to maintain strong margins and generate considerable cash flow for our company. We remain confident in MBE and its future. I think the cell and gene therapy industry is still in a nascent stage, but it will develop in a way that will transform the way we practice medicine for the betterment of mankind.

Previously our MBE biological solutions revenue began to stabilize in the latter part of the year, putting the short term anomalies in perspective <unk> is a global leader in the manufacture of cryogenic systems. It is a resilient business and through cost controls. It has been able to maintain strong margins and generate considerable cash flow for our.

We remain confident in MBE and its future.

I think for cell and gene therapy industry is still in a nascent stage.

That will develop in the way we have been.

That will develop in a way that will transform the way we practice medicine.

For the betterment of mankind.

Jerrell W. Shelton: The actions we take daily are to support that vision, not just for the short term but for the longer term as well. To that end, a few of the actions we took during 2023 to further position ourselves for continued growth and industry leadership included making targeted investments in our business and forming strategic relationships with respected partners. For example, we acquired Bluebird Express, a provider of time-sensitive domestic and international transportation services with the intent to strengthen Cryo PDP's USA rollout. We also completed the acquisition of Tech4Med Life Sciences, a technology company that provides next-generation communication and condition monitoring technology for the life sciences.

The actions, we take daily or to support that vision not just for the short term, but for the longer term as well.

To that end a few of the actions we took in during 2023 to further position.

Ourselves for continued growth and industry leadership included making targeted investments in our business and forming strategic relationships with respected partners. For example, we acquired Bluebird Express a provider of time sensitive domestic and international transportation services with the intent to strengthen cryo Pdp's USA Roe.

Cloud. We also completed the acquisition of <unk> Life Sciences, a technology company that provides next generation communication and condition monitoring technology for the life Sciences.

Jerrell W. Shelton: It is through tactical investments with strategic impacts such as these that we have, over the years, expanded our solutions beyond logistics and transformed our company into a robust platform of temperature control supply chain solutions for the life sciences with a focus on cell and gene therapy. We pay attention to the development of our ecosystem. To that end, we developed additional strategic partnerships in 2023, including forming a new collaboration with the Cell and Gene Therapy Catapult Network in Stevenage, England to provide integrated logistic support to its Manufacturing Innovation Center. Through this partnership, we are establishing our first UK logistics center to support cell and gene therapy clinical trials and future commercial growth throughout Europe. Stevenage is located in the center of the Golden Triangle, arguably the most concentrated cell and gene therapy activity in all of Europe.

It is true.

Technical investments with strategic impacts such as these that we have had over the years expanded our solutions beyond logistics and transformed our company into a robust platform of temperature controlled supply chain solutions for the life Sciences with a focus on cell and gene therapy.

We pay attention to the development of our ecosystem and to that end, we developed additional strategic partnerships in 2023, including forming a new collaboration with cell and gene therapy catapult network in Stevenage, England to provide integrated logistics support to its manufacturing innovation center through this partnership.

We are establishing our first UK logistics center to support cell and gene therapy clinical trials and future commercial growth throughout Europe. Stevenage is located in the center of the Golden Triangle arguably the most cell and gene therapy concentrated activity in all of Europe.

We also expanded our relationship with an M. D. P. Bio therapies, formerly known as be the match therapies, and which it will be leveraging our new integra cell platform in support of allogeneic donor recruitment collection and crowd preservation.

Jerrell W. Shelton: We also expanded our relationship with NMDP Biotherapies, formerly known as Be The Match Therapies, which will be leveraging our new IntegraCell platform in support of allogeneic donor recruitment, collection, and cryopreservation. In Asia-Pacific, we developed a strategic partnership with Nippon Express, headquartered in Tokyo, which will build on our growing APAC presence and bolster our temperature control supply chain solutions worldwide. Our business development activities included welcoming a number of key new clients from which revenue will ramp up over time. For example, Sarepta's gene therapy, Alvetis, for the treatment of Duchenne muscular dystrophy, has ramped up treating patients much faster than Wall Street had predicted. And by June of this year, Sarepta may receive a label expansion for Alvetis that removes all the current age restrictions.

In Asia Pac, we developed a strategic partnership with nephrotic suppress headquartered in Tokyo, which will build onto our growing APAC presence and bolster our temperature controlled supply chain solutions worldwide.

Our business development activities included welcoming a number of key new clients from which revenue will ramp up over time for example, so raptors gene therapy <unk> for the treatment of Duchenne muscular dystrophy has ramped up treating patients much faster than wall Street had predicted and by June of this year. So rep may receive.

A label expansion for <unk> that removes all the current age restrictions.

Other positive client developments.

Jerrell W. Shelton: Other positive client developments that have continued into 2024 include the FDA's commercial approval of IOVAN's biotherapies and TAGV therapy for advanced melanoma, the FDA's commercial approval of CRISPR and Vertex of cascavi for the treatment of sickle cell and beta thalassemia, and the FDA's acceptance for priority review of Adapt-Immune's biologic license application for alpha-MSL and investigation As these and other anticipated therapies are introduced into the market and begin to ramp up, our commercial revenue will grow, driving further growth in logistics and bioservice revenue. We continue to set a new standard for the cell and gene therapy industry, as evidenced by the launch of innovative and revolutionary products and services, including the Cryoport Elite line of shippers, which include the Cryoport Elite Ultra-Coal-80 shipper. These cutting-edge shippers are setting a new bar, exceeding industry standards for temperature hold times and providing additional risk mitigation. Our advanced integrated technologies enable data management and transparency verified through our chain of compliance service platform.

That have continued into 2024 include the Fda's commercial approval of <unk> bio therapies <unk> therapy for advanced melanoma, the Fda's commercial approval of CRISPR and vertex of cash <unk> for the treatment of sickle cell and beta.

Thomas email.

And the Fda's acceptance for prior priority review of adapt immune biologic license application for Alpha Marcel and investigational engineered T cell therapy for advanced <unk> sarcoma.

As these and other anticipated therapies are introduced into the market and begin to ramp up our commercial revenue will grow driving further growth in logistics and <unk> service revenue.

We continue to set a new standard for the cell and gene therapy industry as evidenced by.

The launch of innovative and revolutionary products and services, including the crowd ported elite line of shippers, which include the crop toward elite Ultra coal minus 80 shipper. These.

These cutting edge shippers are set.

Setting a new bar exceeding industry standards temperature hold times and providing additional risk mitigation.

Our advanced integrated technologies enable data management and transparency verified through our chain of compliance service platform.

Jerrell W. Shelton: With product introductions like these, we continue to expand our end-to-end solutions for the care and transport of cell and gene therapy. The developments and actions I've outlined today are just a few examples of the solid foundation Cryoport continues to build to support our long-term growth strategy. Growth in the cell and gene therapy market alone, along with other sectors of the life sciences, paused over the last year or so, but we expect 2024 to show progressive improvement throughout the year. Therefore, we're providing full year 2024 revenue guidance in the range of $242 million to $252 million.

With product introductions like these we continued to expand our end to end solutions for the care and transport of cell and gene therapies.

The developments and actions I've outlined today are just a few examples of solid foundation crowd.

Continues to bill to support our long term growth strategy.

Growth in the cell and gene therapy market alone.

Along with other sectors of the life Sciences pause over the last year or so, but we expect 2024 to show progressive improvement throughout the year. Therefore, we are providing a full year 2020 for revenue guidance in the range of 242 million to $252 million.

Operator: As we move through 2024, we will continue to focus on leveraging our growth drivers and strengthening our industry-leading brands to better serve our clients while capitalizing on the growth of the cell and gene therapy industry as more of these lifesaving therapies receive regulatory approval globally. We believe 2024 will be a year of progressive advancement for our business with stronger overall growth in our service business. That concludes my prepared remarks. Now we're happy to take your questions. Operator, please open the lines for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star 1 on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. If you would like to withdraw from the question queue, please press start. If you're using a speakerphone, please lift the handset before pressing any keys.

As we move through 2024, we will continue to focus on leveraging our growth drivers and strengthening our industry, leading brands to better serve our clients while capitalizing on the growth of the cell and gene therapy industry as more of these life saving therapies receive regulatory approval globally.

We believe 2024 will be a year of progressive advancement in our business with stronger overall growth in our service business that concludes my prepared remarks now we're happy to take your questions. Operator, Please open the lines for questions.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session.

If you have a question. Please press star one on your Touchtone phone.

You will hear threats on prompt acknowledging your request.

And your questions will be pulled in the order they are received.

If you would like to withdraw from the question queue.

Please press star two.

If you are using a speaker phone please lift the handset before pressing into Q1.

Operator: One moment, please, for your first question. Your first question comes from Puneet Souda of Learink Partners. Your line is already open. I pass. Oh, well. I'm fine, I'm in A, Jerry, Puneet, you're not coming through clearly, Puneet, you're not coming through clearly. Can't understand your question, helps fully kick their career out. Now you're all broken up,

Please for your first question.

Your first question comes from Puneet <unk> of Leerink partners. Your line is already open.

Yes.

Alrighty.

So.

Yes, Jerry.

Clearly low end of your attorney.

Can't understand your question.

Hello.

Fair enough.

No.

Okay.

Okay.

Operator: Thank you for watching... Operator, why don't you go to the next question? Puneet, why don't you try to fix your situation and hop back?

Okay.

Okay.

Operator, why don't you go to then the next question Puneet why don't you try to fix your situation and hop back in.

Thank you Puneet you can try to.

Operator: Okay, Puneet, you can try to... Recover. Your next question comes from David Saxon of Needham. Your line is already open. Oh, great. Hi, guys. Good afternoon.

I'll requeue.

Next question comes from David Saxon of Needham Your line is already open.

Great Hi, guys. Good afternoon. Thanks for taking my questions. Hopefully you can hear me a little better.

David Joshua Saxon: Thanks for taking my questions. Hopefully, you can hear me a little better. I wanted to.

I wanted to okay.

David Joshua Saxon: OK, great. So, you know, the comments around and the MBE stabilizing in the fourth quarter, it sounds like the rest of the portfolio is seeing growth. So I wanted to ask about the cadence of revenue throughout the year. You know, looking back, you do typically grow sequentially off the fourth quarter. So, you know, with kind of what you saw in the fourth quarter, should we think about that trend continuing and, you know, seeing growth sequentially in the first quarter? And any reaction to consensus at around 62 million for the first quarter? And then there was all the quick follow up.

Okay great.

So.

Comments around NDA MBE stabilizing in the fourth quarter it sounds like the rest of the portfolio.

Seeing growth so I wanted to ask about the cadence of revenue throughout the year.

Looking back you do typically grow sequentially off the fourth quarter. So.

With kind of what you saw in the fourth quarter or should we think about that trend continuing.

<unk> seen growth.

Sequentially in the first quarter.

And any reaction to consensus at around $62 million for the first quarter and then all of that quick follow up.

David as you know, we don't give quarterly guidance, but I think the assumption about your trend I think is fine.

Jerrell W. Shelton: David, as you know, we don't give quarterly guidance, but I think, you know, the assumption about your trend is fine. I, you know, what we suggested, and I tried to suggest in my comments was, you know, progressive improvement throughout the year. The industry did take a haircut for the past couple of years, in terms of funding and in terms of growth and so forth, but we think that's coming back. We think the funding is off to a good level.

What we what we suggested tried to suggest in my comments was progressive improvement throughout the year.

Industry did take a haircut for the past couple of years and in terms of funding and in terms of growth and so forth, but we think thats coming back. We think the funding is off to a good level as I mentioned, we've got a couple of therapies already approved and we think we're off to a good start. So we think will be progressively better throughout the year.

Jerrell W. Shelton: As I mentioned, we've got a couple of therapies already approved, and we think we're off to a good start. So, we think we'll be better throughout the year. And we mentioned, you know, the services revenue being really the growth driver. So if you look at the 23 performance and kind of two of the critical revenue streams that we've seen significant growth in, both on the commercial revenue side, where we've seen growth of 33% year over year and actually 36% in Q4, or the bio-storage and bio-services revenue, you know, where we've seen, again, 45% year over year growth. So those are some of the leading service revenues that we also expect to continue to grow in Q4 as well. And David, we'll have progressive improvement at MBE2. I mean, that's a great business. It owns the, it's the dominant share of the market.

And we mentioned the services revenue being really the growth driver.

If you look at the 23 performance in two of the critical revenue streams that we've seen significant growth in both on the commercial revenue side, where we're seeing growth of 33% year over year and actually 36% in Q4.

The bio storage by services revenue, where we've seen again, 45%.

Year over year growth.

Those are solve the leading service revenues that we also expect to continue to grow in 'twenty four as well.

And David will have progressive improvement in <unk>.

Maybe he's a great business.

It owns.

It's a dominant share of the market.

Jerrell W. Shelton: And it is a great business. It's the number one cryogenic systems manufacturer in the world, and it's highly lauded.

And it is a great business.

Number one growth.

Cryogenic systems manufacturer in the World and it's highly lauded and there is need for a biologic.

David Joshua Saxon: And there is a need for biological storage all around the world so that that will come back. It just comes back. It'll come back over time. Okay, all super helpful.

Storage all around the world and so that will come back. It just comes back it will come back over time.

Okay.

Super helpful. So thank you for that and then I wanted to ask on the P&L specifically at the gross margin.

Robert S. Stefanovich: And then I wanted to ask about the P&L, specifically the gross margin, which was fairly stable through the third quarter and then, you know, came down a bit in the fourth. So what happened during the quarter to cause that sequential contraction? And then for 2024, you know, what should we think about the gross margin for this year? Thanks so much.

On.

It was fairly stable through the third quarter.

And then came.

Came down a bit in the fourth so so what happened during the quarter caused that sequential contraction and then for 2024.

How should we think about the gross margin.

For this year. Thanks, so much.

David Joshua Saxon: Yeah, again, you're on gross margin. You're right. If you look at overall gross margins, we ended Q4 at 42.6 and versus 43.8%, and we've seen SERS's revenue being relatively flat year over year and then seeing a little bit more of a dip on the product side. In some instances, you'll have in Q4 kind of additional cost increase the amount of initial true ups. So I would expect some of that to alleviate going forward in Q1 and beyond. But I would expect, for modeling purposes, more of a stabilization of gross margin, you know, again, also with an increase in our business, increasing progressively throughout the year. Great, thank you so much. Your next question comes from Tejas Savant, from Morgan Stanley. Hey guys, good evening.

Yes, again on gross margin you're right. If you look at overall gross margins. We ended Q4 at 42 six.

And versus a 43, 8%.

And we've seen serves as revenue being bring relatively.

Flat year over year, and that seems a little bit more of a dip on the product side.

Some in some instance, youll have in Q4 kind of additional kind of cost increase the amount of initial true ups.

So I would expect some of that to alleviate going forward in Q1 and beyond.

But yes, I would expect for modeling purposes, Barbara stabilization of gross margin again also with increase in our business increasing progressively throughout the year.

Great. Thank you so much.

Your next question comes from Jay Haas Zavon.

From Morgan Stanley.

Your line is already Hey, guys, Hey, guys. Good evening.

Tejas Savant: Jerry, one for you on the guide. Just curious about what exactly you are baking in for the biopharma funding recovery. Are you essentially assuming current demand conditions continue through the rest of the year? Or are you baking in something like a recovery in the back half beyond just easier comps?

Joey.

One for you on the guide just curious about what exactly are you baking in for the Biopharma funding recovery are you essentially assuming current demand conditions continue through the rest of the year or are you baking in.

Something like a recovery in the back half beyond just <unk>.

Jerrell W. Shelton: And then, similar sort of question on the China situation as well. I mean, clearly, China was a weak geography for you in 23, as it was for a lot of other life science companies. Are you baking in some sort of a recovery there in MBE into the guide in the back half?

Easier comps and then similar sort of question on the China situation as well I mean clearly was.

Geography for you in 2003 as it was for a lot of other life science companies.

Are you baking in some sort of a recovery there in MBE into the guide in the back half.

Jerrell W. Shelton: Tejas, in terms of the overall funding for biopharma, for biotech, and especially for cell and gene therapy, we think that we'll be improving on a progressive basis throughout the year. You know, and all this is, you know, notwithstanding any geopolitical unrest or geopolitical tilting or anything, but we think, you know, given the situation that we have right now, it will be progressing on a progressive basis As regard to China, China is in a depression, in a recession, and it could be a depression, but I think it's in a recession right now, and it's going to remain in a recession for a while.

Just in terms of the overall funding for Biopharma provide biotech and especially for cell and gene therapy.

We think that will be improving on a progressive basis throughout the year.

All of this is.

Notwithstanding any geopolitical unrest.

Our geopolitical tilting or anything, but we think given the situation that we have right now.

We are progressing on our.

On a progressive basis as regard to China, China is in a depression in a recession and it could be a depression, but I think it's in a recession right now and it's going to remain in a recession for a while we don't depend on China for.

Jerrell W. Shelton: We don't depend on China for, you know, a lot of our volume. I mean, it's less than 4% of our total revenue. It is a more significant part of MVE's revenue. But we're taking action at MVE to do a couple of things. One, we will be manufacturing freezers domestically in China. That will take about a year to implement, but we will be manufacturing them in China and meeting to meet President Xi's 2025 initiative of Make in China, Buy in China.

A lot of our volume I mean, it's less than 4% of our total revenue.

It is a more significant part of the EES revenue, but we're taking action at MGE two to do a couple of things.

One we will be manufacturing freezers, you mentioned domestically in China that will take about a year to implement but we will be manufacturing them in China and meeting to.

To meet President She is 2025 initiative of making China by in China, We're happy to do that that plant has produced freezers in the past and we have the capacity to ramp up freezer manufacturing in China. So we think that will that will help alleviate part of the situation with China. The pressure on China is going to continue for a while we don't.

Jerrell W. Shelton: We're happy to do that. That plant has produced freezers in the past, and we have the capacity to ramp up freezer manufacturing in China, so we think that will help alleviate part of the situation. The pressure on China is going to continue for a while. We don't see China recovering this year for sure.

See China recovering this year for sure.

Hey, Jerry Jon I'd, just add one thing on the on the <unk>.

Unknown Executive: Hey, Jerry, just one thing on the bioservices or biopharma funding situation. So, I just want to make sure everybody's aware. Obviously, the improvement in funding for the biopharma space is a long-term benefit for us because it recapitalizes a lot of the portfolio and allows them to reinitiate clinical programs. But that's not an instantaneous benefit.

Biopharma funding situation.

So I just want to make sure everybody is aware obviously the improvement in funding for the Biopharma space as a long term benefit for us because I agree it recapitalize as lot of the portfolio and allows them to reinitiate clinical programs.

But that that's not an instantaneous benefit the benefit is really focused around what Jerry had mentioned in his opening comments is is all of the new any approval activity. We see upwards of another nine therapies that may be approved this year and.

Tejas Savant: The benefit is really focused around what Jerry mentioned in his opening comments, all of the new and approval activity. We see upwards of another nine therapies that may be approved this year. And so, that's where you're going to start to see that significant improvement and contribution later in the year, as well as the diversification of revenue into the bioservices space, as we have already mentioned, as well as that commercial revenue improvement. That's super helpful.

And so that's that's where you're going to start to see that significant improvement in contribution later in the year as well as the diversification of revenue into the bio services space as we had already mentioned as well is that commercial revenue piece.

Got it that's super helpful.

Jerrell W. Shelton: And then just speeding up the layers at MBE a little bit, Jerry, can you share some color on what the order book sort of looks like, you know, how month over month things have trended there? You've consistently talked of margins holding up really well in that business, even with the top line headwinds. Do you envision a situation where you need to perhaps lean in on that pricing lever a little bit more in 24 to help nudge, you know, high-end freezer sales, and then any color on that 50 million non-cash impairment on MBE in the quarter? Thanks.

And then just just feeding back quickly or is it a little bit Gerry.

Can you shed some color on what the order book sort of looks like month over month things have trended there.

This can lead to op margins holding up really well in that business, even with the topline headwinds do you envision a situation, where you need to perhaps like lean in on that pricing lever a little bit more in 'twenty four to help nudge.

Hi, Anne please or sales and then any color on that 50 million noncash impairment on MB and in the quarter. Thanks.

Jerrell W. Shelton: Well, yeah, I'll answer the first part, and Robert can answer the latter. The latter question: we don't actually comment on details about any of our business units, so I don't really want to comment on those.

Yes, I'll answer the first part and then Robert can answer the latter the latter question, we don't actually comment on details on any of our business units. So I don't really want to comment on those I can tell you that the margin has to do with.

Robert S. Stefanovich: I can tell you that the margin has to do with superlative management. And our management team at MBE does an incredible job of managing manufacturing operations and the cost to be in line, you know, more with revenue. And so, in terms of leaning on a price lever, we that is that we are always looking at our pricing; we look at it annually, and we look at it more frequently if we have need to. But I don't think we'll be leaning on that lever in any disproportionate way.

So productive management.

Our management team at MGE doesn't an incredible job of managing manufacturing operations and the cost to be in line.

With revenue and so.

The in terms of leaning on a price lever.

<unk>.

Yes.

We are always looking at our pricing we annually, we look at our pricing and we look at it more frequently if we have have need to but I don't think we'll be leaving on that lever and any disproportionate way.

Robert S. Stefanovich: MBE is a healthy business that's doing well; even under these conditions, it continues to generate cash flow, it's a strong business, and it is the dominant player in cryogenic systems manufacturers, controlling some 65 70% of the market. And so we're very confident in MBE, I'm not concerned, we're in this business for the long term; we're not in it for the short term. Now, Robert can comment on your question regarding goodwill impairment. Yeah, absolutely. Obviously, you know, this is your standard accounting approach. So So when you look at the non-cash impairment charge and the reduction in goodwill related to MBE biological solutions, the acquisition that we completed in Q4 of 2020, this is really based on the drop in revenue that we saw in Q2 of 23, which continued to kind of more or less flat, you know, for Q3 and Q4, because it leveled out. And with that, we had to adjust our financial modeling and do a quantitative quantitative impairment assessment And that led to that one-time charge reducing the goodwill; no other goodwill or intangible assets, you know, were considered impaired.

And the ease of healthy business, it's doing it's doing well even under these conditions. It continues to generate cash flow. It's a strong business and it is the dominant player in cryogenic systems manufacturer controlling some $65, 70% of the market and so we're very confident in MBE.

Concerning where again we're in this business for the long term, we're not in it for the short term.

Robert can comment on your question regarding goodwill impairment, yes, absolutely. Obviously this is this is your standard accounting.

Approach. So when you look at the noncash impairment charge and the reduction in goodwill related to NV biological solutions with the acquisition that we completed in Q4 of 2020. This is really based on the drop in revenue that we've seen in Q2 of 'twenty, three which continued kind of more or less flat for Q3.

In Q4, because it has leveled out and with that we had to adjust our financial modeling and do a quantitative quantitative impairment assessment and that led to that one time charge, reducing the goodwill no other goodwill or intangible assets were considered impaired.

Tejas Savant: So that's really, you know, got it. That's super helpful. And then I have one final one for you, Jerry.

So thats really the escalation.

Got it that's Super helpful. And then one final one for you Jerry I know you were at.

Jerrell W. Shelton: I know you were at the Advanced Therapy Week conference in Miami, so just any color on just customer feedback and traction there. And as you talk to them about perhaps some of your upcoming products or recently launched products, whether it's the HV3 shipper or, you know, perhaps the Fusion 2.0, etc. Where do you sense the most unmet need and excitement? And where do you see the most traction over the next couple of years for you guys? You know, Tejas, it's a really good question.

Non therapy week conference in Miami, just any color on just customer feedback and traction there.

And as you talk to them about perhaps some of your upcoming products. The recently launched products, whether it's THB three ship.

Perhaps the fusion to pointed out et cetera, where do you sense, the most unmet need and excitement and where do you see the most traction over the next couple of years for you guys.

Just it's a really good question, but it's a very complicated answer in the sense that we have.

Jerrell W. Shelton: But it's a very complicated answer in the sense that we have 20 odd initiatives going on inside the company right now building out for the future. And we are constantly reprioritizing to meet market needs as they come up. The HV3 shipper is going to be a fantastic addition to our product line because it'll reduce the total cost of shipping for the manufacturers. The Fusion line, as it's developed, and especially as we develop the 800 series, the smaller series, will open up markets that we've never been in; it'll open up second and third floors. And you know, the Broad Institute, for example, to cite just one customer that I think we can cite, you know, about fusions, because of the plumbing issues, they could get, they could use it flexibly on higher floors.

20, some odd initiatives going on inside the company right now building out for for the future.

We are constantly re prioritizing to meet market needs as they come up the HB three shipper is going to be is going to be a fantastic addition to our product line because it will reduce the total cost of shipping for the for the manufacturers.

The fusion line.

Developed in especially as we develop the 800 series the smaller series will open up markets that we've never been in it'll open up second and third floors of.

The broad Institute for example to cite just one customer I think we can cite.

Bulk fusions because.

Plumbing issues that could get they could use it flexibly on on higher floors and so.

Jerrell W. Shelton: And so this that's a that's a very exciting, you know, product, the Vario, which can be which is energy conserving, an energy efficient unit can be dialed up and down for different temperature ranges from minus 20, all the way up to to cryogenic temperatures, we have Integra cell coming on, or we're going to be furnishing, optimized cryo processed apheresis, which will standard, which will be standard and standardized, and there'll be it'll be producing more robust material will be cryo preserved to allow manufacturers to insert the materials when they need when they want to, as opposed to when they have to from as a, you know, being fresh material will be proper reserve to expand manufacturing capacity to improve the quality of the therapies, it'll be more consistent, there'll be more consistent. And this is another, you know, standard setting, thing that we're doing it, we're opened up this gene therapy business minus 80, whether with the crowdport elite, ultra coal, you know, so it goes on and on.

That's a very exciting.

The varrio, which can be.

Energy conserving.

And energy efficient unit can be dialed up and down different temperature ranges from minus 20, all the way up to two cryogenic temperatures, we have integra sale coming on or where we're going to be furnishing.

Optimized cryo processed for Reese's, and which will standard which will be standard and standardized and there'll be there'll be producing more robust material will be crowd preserved to allow manufacturers to insert the materials when they need when they want to as opposed to when they have to.

Being fresh material.

We will be proud preserved will expand manufacturing capacity to improve the quality of the therapies it'll be more consistent there'll be more consistent.

This is another standard setting.

Thing that we're doing we're open up this gene therapy business minus 80 with with the crowd port elite Ultra coal.

So it goes on and on and we just bought <unk>, which I mentioned in my comments is.

Jerrell W. Shelton: And, you know, we just bought tech from them, which, as I mentioned in my comments, is an incredible communications and temperature monitoring system that will start, over time, to tie all of our companies together and give us the most complete chain of compliance in the world. You know, from our point of view, it'll be terribly exciting as it gets into that process. So those are just a few things.

An incredible communications and temperature monitoring system that will start over time to tie all of our companies together and give us the most complete chain of compliance in the world.

It will be terribly exciting as it gets into that process. So those are just a few things and we have levels of priority. It's not just one priority as levels of priority as we serve the industry. We're rolling out of course cryo PDP in the United States is already has a number.

Jerrell W. Shelton: And, you know, we have levels of priority; it's not just one priority; it's levels of priority, as we serve the industry. We're rolling out, of course, cryo PDP in the United States. It already has a number one footprint in Asia Pacific and also in EMEA. And we're just now rolling it out in the United States; it's been underway for a while, we acquired Bluebird to accelerate that, and we're opening up operations to, you know, supplement that and to continue to build out that operation. So we have a host of things going on that are meeting the needs of the industry and anticipating where the industry will be and helping enable it to, you know, grow and prosper. And that's both in cell and gene therapy. I got it. Appreciate the call, guys, and best of luck with the year. Thank you very much, Jake.

One footprint.

Asia Pac and also in <unk>.

And we're just now rolling it out in the United States, that's been underway for a while we acquired Blue bird to accelerate that we're opening up operations too.

To supplement that and to build out that can continue to build out that operation.

So we have a host of things going on.

There are meetings that are not only meeting the industry, but anticipating where the industry will be and help enabling it to.

To grow.

And to prosper and Thats, both in cell and gene therapy.

Got it I appreciate the color guys and best of luck with the year.

Thank you very much stages.

Your next question comes from Puneet <unk> of Leerink partners. Your line is already open.

Puneet Souda: Your next question comes from Puneet Souda of Lear Inc. Partners. Your line is already open. Okay. Yeah, I guess. Hopefully, you can hear me OK. Much better, Puneet.

Okay.

Hopefully you guys hear me okay.

Much better.

Alright.

Unknown Executive: All right. So just if you can help me a little bit on the guide, which came in on the lower end of the guide, in itself, that was flat for the year. You are seeing some improvement in MVE, as you pointed out, in sequential improvement, but China is still not improving. So, sort of taking all that in, I guess my main question is, you're implying about 6% growth this year in 24. What is actually sort of embedded in that guide? What are the levers that you think push that?

<unk>.

If you can help me.

Maybe a little bit on the on the.

The guide I mean, it came in on the lower end of the guide.

In itself that was flat for the year.

You are seeing some improvement in MBE as you pointed out and sequential improvement, but China is still not improving.

So sort of taking all of that and I guess my main question is youre, implying about a 6% growth.

This year in 'twenty four.

What.

What is actually sort of embedded in that guide what are the levers that you think could push that 6% growth potentially higher.

Jerrell W. Shelton: Unknown Executive, Puneet Souda, Well, you know, we did take a conservative approach, Puneet. We looked at all of our business units, and we built our forecast from the ground up. And certainly, we think that there are some upsides that could happen. And, you know, this year, there could be more therapies approved that they could, and we have our existing therapy therapies that could ramp quicker, both of which I alluded to, you know, a little bit earlier, some of our introductions of products this year could be adopted much quicker than we forecast. So we definitely have upside, but we wanted to be conservative. We're not interested in disappointing anyone.

And is there or is there enough.

Sort of lack of a better word conservatism baked into that.

Well, we did take a conservative approach puneet, we looked at all of our business units and we built our forecast from the ground up.

And certainly we think that there are some upsides.

Could happen.

This year, there could be more therapies approved that.

We have our existing <unk> therapies could ramp quicker both of which I alluded to.

A little bit earlier, some of our introductions of products. This year could be could be adopted much quicker than than we forecast. So we definitely have upside, but we wanted to be conservative we're not interested in disappointing any one.

Robert S. Stefanovich: And we will end our business plan around that. Robert, would you like to comment any further on that? No, no, I just, you know, echo what Jerry said. If you look again at the outlook for 24, and you look at what we've achieved in some of the key areas in 23, you can see the continuum of services revenue growing, in particular, you know, the commercial, in particular, the bio storage bioservices revenue. And, and those are really some of the leads.

Our business plan is around that Robert would you like to comment any further on that no no I would just echo what Jerry said, yes. If you look again at the outlook for 'twenty four and you look at what we've achieved so the key areas. In 23, you can see the continuum of services revenue growing in particular or the other.

<unk> in particular, the bio storage by our services revenue.

And those are really some of the leads like Terry mentioned Theres, a few new initiatives that are coming online this year.

Puneet Souda: Like Jerry mentioned, there are a few new initiatives that are coming online this year. And if they ramp up faster, that can contribute to more, more, and more revenue. Again, we certainly took a conservative look. If you talk to other companies in the life science tool space, you'll hear them say, you know, they're being cautiously optimistic. And we are as well. But you know, that's kind of where we are. Okay, that's helpful. And then just following up on Cryo PDP as well.

If they ramp faster that can contribute to more more and more revenue.

Again, we certainly took.

A conservative look you talked to other companies in the life science tools space, Youll areas, and saying Theyre being cautiously optimistic.

And we are as well.

But that's kind of where we stand.

Okay. That's helpful. And then just following up on cryo PDP as well I mean the.

Puneet Souda: I mean, the combined Cryo PDP and MVE is still, I believe, more than 60% of your revenue. Could you maybe just elaborate a bit on whether we should start thinking about the normalized sort of growth rate at MVE, similar to what you acquired it for when, you know, at the time of acquisition? Correct me if I'm wrong, it was low single digit to maybe mid single digit, and Cryo PDP was not far from that.

Combined cryo PDP in MBE.

Still I believe more than 60% of your revenue.

Could you maybe just elaborate a bit on should we start thinking about the normalized sort of growth rate and the similar to what you acquired it.

At the time of acquisition that correct me if I'm wrong. It was low single digit maybe mid single digit and cryo PDP was not far from that so maybe just help us understand what's the normalized sort of growth rate, we should we ought to be thinking for these two these two businesses.

Jerrell W. Shelton: So maybe just help us understand what's the normalized sort of growth rate we should, we ought to be thinking for these two businesses. You know, once MVE starts to fall out, and I don't pair these businesses together, they're totally different businesses, and they serve totally different parts of the market with totally different missions. So I'll take them one at a time.

Once <unk> starts to fall out.

Compare these businesses together, they're totally different businesses and they're totally serves totally different parts of the market with totally different missions, but so I'll take them one at a time.

Jerrell W. Shelton: On MVE, I think once it pulls out of this lull, you will be able to assume the growth rates are maybe even a little bit better than single digits, maybe maybe in the low double digits once it's out of this lull, you know, so what created the lull and what created this? We do have some hypotheses. It's not, you know, they're there.

I think once it pulls out of this lull I think you will be able to you'll be able to assume the growth rates are.

Or maybe even a little bit better than.

Single digits might be maybe in the low double digits. Once it's out of out of this low.

So what created the low what created this we do have some hypothesis there.

Jerrell W. Shelton: And I've mentioned in the past that, you know, there was a pullback on capital expenditures. Well, we've all known that because the economy has been in a cautious mode for over a year, and overall global activities, capital budgets have been affected. But I also think that there was, this is an hypothesis on my part, this is not factual, but it is a hypothesis, that there was a little bit of a buildup during the COVID period of time of capacity, and that capacity is being filled up now. Once that's being filled up, you'll see the normal rates. Look, biological material is being produced all the time. And it's being produced in great quantities all the time; it has to be stored. And and there's no way to avoid it.

I've mentioned in the past.

There was.

There was a pull back on capital expenditures and what we've all known that because the economy has been in a cautious mode for over a year.

With the overall global activities and capital budgets have been affected but I also think that there was this isn't a potthast. This on my part this is not factual but it is apotheosize.

There was a little bit of a buildup during the COVID-19 period of time of capacity and that capacity is being filled up now once thats being filled up youll see the <unk>.

Normal rates look biological material was being produced all of the time and is being produced in great quantities. All the time it has to be stored.

Theres no way to avoid cryogenics.

Jerrell W. Shelton: Cryogenics is the way that you store that material so that it will come back. And we're very confident in MVE, its position in the market, its products, the way it serves the market, and its long-term prospects. It's there, we think they're outstanding. And, and, and there will be new products and new services coming out of MVE over time as well, and some diversification of revenue streams. As far as Cryo PDP goes, Cryo PDP is the world's third largest specialty courier serving biotech or biopharma companies.

<unk>.

That your store that material. So it will come back and we're very confident in MBE is positioned in the market.

Its products.

It serves the market and its long term prospects there.

They are outstanding in and there'll be new products, and new services coming out of <unk> over time, as well and some diversification of revenue streams the overtime.

As far as cloud PDP goes crowd PDP as the world's third largest specialty couriers, serving biotech our biopharma.

It is rolling out in the United States, we've been in that process now for a while but we did buy Bluebird express in order to accelerate that process. We've had 10 years' experience with Bluebird Express at craft Board systems, we know the quality of that operation and its people and so we know it's a great addition.

Jerrell W. Shelton: It is rolling out in the United States; we've been in that process now for a while, but we did buy Bluebird Express in order to accelerate that process. We have had 10 years of experience with Bluebird Express at Cryoport Systems. We know the quality of that operation and its people, and so we know it's a great addition. And we continue to build out in the United States. We will, we will find, you know, that we will find momentum in the United States as we build out the structure and as Bluebird has some impact on that growth in the United States. I think that the growth rates there will be a little bit in excess of what they were. They will still be in the low single digits once it finds its footing in the United States, but other parts of the world are doing fine. I mean low double digits, Jerry, not low single digits.

And we continue to build out in the United States, We will we will find.

That.

We will fund.

Momentum in the United States as we as we build out the structure.

And as Bluebird has some impact on that growth in the United States.

I think that the growth rates there will be.

A little bit in excess of what they were there will still be in the low single digits.

Once it finds its footing in the United States other parts of the World are doing fine.

And then low double digits, Jerry that low single digits.

Sorry, just to clarify in single digits.

Jerrell W. Shelton: Sorry, just clarifying. He's just on single digits, and that's what he meant. Ah, sorry, just clarifying. That's low single digits for the US part of the business and double digits for international. Yes, yeah.

What are you Matt.

Yes.

Sorry, just to clarify.

That's.

Low single digits for the U S part of the business and double digits for international.

Yes, yes, yes.

Jerrell W. Shelton: Exactly. Okay. Just last question, if I may, just, you know, the Alabama IVF decision. Does that, can you outline what the impact for you is and what changes you have to bring about in your network for that? Alabama was not a big impact on us.

Exactly okay.

Just last question if I may just.

The Alabama Ibms decision does that can you outline what's the impact for you and what what changes you have to bring about in your <unk>.

Network for that.

Alabama was.

<unk>.

Not a big impact on us we got more publicity than we did anything else out of Alabama.

Jerrell W. Shelton: We got more publicity than we did anything else out of Alabama. That we do, we ship in and out of Alabama. And when the Supreme Court ruled as it did, we suspended shipments until we could understand the situation. We suspended business there both for MVE and cryoport systems and cryo as well as cryo PDP. So, we did suspend business there until we got a clear reading, then a new law was passed, and we opened up Alabama again.

We do we do ship in and out of Alabama, and when the Supreme Court rule as it did we suspended shipments until we could understand the situation.

We suspended business there both for MBE and <unk> systems and cryo.

As well as cryo PDP. So so we did suspend business there until we got a clear reading than a new law was passed and we opened up Alabama again, So we're doing business in Alabama things are business as usual in Alabama at this point, but we certainly are monitoring that situation just in case.

Jerrell W. Shelton: So we're doing business in Alabama. Things are business as usual in Alabama at this point, but we certainly are monitoring that situation just in case, you know, there's a change of mind in that state. But it was, it was, it did create a lot of publicity.

There is a change of mine.

In that state but.

It was it was it.

Was.

It did create a lot of publicity.

Okay. Thank you guys.

Jerrell W. Shelton: Okay, thank you guys. Your next question comes from John Sourbeer of UBS. Your line is already open.

Your next question comes from John SAR Beer of UBS. Your line is already open.

John Newton Sourbeer: Good evening, and thanks for taking the question. I just want to dig in a little bit more on the commercial revenues. I think they slowed quarter over quarter.

Good evening and thanks for taking the question I just wanted to dig in a little bit more on the commercial revenues I think they slowed quarter over quarter any additional details you can provide there on the quarter and then also how do you think about this high level. This ramps out over the next year given some of the recent approvals and the outlook for approvals in 2024.

John Newton Sourbeer: Any additional details you can provide on the quarter? And then also, how do you think about this, you know, high level this ramps out over the next year, given some of the recent approvals and the outlook for approvals in 2024? Well, John, let's let Robert start by giving you some factual information, and then I'd like Mark to comment on what's happening in the market because what's happening in the market is pretty exciting. And the latter probably is the most important because those are some of the drivers for revenue in 24 and beyond. But if you look at commercial revenue, and I think I mentioned on the last quarterly call, when you look at our quarterly revenue, look at a trailing 12-month average. But where you look at even the full year or the Q4 commercial revenue round, it's in the 33 to 36% growth year over year. So we continue to see strong growth in commercial revenue. It's now 22 million in total revenue.

Well, John let Robert start will give you some factual information and then on LIFO Mark to comment on what's happening in the market because what's happening in the market is pretty exciting.

The latter probably is the most important because those are some of the drivers for the revenue in 'twenty four and beyond but look if you look at the commercial revenue and we think I mentioned on the last quarterly call. When you look at our quarterly revenue and look at our trailing 12 months average, but where you look at even the full year.

Or the Q4 commercial revenue ramp it's in the 33% to 36% growth.

Year over year. So we continue to see strong growth in commercial revenue, it's now $22 million.

Of total revenue.

Robert S. Stefanovich: So it's starting to become a more substantial portion of our services revenue, and we expect that to continue. Mark, if you want to talk about some of the market dynamics that we're seeing, yeah, yeah, absolutely. Thanks. Thanks, Robert.

Starting to become a more substantial portion of our services revenue and we expect that to continue Mark if you want to talk about the sort of the market dynamics that we're seeing.

Yes, absolutely. Thanks, Thanks, Robert Yeah, So as Robert said I mean looking at looking at this on an aggregate 12 months.

Mark W. Sawicki: Yeah. So as Robert has said, I mean, you know, looking at looking at this on an aggregate 12 month basis is is extremely important, because anytime you have new therapy launches, there's some volatility in the early phases, they start to ramp. However, you know, you know, at the law of aggregation is what we're really looking at here, you know, we're seeing very, very strong approval activity. And in fact, I think between, you know, the end of 23 and 24, maybe the strongest 18 months in the history of the cell and gene space from an approval standpoint, there are three BLA filings completed in Q4, which is the adapt immune immunity to bio and autoliths, one new approval in Q4, we've already had two new approvals in Q1, another 17 possible filings in 2024, of which one has already been filed, we're projecting the potential of nine new therapies in 2024.

This is extremely important because anytime you have new therapy launches, there's some volatility in the early phase as they start to ramp however.

The law of aggregation is what we're really looking at here.

We're seeing very very strong approval activity and in fact, I think between the end of 'twenty three and 'twenty four may be the strongest 18 months.

In the history of the cell and gene space from an approval standpoint.

There are three BLA filings completed in Q4.

As the adaptive immune mediated by on August one new approval in Q4, we've already had two new approvals in Q1, another 17 possible filings in 2024 of which one has already been filed we are projecting a potential of nine new therapies in 2024.

Mark W. Sawicki: Plus, potentially another Two already commercialized products getting earlier line approval, which will substantially increase the addressable patient population five label extent, and extent expansions. And so there's a ton of activity, and we already see the potential for another 11 possible filings in 2025. So that's the huge driver, you know, and I think, you know, if you look at it overall, that the growth rate there is going to be consistent with where the market has been in with our numbers, you know, some of the numbers that Robert presented for the foreseeable future. Thanks for those details.

Plus potentially another another two already commercialized products getting earlier line approval, which will substantially increase the addressable patient population and five label extent extent expansions.

And so there's a ton of activity and we already see the potential for another 11 possible filings in 2025, so that's a huge driver.

And I think if you look at it overall the growth rate there is going to be consistent.

With where the market has been was our numbers some of the numbers that Robert had presented.

For the foreseeable future.

Thanks for those details and I believe a portion of the convertible debt is due next year. The company has a strong cash position on the balance sheet.

John Newton Sourbeer: And I believe a portion of the convertible debt is due next year. You know, the company has a strong cash position on the balance sheet. Any color, maybe for Robert, on the company's financing plans going forward. Yeah, absolutely. So we're in a strong position. We have a strong balance sheet with strong cash as of the December end. The convertible debt, really the substantial portion of the convertible debt, is due in December of 2026, so we still have some time.

Any color maybe for Robert just on the Companys financing plans going forward.

Yes, absolutely. So we're obviously we're in a strong position that we have.

Our strong balance sheet with strong cash.

Yes.

December end.

The convertible debt really the substantial portion of the convertible debt is due December of 2026. So we still have some time as you recall in Q3, we did buyback some of the convert.

Robert S. Stefanovich: As you recall, in 2-3, we did buy back some of the converted money, roughly about $25 million, roughly about $31 million, and we paid about $25 million in cash for that. So we had about $5.7 million in gains. We'll continue to look at some of the Convert buyback, and we're looking at the longer service strategy that we're still mapping out, but at this point in time, we're in a good position. As you recall, the Convert has 0.75% interest, and like I said, it's due December 26, so we still have some time to evaluate the best option.

Yes for us about 25 billion.

That's about $31 million and we paid about $25 million in cash for that so we had about $5 7 million gain.

Just because of the transaction and we will continue to look at some of the convert buyback we're looking at the longer service strategy.

We are still mapping out but at this point in time, we're in a good position as you recall the convert as 75% interest and like I said is due in December of 2006.

We still have some time to evaluate the best options for that.

John Newton Sourbeer: Thanks. And then the last question I had was on IntegraCell and Luke Caprese's collection. Just a point of clarification, is that currently live, and then just Outlook for that segment for the year? No, it will become live in the last half of the year.

Thanks, and then last question I had was on intake ourself and to look at for your question. I was just point of clarification is that currently lives and then just outlook.

For that segment for the year.

No it will become live in the last half of the year.

Jerrell W. Shelton: Got it. Thanks for taking the question. Your next question comes from Brandon Couillard of Jeffries. Your line is already open. Thanks, this is Matt on for Brandon. I appreciate all the calls already on 24.

Got it.

Thanks for taking the question.

Okay.

Thank you. Your next question comes from Brandon courtyard of Jefferies. Your line is already open.

Thanks. This is Matt on for Brandon I appreciate all the color already on 24, I guess, maybe for Jay or Robert can you talk a little bit about your guidance philosophy and visibility in 2004, I think historically, you've got the most visibility in cloud ports systems, but from where we sit today just the level of visibility you have across systems.

Brandon Couillard: I guess maybe for Jerry or Robert, just talk a little bit about your guidance, philosophy, and visibility in 24. You know, I think historically, you've had the most visibility in cryoport systems. But from where we sit today, just the level of visibility you have across systems, MVE, PDP, and cryogen. And can you also just remind us how much of the MPE business goes through distributors today? Yeah, no, absolutely.

The PDP and crowd gene and then can you also just remind us how much of the MTBE business goes through distributors today. Thanks.

Yes, no absolutely yeah, like we said we did take a conservative view.

Robert S. Stefanovich: You know, like we said, we did take, you know, a conservative view when creating the estimates for the year. We do have forecasts from our clients, especially for Cryoport Systems, in terms of what their expectations are. We did try to do a bottom-up for our services and our product revenue to determine revenue guidance for the year. Clearly, as Jerry already mentioned, for MBE, we have to take a very conservative look at growth. Over the last three quarters, it's been pretty much at the same level after that drop from Q1 to Q2.

At creating the estimates for the year.

We do have.

Our.

Forecast from our clients, especially for <unk> systems in terms of what their expectations are we did try to do a bottoms up.

For for our services and our product revenue to determine the revenue guidance for the year clearly as Jerry already mentioned for MBE, we have to take a very conservative look at growth over the last three quarters, it's been pretty much the same level after that drop from Q1 to Q2.

Brandon Couillard: So we are taking a very conservative approach in terms of the ramp on the product revenue side. Clearly, like we mentioned, there's some upside opportunity on the services side driven by the cell and gene therapy market, in particular, both on the commercial revenue side, as well as on the bio-storage and bio-services side. But that's really how we approached it, and, you know, we're hoping, obviously, that we'll be able to exceed the estimates. And Brandon, your last part of your question was how much of the MBE business is through distributors, and that 70 about 70 75%. Thanks. And then you guys spiked out in the back of the 950 or so industry clinical trials, Cryoport supporting 675 or 70% of those.

So we are taking a very conservative approach in terms of the ramp on the product revenue side clearly like we mentioned there is there is some upside opportunity on the services side.

Driven by the Celgene therapy.

Market in particular.

On the commercial revenue side as well as on the bio storage file services side, but thats really how we approached it.

And we're hoping obviously that we'll be able to exceed the estimates.

And Brian in your last part of your question was how much of the business is through distributors in that 70% about 70% to 75%.

Thanks, and then you guys spiked out in the deck of the 950 or so industry clinical trials <unk> supporting 675 or 70% of those is there.

Mark W. Sawicki: Is there scope for that to go higher over time, or is there kind of a theoretical limit we should think about in terms of market share for those industry clinical trials? Mark, I'm going to turn that to you. Sure. Yeah, I mean, we're obviously always trying to capture more share. The biggest driver for share capture for us over the next 12 to 18 months in this space is going to be around the negative 80 space. We launched the Elite Ultracold product in the middle of last year, and we're already seeing substantial pickup with that product line. And historically, without a negative 80 offering, our penetration in gene therapy distribution that was managed via negative 80 was minimal.

Scope for that to go higher over time or is there kind of a theoretical limit we should think about in terms of market share for those industry clinical trials. Thanks.

Mark I'm going to turn that to you sure. Yes, I mean, we're obviously always trying to capture more share.

The biggest driver for share capture for us over the next 12 to 18 months in this space is going to be around the negative 80 space. We launched the lead ultra cold product the middle of last year, we're already seeing substantial pick up.

With that product line and.

Historically without a negative 80 offering our our penetration in gene therapy distribution that man. It was managed to be a negative 80 was minimal and so this is there is some nice opportunity for upside in that space on the cryo side obviously.

Mark W. Sawicki: And so there's some nice opportunity for upside in that space. You know, on the cryo side, obviously, you know, moving from a 70 percent market share to much higher is more of a challenge. So most of that growth will come out of market dynamics and our continued drive to capture as much of that portfolio as we can. The bigger thing to think about is obviously the drive to maintain that 70 plus percent market share in commercial, which we've had a very, very good track record of doing. Thanks.

Moving from a 70% market share much higher as more of a challenge. So that's going to most of that growth will come out of.

Out of the market dynamics, and our continued drive to capture as much of that portfolio as they can the bigger thing to think about is obviously the drive into maintaining that 70 plus percent market share into commercial which we've had a very very good track record of doing.

Thanks, and one last quick one.

Jerrell W. Shelton: And one last quick one for Jay, we'd just love to get your updated thoughts on how you're thinking about profitability. Clearly, you've laid out a lot of growth areas that you're investing in. But as we look out into 25 and beyond, how do you think about balancing some of those growth investments and looking to turn profitable on an adjusted EBITDA basis? Well, the way I think about them is that all of the projects that we undertake, all of the initiatives that we have going on, are, are, you know, they, they, they withstand financial scrutiny. And so, and, and they are creative. And so, as I said earlier, we're, we're, we constantly are reprioritizing those initiatives, and, and they will start to roll out just as the, you know, the elite ultra coal just just rolled out; you'll see the HP3 rolling out soon. You'll see Integra sell in the last half of this year.

Jay will just love to get your updated thoughts on how youre thinking about profitability clearly you've laid out a lot of growth areas that you're investing in but as we look out to 'twenty five and beyond how do you think about balancing some of those growth investments and looking to turn profitable on adjusted EBITDA basis.

Well the way I think about them, Brian has all of the projects that we undertake all of the initiatives that we have going on.

R R.

They withstand financial scrutiny, and so and they are accretive and so.

As I said earlier, we constantly are re prioritizing.

Those initiatives and.

They are they will start to rollout just as the elite ultra coal.

<unk> just rolled out youll see the <unk> rolling out soon youll see integra sell at the last half of this year.

Jerrell W. Shelton: And you'll see more progress on the fusion product and so forth. So, I think very positively about them. They're going to have a revenue impact, they're going to have profitability. Thank you. Thank you, Brandon.

And you'll see more progress on the fusion product and so forth. So so I think very positively about them theyre going to have going to have a revenue impact theyre going to have profitability impact.

Super Thank you.

Thank you Brandon.

Your next question comes from David Larsen of <unk>. Your line is already open.

David Michael Larsen: Your next question comes from David Larsen of BTIG. Your line is already open. Hi, I think I heard you say in your prepared remarks that you were generating some revenue from allogeneic services. I think you said a client was storing some product in anticipation of allogeneics and I thought I heard you also say that they were using IntegraCell. Did I hear that correctly? And just any thoughts there on the progress that allogeneics are making in the market would be very helpful. Thank you.

Hi, I think I heard you say in your prepared remarks that you were generating some revenue from from allergy ne services. I think you said a client was storing some product in anticipation of allergen aches and.

I thought I heard you also say that they were using integra. So did I hear that correctly and just any thoughts there.

On the progress of allergy next youre, making the market would be very helpful. Thank you.

Mark W. Sawicki: Yeah, so we're already supporting a fairly large portfolio of allogeneic therapies. They constitute nearly 30% of our overall portfolio, so it's a substantial number of products. And in that product, you know, those activities go from, like you said, storage through distribution, as it stands today. IntegraCell, as Jerry had mentioned, is not, the doors are not open there at those facilities that they'll open the second half of this year.

So we're already supporting.

We are already supporting a fairly large portfolio of allogeneic therapies.

Constitute nearly 30% of our overall portfolio. So it's a substantial number of products.

And that product.

Those activities go from like you said storage through distribution.

As it stands today Integra Astellas Jerry had mentioned does not the doors are not open there on those facilities that they will open in the second half of this year.

Mark W. Sawicki: However, we're already very heavily engaged with our clients; we already have clients going in and auditing the facilities even before the doors are open. And, you know, we have the relationship that Jerry also mentioned in his prepared remarks with the NMDP, or National Marrow Donor Program, which we're teaming up with them, where they're going to be managing all the donor recruitment, and we'll be doing all the cryopreservation through our facility in Houston for the United States on behalf of NMDP. So, so, and that's all focused on allogeneic.

However, we're already very heavily engaged with our clients we already have clients going in unaudited the facilities, even before the doors are open and we have the the relationship that you also mentioned in the prepared remarks.

<unk> National <unk>.

No donor program.

Which where we're teaming up with them, where theyre going to be managing all the donor recruitment and we'll be doing all the cryopreservation through our facility in Houston.

For the tour in the United States on behalf of MVP, So and that's all focused around allogeneic contribution.

David Michael Larsen: Okay, great. And then what should we expect for commercial revenue growth going forward? Is 30 to 40% per year reasonable? And how would you expect these new therapies that are now commercially available to ramp up in terms of revenue contribution? Any thoughts would be great, thank you.

Okay, Great and then what should we expect for commercial revenue growth going forward is 30% to 40% per year reason.

Reasonable and how would you expect these new therapies that are now commercially available to ramp.

In terms of revenue contribution any thoughts there would be great. Thank you.

Mark W. Sawicki: Yeah, I guess I can comment. Yeah, so from my perspective, the easiest way for you guys to look at the ramp associated with any given therapy is to go through the audit and the analyst reports for those therapies and for those companies, right? They do a lot of diligence on the space and come back and provide their guidance as it relates to projected ramp. Any, you know, we do get forecasts from all of our clients as it relates to commercial, but it's not something that we can disclose publicly.

Yes, I guess I can tell it yes. So from my perspective, the easiest way for you guys to look at the ramp associated with any given therapy is to go to through the audit the analyst reports for those therapies and for those companies right.

They do a lot of diligence on the space and come back.

Provide their guidance as it relates to projected ramp and we do get forecast from all of our clients as it relates to commercial but it's not something that we can disclose publicly.

David Michael Larsen: However, with the portfolio that's in place today, and all of the filing activity that we see ongoing through late 23 and through 24, I think, you know, the rates that you guys have been seeing historically, and where we saw, you know, in Q4, 33% year over year, you know, that that 30 plus range is probably an issue. In a reasonable expectation for commercial revenue for the next couple of years. And then just one last quick one.

With that with the portfolio Thats in place today and all of the filing activity that we see ongoing through late 'twenty three in through 'twenty four I think.

The rates that you guys have been seeing historically.

And that we saw in Q4, 33% year over year.

That 30, plus range is probably a reasonable expectation for commercial revenues for the next couple of years.

And then just one last quick one demand for large freezers within MGE, just any more color there.

David Michael Larsen: Demand for large freezers within MVE, just any more color there would be very helpful. Thanks again. Our demand at MBE is normalized. It's no different from historical patterns with the mix, David. Okay, thanks a lot. I'll hop back in the queue.

I'll just be very helpful. Thanks again.

Yes.

Demand in the EU is normalized is no different than historical patterns with the mix David.

Okay. Thanks, a lot I'll hop back in the queue.

Thank you. Thank you.

Yuan Zhi: Thank you. Thank you. Your next question comes from Yuan Zhi of B Riley Securities. Your line is already open.

Thanks.

Your next question comes from U N Z.

Riley Securities. Your line is already open.

Mark W. Sawicki: Thank you for taking our questions. And Jerry, I think there are probably 10 biotech companies pivoting cell therapy from cancer treatment to autoimmune disease. I'm curious if these applications or clinical trials in autoimmune disease have meaningfully helped the cryoport system business so far.

Thank you for taking our questions and Gary are probably there are.

Looking at sales therapy from their treatment to alternate immune disease.

Yes.

Our clinical trials.

Immune diseases have meaningfully helped the cryo report this campaign so far.

They are in clinical trials, mostly.

Jerrell W. Shelton: They're in clinical trials mostly, but we do see a lot of promise there. Obviously, it's an area where the market is looking a lot at how CAR T's are expanding beyond oncology.

But we do see a lot of promise there obviously, it's an area where the market is looking a lot at is how car Ts are expanding beyond oncology.

A lot of promise there we're seeing some of the results of the early trials phase one phase two come out with promise. So there's upside there absolutely looking at it and it is part of our clinical trial pipeline.

Mark W. Sawicki: We're seeing some of the results of the early trials, Phase I, and Phase II, come out with promise. So there's upside there. We're absolutely looking at it, and it is part of our clinical trial pipeline. Got it.

Got it.

Jerrell W. Shelton: Another question is related to your recent acquisitions. Can you share any update on the integration of Bluebird Express as well as for MAP since the acquisition? Well, Bluebird fits like a hand in a glove because it's, we've known Bluebird for a long time.

Another question.

Your recent acquisitions can you share any update from the integration of our broker to express as wise.

For Mac since the acquisition.

Well the App.

Bluebird.

It fits like a hand in glove, because it's we've known Bluebird for a long time so.

Jerrell W. Shelton: So it's, it's, it's, it's in process. There's, there's no, nothing more to say about that, that it's in process and that the integration of the operations is moving along very, very well. Oh, you mentioned Tech Permit as well.

It's in process. There is there is no nothing.

Nothing nothing more to say about that it's in process in that.

The integration of the operations or are moving along very very well.

And then take from it.

Alright.

You mentioned tech permit as well.

Jerrell W. Shelton: Yeah, what was your question about? Okay, so, Tech4Med is quite interesting. Tech4Med is, is, is a German company that we acquired. It offers communication and temperature monitoring systems that are quite advanced.

What was your question about okay. So okay. So tech protectorate is quite interesting tech from it as is.

As a German company that we acquired it is.

It offers communication and temperature monitoring.

Systems that are quite advanced in.

Jerrell W. Shelton: And that, too, is in the process. We're looking at the impact that Tech4Med has on our SmartPak, I mean, on our SCOTTRAX condition monitoring system project. And most likely, those two will be moving, you know, intersecting and moving together because there are some software advantages there.

And that that too is in process, it's being.

We're looking at the.

The impact that <unk> has on our smart Pak.

Scott tracts condition monitoring system project.

And most likely those two will be moving.

Intersecting and moving together because there is some software advantages there.

Mark W. Sawicki: And also, I think that Tech4Med stands independently as well, so it's got independent orders coming in. And then, thirdly, I think it will serve as an integrating tool, as I mentioned in my comments earlier, throughout the company over time. So it'll take some time to do all these things, but we're really excited about Tech4Med. Thanks for the additional information. Yeah, the industry feedback on Tech4Meta has been resoundingly positive as well. Got it. Thanks for the additional color there, and that's all my questions.

And also I think.

<unk> has it stands independently as well so it's gotten independent orders coming in and then I think thirdly, I think it will serve as an integrating tool as I mentioned in my comments earlier throughout the company over time. So it will take some time to do all these things, but we're really excited.

<unk> Tec from Ed.

Got it thanks.

Yes, the industry feedback on <unk> has been resoundingly positive as well.

Got it thanks for the additional color there and Thats all my questions.

Paul Richard Knight: Thank you. Your next question comes from Paul Knight of KeyBank. Your line is already open. Hi Jerry. You mentioned the 70% market share. What's the alternative? I guess they do it themselves or another commercial vendor? What, what's the biggest piece of that 30? Is it them or Martin or what?

Thank you.

Your next question comes from Paul Knight of Keybanc. Your line is already open.

Hi, Jerry on the you had mentioned the 70%.

Market share.

Whats the alternative I guess it is they do it themselves or.

Another commercial vendor.

What's the biggest piece of that 30 is it themselves or.

Mark in our world.

Jerrell W. Shelton: No, that's a global basis. Paul, so you have you have one large, lower-end manufacturer in China; you have a large lower-end manufacturer in India. And then you have a number of then you have one smaller operation in Germany. And then you have a number of small, small operations that kind of are like job shops.

No.

Global bases.

Paul So you have you have one large.

Lower in manufacturer in China, you have a large laurean manufacturer in India, and then you have a number.

Then you have one smaller operation in Germany, and then you have a number of small small operations that kind of arent like job shops.

Thomas J. Heinzen: I think he was talking about clinical trial percentage, not MVEs. I thought you were talking about MVEs. So, yeah, okay. Oh, clinical trials. I'm gonna turn that to Tom because he's the expert on clinical trials. Thanks, Jerry.

I think he was talking about clinical trial percentage not ftes.

Thought you were talking about in the E. So yes.

Okay.

All clinical trials I'm going I'm going to turn that to Tom because he's the expert on clinical trials.

Thanks Terry.

Thomas J. Heinzen: There are alternatives. We're not a monopoly out there. There is competition, but it's the same competition that's been around for years. It's some of our partners that we go to work with every day, especially couriers that are using either MVE's product or somebody else's to compete with us. But we stand on our merits. We stand on the quality of our product, our market-leading position, all of our commercial customers, our chain of compliance, and everything else we do. That's what separates us.

There are alternatives, where not a monopoly out there there is competition. It's the same competition that's been around for years at some of our partners that we go to work with every day the specialty carriers that are using either Mds.

Our product or somebody else's.

To compete with us, but we stand on our merits, we stand on the quality of our product our market leading position all of our commercial customers are chain of compliance and everything else. We do that's what separates us.

Mark W. Sawicki: Yeah, and that 70% is, in reality, higher than that because we do have, you know, a lot of the specialties that subcontract equipment through us for programs that they're supporting that we don't have visibility on. So the effective number is going to be higher than 70%. We just don't know that exact number.

And in that sense.

<unk> percent is that in reality higher than that because we do have.

A lot of the specialties that subcontract equipment through us for programs that they are supporting that we don't have visibility on so the effective numbers can be higher than 70%. We just don't know that exact number.

Paul Richard Knight: Okay, and then on animal health was down year over year. Could you comment on that? And then, in these down year over year, but you're saying that it's stabilizing at this juncture? Yeah, animal health and MVE are directly correlated. So, you look at the product size of the markets, and this is, you know, the reduction in revenue or the drop in revenue is really driven by, you know, the drop in MVE revenue. So animal health and biopharma both have been impacted by MVE throughout the remainder of the year. Okay, thank you.

Yeah.

Okay, and then on animal health was down year over year.

Could you comment on that and then India is down year over year, but youre, saying what that stabilizing at this juncture.

Yes, I don't know health and <unk> directly correlated. So if you look at the product size of the markets. This is the reduction in revenue of the drop in revenue is really driven by the.

The drop in MBE revenue, so animal health and Biopharma, both have been impacted by buying the what we've seen in Q2 through throughout the remainder of the year.

Jerrell W. Shelton: Thank you. There are no further questions at this time. I would hand over the call to Jerry Shelton, CEO. Please go ahead.

Okay. Thanks.

Thank you there are no further questions at this time I would hand over the call to Jerry Shelton CEO. Please go ahead.

Jerrell W. Shelton: Thank you for your questions and our discussions. In closing, our 2023 results were within our guidance range and our expectations. While product revenue was lower than historical levels, MVE revenue began to stabilize in the latter part of the year, and that has continued into early 2024.

Thank you for your questions and our discussions.

In closing our 2023 results were within our guidance range and our expectations, while product revenue was lower than historical levels MBE revenue begin to stabilize in the latter part of the year and that has continued into early 2024.

Jerrell W. Shelton: Services revenue continued to become a larger part of our business, led by growth in bio storage, bio services, and commercial cell and gene therapy. We think 2024 will be a year of progressive advancement as more therapies move toward commercialization. In addition, to our operating results in 2023, we continue to make strategic investments and establish important relationships to drive our long-term growth. We signed a number of new clients and brought new products and services to market. All of these actions continue to expand our ability to serve the cell and gene therapy industry globally and open up new revenue streams. Barring any geopolitical breakdown, we think our outlook of a progressive and progressively improving market in 2024 is well founded. As an established industry leader that leads the way in providing vital supply chain support to the life sciences industry, we intend to continue to grow in importance and to benefit from the growth of the cell and gene therapy industry as it becomes an even greater proportion of our business.

Services revenue continued to become a larger part of our business led by growth in bio storage bio services and commercial cell and gene therapy.

We think 2024 will be a year of progressive advancement as more therapies move toward commercialization.

In addition.

To our operating results in 2023, we continue to make strategic investments and establishing important relationships to drive our long term growth, we signed a number of new clients and bought new products and services to market.

All of these actions continued to expand our ability to serve the cell and gene therapy industry globally and open up new revenue streams.

Barring any geopolitical breakdown, we think our outlook of a progressive.

Regressive Lee improving market in 2024 is well founded.

As an established industry leader that leads the way in providing vital supply chain support to the life Sciences industry, we intend to continue to grow in importance and to benefit from the growth in the cell and gene therapy industry as it becomes an even greater proportion of our business. Thank you for joining us today. We appreciate your continued.

Jerrell W. Shelton: Thank you for joining us today. We appreciate your continuing support and interest in our company. We look forward to updating you on our progress again next quarter. And we hope you have a good evening. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

Doing support and interest in our company, we look forward to updating you on our progress again next quarter.

If you have a good evening.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.