Q1 2024 Cryoport Inc Earnings Call

Okay.

Operator: Good afternoon, and welcome to Cryoport's fourth quarter and full year 2023 earnings conference. All participants will start in a listen-only mode. Following the presentation, we will conduct a question and answer session.

Speaker Change: Good afternoon, and welcome to quite report fourth quarter and full year 2020 earnings conference call.

All participants will will start in a listen only mode.

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

Operator: If at any time during this call you require immediate assistance, please press star zero for the option. As a reminder, this call is being recorded. I will now turn the call over to your host, Todd Fromer, from KCSA Strategic Communications.

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 will now turn the call over to your host Todd Fromer from K C. <unk> strategic Communications. Please go ahead.

Todd Fromer: Thank you operator before I get started with this I just want to correct. The record. This is the cloud report first quarter earnings Conference call.

Todd Fromer: Thank you, operator. Before I get started with this, I just want to correct the record.

Todd Fromer: This is the Cryoport first quarterly conference call. Before we get started, I would like to remind everyone that this conference call contains certain forward-looking statements. All statements that address our operating performance, events, or developments that we expect or anticipate occurring in the future are forward-looking statements. These forward-looking statements are based on management's beliefs and assumptions and not on information currently available to our management team. Our management team believes that these forward-looking statements are reasonable as and when they are made.

Speaker Change: Before we get started I would like everyone I would like to remind everyone that this conference call contains certain forward looking statements all statements that address our operating performance events or developments that we expect or anticipate occurring in the future are forward looking statements. These forward looking statements are based on management's beliefs and assumptions and not on information currently.

Todd Fromer: However, you should not place undue reliance on any such forward-looking statements because such statements speak only as of the date when 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 results 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.

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 Security and Exchange Commission and those described from time to time in other reports which we file with the SEC. It is now my pleasure to turn the call over to Mr. General Shelton, Chief Executive Officer of CryoPort. Jerry, the floor is yours.

Jerrell W. Shelton: Thank you, Todd. Good afternoon, ladies and gentlemen. Thank you for joining our first quarter earnings call today. With us this afternoon is our 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've uploaded our first quarter 2024 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.

Jerrell W. Shelton: I will provide you with a brief update on our business, and then we will take your questions. For the first quarter of 2024, we continue to experience a difficult environment globally. Our quarterly results were disappointing across the board, particularly our life science products. However, as we stated when we initially provided our annual guidance, we anticipate our total revenue will progressively improve throughout the year, and we maintain our full-year revenue guidance of $242 to $252 million. I am sure some of you are asking what makes us confident. Well, there are several things.

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 when 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 results.

Todd Fromer: Or otherwise except as required by law. In addition forward looking statements are subject to certain risks and uncertainties that could cause actual results events and developments to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include but are not limited to those described in item one.

Risk factors and elsewhere in our annual report on Form 10-K filed with the Securities and Exchange Commission and those described from time to time in other reports, which we file with the Securities and Exchange Commission.

Todd Fromer: Now my pleasure to turn the call over to Mr. Jerrell, Shelton, Chief Executive Officer of Cryo Port Jerry the floor is yours.

Jerrell W. Shelton: Thank you Todd good afternoon, ladies and gentlemen, thank you for joining our first quarter earnings call today with US. This afternoon is our chief financial Officer, Robert sounded so part of it our Chief Scientific officer, Dr. Mark Sawicki, and our Vice President corporate development and Investor Relations on the science.

Jerrell W. Shelton: As a reminder, we've uploaded in our first quarter 2024 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 have not had a chance to read it I would encourage you to go to our website at <unk>.

Jerrell W. Shelton: Loaded.

Jerrell W. Shelton: I will provide you with a brief update on our business and then we will take your questions.

Jerrell W. Shelton: For the first quarter 2024, we continued to experience a difficult environment globally.

Jerrell W. Shelton: Quarterly results were disappointing across the board, particularly our life science products. However.

Todd Fromer: As we as we stated when we initially provided our annual guidance. We anticipate total revenue will progressively improve throughout the year and we maintain our full year revenue guidance of $242 million to $252 million.

Todd Fromer: I am sure. Some of you were asking what makes us confident well there are several things for example, despite the near term challenges. We are still quite positive based on the momentum we see we're seeing from our cell and gene therapy clients and from the growth of our vital storage vital services revenue.

Jerrell W. Shelton: For example, despite the near-term challenges, we're still quite positive based on the momentum we see from our cell and gene therapy clients and from the growth of our bio storage and bio services revenue. If you look at our results, you will see that our first quarter commercial therapies rose 9% while bio-storage and bio-services revenue also rose by the same amount. Both these service areas should continue to be growth drivers for Cryoport in 2024 and beyond.

Todd Fromer: If you look at our results Youll see that our first quarter commercial therapies grew not rose, 9%, while bio storage services revenue also rose with the same amount.

Todd Fromer: Both of these services areas should continue to be growth drivers for cloud port in 2024 and beyond we're also encouraged by new clients slated in the Biopharma market and some positive signs recently in the cryogenic systems market.

Jerrell W. Shelton: We're also encouraged by new clients in the biopharma market and some positive signs recently in the cryogenic systems market. As I indicated, our life science services revenue growth for the first quarter was softer than anticipated, increasing 3% year over year.

Todd Fromer: As I indicated our life science services revenue growth for the first quarter was softer than anticipated increasing 3% year over year. There is however, a bright spot as the cell and gene therapy market seems to be gaining some momentum again.

Jerrell W. Shelton: There is, however, a bright spot as the cell and gene therapy market seems to be gaining some momentum again. To date, this year, three new therapies have been approved. Three existing commercial therapies were approved to move to an earlier line of treatment, and two therapies were approved to expand their label or geographic territory. By combining the expected revenue ramps of existing and new commercial therapies, we believe we should see revenue acceleration from our cell and gene therapy clients over the remainder of the year.

Todd Fromer: To date this three year.

Todd Fromer: To date this to date this year three new therapies have been approved three existing commercial therapies were approved to move to an earlier line of treatment and two therapies.

Todd Fromer: Move to expand their label or geographic territory.

Todd Fromer: By combining the expected revenue ramps of existing and new commercial therapies, we believe we should.

Todd Fromer: The revenue acceleration from our cell and gene therapy clients over the remainder of the year.

Jerrell W. Shelton: Currently, we think an additional 16 global regulatory filings will be completed before year-end. As of March 31st of this year, Cryoport supported a total of 675 global clinical trials, a net increase of 23 clinical trials over the same time last year. As of quarter-end, 77 of these trials were in Phase 3, along with 312 of them in Phase 2.

Todd Fromer: Currently we think an additional 16 global regulatory filings will be completed before year end.

Todd Fromer: As of March 31 of this year <unk> supported a total of 675 global clinical trials, a net increase of 23 clinical trials over the same time last year.

Todd Fromer: As of quarter end 77 of these trials, we are in phase III, along with 312 of them in phase III.

Jerrell W. Shelton: As we have said before, our clinical trial portfolio represents a substantial long-term revenue growth opportunity for Cryoport as more therapies advance through clinical trials toward commercialization. Our outlook for the rest of the year with commercial therapies looks strong, with potentially five additional new therapy approvals and three additional label or geographic extensions. Turning to our life science products, similar to last quarter, this business's revenue was lower than in prior years. This is due to decreased demand for N to the E biological solutions cryogenic system. This, in turn, was attributable to a continued slowdown in capital equipment investment that began last year.

Todd Fromer: As we have said before our clinical trial portfolio represents a substantial long term revenue growth opportunity for Crown court as more therapies advance through the clinical trials toward commercialization.

Todd Fromer: Our outlook for the rest of the year with commercial therapies look strong with potentially five additional new therapy approvals and three additional label or geographic expansions.

Todd Fromer: Turning to our life science products.

Todd Fromer: <unk> last quarter. This business revenue was lower than in prior years.

Todd Fromer: This was due to decreased demand for MBE biological solutions cryogenic systems. This in turn was attributable to a continued slowdown in capital equipment investment it.

Jerrell W. Shelton: Although global in nature, as we have reported previously, the most severe pullback in demand continues to be in China. While we expect MVE's cryogenic systems sales to be challenged throughout the remainder of this year as biotech funding, government budgets, and academic budgets are constrained, we expect to see gradual improvement in demand in the ensuing quarters. MVE is a well-managed business, and we want to remind investors that even in this difficult time, it continues to produce free cash flow for our company. MBE is the leading manufacturer of cryogenic systems worldwide.

Todd Fromer: We began last year, although global in nature as we have reported previously the most severe pullback in demand continues to be in China.

Todd Fromer: While we expect Mbe's cryogenic systems sales to be challenged throughout the remainder of this year as biotech funding government budgets and academic budgets are constrained.

Todd Fromer: To see gradual improvement in demand in the ensuing quarters.

Todd Fromer: <unk> is a well managed business and we want to remind investors that even in this difficult time. It continues to produce free cash flow for our company.

Todd Fromer: <unk> is the leading manufacturer of cryogenic systems worldwide and we are confident in the long term prospects of our products business and when demand normalizes and we believe it will we will benefit from our position as the global leader in this space.

Jerrell W. Shelton: And we're confident in the long-term prospects of our products business. And when demand normalizes, and we believe it will, we will benefit from our position as the global leader in this space. In summary, and to put it plainly, there is simply no other company with the extensive resources Cryoport has in providing a full array of innovative, reliable, end-to-end supply chain solutions to the life science industry. With advanced services, products, and information systems focused on reducing risk, and located in 50 locations in 17 countries, Cryoport is well prepared to support the expansion of the life sciences and especially the growing cell and gene therapy market.

Todd Fromer: In summary, and to put it plainly there is simply no other company with your extensive resources cloud port has in providing a full array of innovative reliable end to end supply chain solutions to the life Sciences.

Todd Fromer: With advanced services.

Todd Fromer: <unk> and information systems focused on reducing risk and located in 50 locations in 17 countries.

Jerrell W. Shelton: <unk> is well prepared to support the expansion of the life Sciences, and especially the growing cell and gene therapy market.

Jerrell W. Shelton: Based on our client's forecast and fueled by industry indicators for cell and gene therapies and the life sciences, we continue to build out services, products, and infrastructure to prepare ourselves to provide comprehensive and dependable supply chain support for these life-saving treatments. However, considering the current macroeconomic challenges and their impact on our financial results, we are implementing a number of initiatives to drive toward positive adjusted EBITDA and cash flow in the near term.

Todd Fromer: Based on our clients' forecast and fueled by industry indicators for cell and gene therapies in the life Sciences, we continue to build out services products and infrastructure to prepare ourselves to provide comprehensive and dependable supply chain support for these lifesaving treatments. However, considering the current macroeconomic.

Jerrell W. Shelton: Challenges and their impact on our financial results. We are implementing a number of initiatives to drive towards positive adjusted EBITDA and cash flow in the near term.

Jerrell W. Shelton: These include improved alignment of our global organization, a reduction in our workforce, leveraging lower-cost shared services, refining and reprioritizing planned initiatives, and delays in capital spending as a result of reprioritization, all of which should possibly impact the second half of 2024. We're mindful of our need to maintain a strong balance sheet to support our future growth. And we ended the quarter with $448 million in cash, $448 million, and $500,000 cashed out. This concludes my prepared remarks. Now, we're going to be happy to take questions from you. Operator, please open the lines for questions.

Todd Fromer: These include improved alignment of our global organization reduction in our workforce leveraging lower cost shared services refining and re prioritizing planned initiatives and delays in capital spending as a result of re prioritization.

Todd Fromer: All of which should positively impact the second half of 2024.

Jerrell W. Shelton: We are mindful of our need to maintain a strong balance sheet to support our future growth and we ended the quarter with 448 million.

Jerrell W. Shelton: Cash balance 448 billion.

Speaker Change: 500000 cash balance. This concludes my prepared remarks prepared remarks, now we're going to be happy to take questions from you operator, Please open the lines for questions.

Operator: Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press star on your telephone keypad. And if you wish to cancel your request, please press star 2. Your first question comes from Tejas Savant from Morgan Stanley. Your line is now open.

Speaker Change: Thank you, ladies and gentlemen, we will now conduct the question and answer session.

Speaker Change: If you have a question. Please press star on your telephone keypad.

Speaker Change: And if you wish to cancel your request please press star two.

Operator: Your first question comes from Sevan.

Tejas Rajeev Savant: From Morgan Stanley. Your line is now open.

Edmund: Good afternoon, guys. This is Edmund on Tejas. Thank you for the time. Um, first question, could you guys provide some more color on how things played out? Where do customers stand today in terms of their need to expand their freezer capacity? And what do order books look like heading into the second half?

Tejas Rajeev Savant: Good afternoon, guys. This is edmund on pages. Thank you for the time.

Sevan: First question could you guys provide some more color on how things play out.

Sevan: Customer stand today in terms of their need to expand their visa because capacity and what the order books look like heading into the second half.

Sevan: MBE.

Sevan: Yes.

Sevan: Andy.

Jerrell W. Shelton: Okay, so Tejas, would you please repeat that question again, please? Just one second.

Andy: Okay. So hey, just repeat repeat that question again please.

Tejas: Just one second.

Edmund: Sorry, Jerry, this is Edmund. But the question was, um, could you provide some more color on how things played out at MBE this quarter? Where do customers stand today in terms of their need to expand their freezer capacity? And what do order books look like heading into the second half of 2015?

Jerrell W. Shelton: Hi, Jamie this is Ed but the question was.

Speaker Change: Could you provide some more color on how things played out LTE this quarter, where our customer stand today in terms of their need to expand their piece of capacity and what's the order books look like heading into the second half of 'twenty four.

Jerrell W. Shelton: Okay, that's a good question. Look, MVE tracks its orders and talks with its distributors and its direct customers on a regular basis. There's simply been some pullback in funding in government and, you know, and institutions and businesses. And that seems to be fading.

Speaker Change: Okay. That's a good question and look MBE tracks.

Jerrell W. Shelton: Its orders in talks with it.

Sevan: Its distributors and it's key it's direct customers on a regular basis.

Jerrell W. Shelton: We seem to be, and we do know that in the last half, or the second half of this quarter, we will have, it looks like we have orders lined up for large pharma and for mid-sized biorepositories. And we think that there's some government spending that will be in the last half. So we think we'll have a progressive improvement in the MVE in the second half of the year.

Jerrell W. Shelton: There has simply been some pullback in funding in government and.

Jerrell W. Shelton: And institutions in business and that that seems to be breaking we seem to be and we do know that in the last half or the second half of this quarter.

Jerrell W. Shelton: This year, we will have.

Jerrell W. Shelton: It looks like we have orders lined up for.

Jerrell W. Shelton: Large pharma and for midsized bio repositories.

Jerrell W. Shelton: And we think that there is some some government spending that will be on the last half. So we think we'll have a progressive improvement.

Sevan: And in the second half of the year.

Jerrell W. Shelton: You know, the hope academically, the hope academically is China, and China is, you know, continues to be in recession. And we do not expect China to improve for the remainder of this year and probably into the next. There's been a reduction in biotech funding, and there have been some breeder programs instituted by the government. And all of that has affected our business. However, we do have initiatives to compete within China on a very effective basis. I want to remind you, though, that China only accounts for about 5% of our total revenue at this point.

Jerrell W. Shelton: Got it back.

Speaker Change: Now I'll hop back in.

Jerrell W. Shelton: The China, and then China, China continues to be in recession, and we do not expect China to improve.

Jerrell W. Shelton: For the remainder of this year and probably into the next next year.

Jerrell W. Shelton: It's been a reduction in biotech funding.

Jerrell W. Shelton: Theres been some breeder programs instituted by the government and all of that has affected our business. However, we do have initiatives to compete within China on a very effective basis I want to remind you, though China only accounts for about 5% of our total revenue at this point.

Unknown Executive: That's very helpful. And then, um, a higher-level question. Some of the traditional logistics companies, such as UPS, have recently expressed an interest in expanding to the healthcare vertical. Now, are there any opportunities for a company like Cryoport to work with those providers, or do they represent more of a medium-term competitive threat to the business model?

Speaker Change: Got it that's very helpful and then.

Unknown Executive: A higher level question some of the traditional logistic companies such as UBS have recently expressed an interest into expanding into the health care vertical now are there any opportunities for a company like cohorts of work with those providers or do they represent more of a medium term competitive threat to the business model.

Jerrell W. Shelton: You know, in recent times, UPS has become more of a competitor, or tried to at least, but we work with the integrators on a regular basis. And we have for 12 years since I took over the company. We've had strategic relationships with them, which we talk about on a frequent basis. In some cases, we work more closely than in others. UPS has been the most aggressive through their purchase of Markham, but they don't really pose a tremendous threat to us. We still use them as an integrator for many of our services.

Unknown Executive: Over the recent time.

Unknown Executive: As has become.

Jerrell W. Shelton: More of a competitor or tried to at least but we've worked with the integrators on a regular basis and we have for 12 years since I took over the company, we've had strategic relationships with them, which we've talked about on a frequent basis.

Jerrell W. Shelton: In some cases, we work more closely than in others.

Jerrell W. Shelton: As has been the most aggressive through the purchase of marketing but.

Jerrell W. Shelton: Don't really pose a tremendous threat to us we still use them as an integrator and many of our services. They also use our equipment sets on a regular basis in conjunction with programs that they're supporting.

Jerrell W. Shelton: They also use our equipment sets on a regular basis in conjunction with programs that they're supporting, you know, through their healthcare vertical.

Jerrell W. Shelton: Through their health care vertical that's an important point that's MBE.

Unknown Executive: That's an important point. That's MBE equipment.

Unknown Executive: <unk>.

Unknown Executive: Got it. And then one housekeeping question for the model: what percentage of product revenue is from MVE, and what percent is from legacy Pyreport systems?

Speaker Change: Got it and then one housekeeping question for the model what percentage of the product revenue is from <unk> and what percent is from legacy systems.

Unknown Executive: It's really, you know, if you look at the product revenue, it's really the vast majority, so in excess of 95% of the revenue, is related to MBE cryogenics. Got it. Super helpful.

Unknown Executive: Robert It's really if you look.

Unknown Executive: At the product revenue.

Unknown Executive: Really the vast majority so in excess of 95% of the revenue is related to MB cryogenic systems.

Unknown Executive: Got it. Super helpful. Thank you for the time.

Speaker Change: Got it Super helpful. Thank you for the time.

Speaker Change: Okay. Thank you.

Unknown Executive: Yes.

Operator: Your next question comes from Matt Stanton from Jefferies. Your line is now open.

Unknown Executive: Your next question comes from Matt Thompson from Jefferies.

Matthew Jay Stanton: Your line is now open.

Matthew Jay Stanton: Hey, thanks. Appreciate the call on focusing on EBITDA and cash flow in the near term. It sounds like you have a number of initiatives in motion around that. Just help us quantify what the impact could start to look like to OPEX as we move into the back half of the year. Just trying to get a better understanding of what, you know, total cost savings or improvements we could start to bake into the P&L here. Thanks.

Matthew Jay Stanton: Alright. Thanks.

Matthew Jay Stanton: The color on focus near term on EBITDA and cash flow. It sounds like you have a number of initiatives.

Matthew Jay Stanton: And motion around that just help us quantify.

Matthew Jay Stanton: What the impact could start to look like to Opex.

Matthew Jay Stanton: As we move into the back half of the year, just trying to get a better understanding of what.

Matthew Jay Stanton: Total cost savings or improvements, we could start to bake into the P&L there. Thanks.

Jerrell W. Shelton: Yeah, no, thanks for the question. Look, at the current time, we obviously just provide, you know, guidance related to our annual revenue. But with that said, you know, I can provide a little bit of information overall. You know, we have been and are taking, you know, continuous action and review of our initiatives, of our CAPEX spending, pushing out some of the CAPEX spending that is not driving any kind of near-term revenue, or is not critical to our near-term initiatives.

Speaker Change: Yes, no. Thanks for the question look at the current time, we obviously just provide guidance related to our annual revenue.

Jerrell W. Shelton: But with that said I can provide a little bit of information overall, we have been and are taking continuously actions and a review of our initiatives of our capex spending pushing all saw the capex spending that is not driving kind of a near term revenue or is not critical to our near term initiatives.

Jerrell W. Shelton: You know, if you look at the overall operating expense, you know, a couple of things. One, we've been building out our infrastructure over the last couple of years, as you know, and we're looking to see leverage of that infrastructure and capabilities that we built out. We expect to have that substantially in 2026. As revenue grows, we're going to see, you know, better operating leverage of the overall infrastructure that we set up.

Jerrell W. Shelton: Yes, if you look at the overall operating expense.

Jerrell W. Shelton: Are things one we've been building out our infrastructure over the last couple of years as you know.

Jerrell W. Shelton: We're looking to see leverage of that infrastructure and capabilities that we built out we expect to have that substantially complete in 2026 as revenue grows we're going to see better operating leverage.

Jerrell W. Shelton: The overall infrastructure that we set up in terms of the specific question.

Jerrell W. Shelton: In terms of, you know, the specific question and, you know, modeling out the second half of the year, you know, I would expect, you know, a drop in operating expenses. I can't tell you exactly how much, the percentage will provide some more clarity there, but certainly we do expect to see an impact in the second half on operating expenses.

Jerrell W. Shelton: We are modeling out the second half of the year I would expect a drop in operating expenses I can't tell you exactly the <unk>.

Jerrell W. Shelton: Percentage will provide some more clarity there, but certainly we do expect to see an impact in the second half.

Jerrell W. Shelton: On the on the operating expenses.

Unknown Executive: Okay, thanks. That's very helpful.

Speaker Change: Okay. Thanks, that's helpful and then.

Unknown Executive: Maybe back over to <unk>, you talked about how sales kind of remain challenging there and gradual improvement through the year I think prior you guys had baked in kind of flattish growth in <unk> for the year, just given kind of the slower start should we still expect MTBE to be flattish in 'twenty four or is it down for the year.

Jerrell W. Shelton: And then maybe back over to MVE, you talked about how sales kind of remain challenging there and a gradual improvement through the year. I think prior, you guys had baked in kind of flattish growth in MVE for the year. Just given kind of the slower start, should we still expect MVE to be flattish in 24? Or is it down for the year? And I guess if it is now down by 24, you know, what other areas are potentially offsetting that, you know, to reiterate the guide for the full year?

Jerrell W. Shelton: If it is now down in 'twenty four what other areas are potentially offsetting that.

Jerrell W. Shelton: To reiterate the guide for the full year.

Jerrell W. Shelton: No, Matt, I think you can expect MVE to be flattish for 2024. And so you'll see that improvement in the last half, which will create that, and then I think we'll have some progression in 2025. Look, we ran into a situation where, you know, the market pulled back severely in the second half of 2023. And that probably had to do with some, you know, extra capacity build-up from COVID plus the economic situation, which caused people to pull back on budgets and governments pulling back, and so forth. But some of that's freeing up at some points; you have to have more capacity. So, we do think it'll be flattish in 2024 and improve in 2025.

Speaker Change: No Matt I think you can expect them to be flattish for 2024 and.

Jerrell W. Shelton: So you will see that improvement in the last half, which will create that and then I think we'll have some progression in 2025.

Jerrell W. Shelton: Look we ran into a situation where.

Jerrell W. Shelton: The market pulled back in the second half of 2023.

Jerrell W. Shelton: Severely and.

Jerrell W. Shelton: Probably had to do with some.

Jerrell W. Shelton: Extra capacity buildup from from.

Jerrell W. Shelton: From Covid, plus the economics economic situation, which caused people to pull back on budgeted and government pulling back and so forth, but some of thats freeing up at some point you have to have more capacity. So.

Jerrell W. Shelton: So we do think it will be flattish in 2024 and improving in 'twenty five.

Unknown Executive: And the driver, really, for revenue, especially in the second half of the year, is related to our services offering and revenue.

Speaker Change: And the driver really for for the revenue, especially in the second half of the year is related to our services offering and revenue.

Unknown Executive: Okay, great. And maybe just one last quick one.

Speaker Change: Okay, Great and maybe just one last quick one.

Unknown Executive: Phase III trials dropped to 77.

Unknown Executive: The phase three trials dropped to 77. I know you expect some normal kind of fallout in there. Any more color you can provide on just the gross and net numbers for phase three in the quarter? And did it have any impact on 1Q revenue, given those programs are generally a bit more meaningful than some of the earlier phase programs? Thank you.

Speaker Change: I know you expect some normal kind of fallout in there any more color you can provide on just the.

Unknown Executive: Gross and net numbers for phase III in the quarter did it have.

Unknown Executive: Any impact on <unk> revenue given those programs are generally a bit more meaningful than some of the earlier phase programs. Thank you.

Unknown Executive: Yeah, we're still seeing a lot of churn as it relates to clinical trial activity. So if you, if you, if you drill into the flat sequential quarter, we actually saw 42 trial terminations. And, you know, 20 of which were completed and 22 terminated. Those that were terminated, in many cases, were due to cash. Of those, obviously, you saw a drawdown of the phase, some of the phase three trials. But we also added back 42 programs.

Unknown Executive: Yes, we're still seeing a lot of churn as it relates to clinical trial activity.

Unknown Executive: If you drill into the flat sequential quarter, we actually saw 42 trial terminations.

Unknown Executive: 20 of which were completed in 'twenty two terminated those that were terminated in many cases were due to cash.

Unknown Executive: Those obviously you saw a drawdown on the face of some of the phase III trials. We also added back 42 programs, obviously theres a lag period associated with those as they get up and running.

Unknown Executive: Obviously, there is a lag period associated with those as they get up and running, but we did see an impact on a couple of terminations in phase three that did show some, you know, obviously that had an impact on where we thought we were going to see some accretive activity there that was relatively flat. But the good thing is that the new programs that are starting are really diversified and will start to contribute in the coming months.

Unknown Executive: But we.

Unknown Executive: We did see an impact on a couple of terminations in phase III.

Unknown Executive: So obviously that had an impact on.

Unknown Executive: Where we thought we were going to see some accretive activity there that was relatively flat.

Unknown Executive: But the good thing is that the new programs that are starting really diversified and will start to contribute in the coming months.

Unknown Executive: Thanks, that's helpful. I appreciate it.

Speaker Change: Thanks, that's helpful. I appreciate it.

Operator: Your next question comes from Puneet Souda from Lehren Partners. Your line is now open.

Unknown Executive: Your next question comes from Puneet <unk> from Leerink Partners. Your line is now open.

Philip: Hi, this is Philip on behalf of Puneet. Thank you for taking my question. Maybe just a high-level kind of question. Coming off a softer first quarter, you've got an implied ramp in the second half; it's a bit steeper. Can you just maybe give a bit more color on sort of the levers that give you confidence to reiterate your guidance, kind of if you expect MVE to improve sequentially in the second quarter, or if that still hasn't bottomed out, or just kind of what are the different levers that will take us to the low end versus kind of like the high end of the guidance?

Operator: Hi, This is Philip on for Puneet. Thank you for taking my question.

Philip: Maybe just a high level kind of <unk>.

Philip: <unk>.

Philip: Just coming off a softer first quarter, you've got an implied ramp in the second half that's a bit steeper.

Philip: Can you just maybe give a bit.

Philip: More color on sort of the levers that give you confidence to reiterate guidance kind of.

Philip: <unk>.

Philip: To improve sequentially in the second quarter or if that still hasnt bottomed out or just kind of what are the different levers that will take us at low end versus the high end of the guidance. Thank.

Jerrell W. Shelton: Thank you. Sure. I'll start the answer, and then, and then Robert and Mark may want to chime in with some other thoughts. But, you know, our outlook is based on the trends that we're currently seeing industry-wide, as well as what we specifically are seeing from our cell and gene therapy clients. So you take those factors into consideration, and we're confident, as one can be given the current economic and geopolitical landscape.

Speaker Change: Sure I'll start the answer.

Speaker Change: And then and then Robert and Mark.

Speaker Change: I may want to chime in with some other calls but.

Jerrell W. Shelton: Our outlook is based on the trends that we're currently seeing industry wide as well as what we specifically you are seeing from our cell and gene therapy clients.

Jerrell W. Shelton: There are a number of clients with commercial therapies that are forecasting a second, a strong second, you know, half ramp. And we also are seeing a number of new therapies approved recently, and their ramp should contribute to our revenue growth later this year. And then there's the biotech funding increasing dramatically in quarter one, and then we should see some impact from that later this year. And we're having new products and services launched throughout the year, which brings in new revenue.

Jerrell W. Shelton: These factors into taking those factors into consideration.

Jerrell W. Shelton: We're confident as one can be given the current economic and geopolitical landscape. There are a number of our clients with commercial therapies that are forecasting a second.

Jerrell W. Shelton: Our strong second half ramp.

Jerrell W. Shelton: We also were seeing a number of new therapies approved recently in their ramp should contribute to our revenue growth later this year.

Jerrell W. Shelton: And then theres, the biotech funding increasing dramatically in quarter, one and we should see some impact from that later this year and we are having new products and services launched throughout the year, which bring in new revenue.

Jerrell W. Shelton: So, you know, all in all, we believe that each of these businesses, each of our businesses will grow in 2024, as highlighted in the press release. Our service business should lead the way, and I think Robert mentioned that a little bit earlier.

Speaker Change: So all in all we believe that each of these each of our businesses will grow in 2024 as highlighted in the press release, our service business should lead the way and I think Robert mentioned that a little bit earlier. So Robert would you like to add anything no. I think you mentioned most of them, we do expect and progressed.

Jerrell W. Shelton: The improvement in your Astra right, especially in the second half and if you look at so.

Jerrell W. Shelton: The core revenue drivers commercial revenue bio storage five services revenue.

Jerrell W. Shelton: And even maybe clarification on commercial revenue you look at the commercial revenue growing 9% year over year, but we all said take a look at the trailing 12 months revenue because you have some lumpiness there in terms of timing. So when you look at 12 months over 12 months for Q1 over over the trailing 12 months last year. It grew by.

Unknown Executive: Unknown Executive, Puneet Souda, Yuan Zhi, Todd Fromer, Cryoport, Unknown Executive, Puneet Unknown Executive, Puneet Souda, Yuan Zhi, Todd Fromer, Puneet Souda, Yuan Zhi, Todd So if you look at that, plus, you know, the additional BLA filings, MAA filings, and expected approvals that we see this year, you'll see a continuous momentum that will, you know, keep driving the services revenue to meet our revenue guidance for the year. Yeah, let me just add to that.

Unknown Executive: 27%. So if you look at that plus the additional BLA filings MAA filings and expect that accruals that we see this year you will see <unk>.

Speaker Change: <unk> momentum.

Speaker Change: We'll keep driving the services revenue.

Speaker Change: To meet or beat our revenue guidance for the year now let me just add to that obviously a lot of our commercial folks have come out with.

Unknown Executive: Obviously, a lot of our commercial folks have come out with earlier line approvals, you know, obviously BMS and J&J, SREPTA might have a significant expansion coming out after the end of the second quarter, all of which should contribute to increasing activities that relate to commercial. And then obviously, the recent approvals for Iovance, CRISPR, Virtex, Bluebird, Immunity, Bio, and Attara are also going to start in a more meaningful way.

Unknown Executive: Earlier line approvals.

Unknown Executive: BMS and J&J strep that might have a significant expansion coming out after the end of the second quarter, all of which should contribute to to increasing activity as it relates to commercial and then obviously the recent approvals for Io Vance CRISPR vertex Bluebird immunity bio and <unk>.

Unknown Executive: I'm going to start to contribute.

Unknown Executive: In a more meaningful way.

Unknown Executive: Got it. That makes sense. Thank you.

Speaker Change: Got it that makes sense. Thank you and then maybe just one follow up.

Speaker Change: Keeping question.

Philip: And then maybe just one follow-up housekeeping question. I guess I know... You guys don't have too much exposure to China, but have you thought about how much risk there is with the Biosecure Act and any retaliation to that for your business? Any potential disruptions there? Yeah, we...

Speaker Change: I guess I know.

Philip: You guys don't have too much exposure to China, but have you thought about kind of.

Philip: How much risk there is that bio secure act and any retaliation to that.

Philip: For your business.

Philip: How many disrupt sort of disruption there yes, we have we have we thought quite a bit about it and we studied China quite a bit China is the second most powerful country in the world and has more trading partners in the United States and extremely important country.

Jerrell W. Shelton: Yeah, we have, we've thought quite a bit about it, and we studied China quite a bit. Look, China is the second most powerful country in the world and has more trading partners than the United States. It's an extremely important country, and it's not going away.

Jerrell W. Shelton: And it's not going away and we have an investment in China, we have a plant in China and that plan is staffed by some very capable people.

Jerrell W. Shelton: And we have an initiative.

Jerrell W. Shelton: Compete better in China.

Jerrell W. Shelton: Given president cheese.

Jerrell W. Shelton: By in China, What's made in China.

Jerrell W. Shelton: And so we will be manufacturing freezers, there in the future for for that Chinese market.

Jerrell W. Shelton: The Chinese market is there are some risk, but you have to pay attention to the rules of the game and play there we're not we're not going to go back to.

Jerrell W. Shelton: To the thirties and forties with China.

Jerrell W. Shelton: China is here to stay and we have to learn.

Jerrell W. Shelton: And we have an investment in China; we have a plant in China, and that plant is staffed by some very capable people. And we have an initiative, you know, to compete better. And we have to learn, you know, how to work with that economy and assess the risk and move forward. We only have about 5% of our revenue exposed right now, but we think the potential there is substantial over time. It's an economic recession right now, but it'll get out of that over, you know, over some period of time.

Jerrell W. Shelton: How to work with that economy, and assess the risk and move forward. We only have about 5% of our revenue are exposed right now, but we think the potential there is substantial over time, it's an economic recession right now, but it will get out of that over over some period of time.

Philip: Got it. Thank you so much. I'll hop back in the queue.

Speaker Change: Got it thank you so much.

Jerrell W. Shelton: Hugh.

Operator: Your next question comes from Douglas Bernofsky from UBS.

Speaker Change: Your next question comes from Don Carson Bernacki from UBS your.

Douglas Bernofsky: Your line is now open.

Lucas: Hi, this is Lucas speaking on behalf of Dan Leonard at UBS. I guess to start things off, you know, there's definitely been an increase in oil prices since the start of the year. Given that increase in costs, are you finding that you're able to pass that on to customers? And should we expect any kind of a margin impact there over the near term? Thanks.

Operator: Hi, This is Lucas on for Dan Leonard at UBS.

Lucas: I guess to start things off.

Lucas: There's definitely been an increase in oil prices since the start of the year.

Lucas: Given that increase.

Lucas: In costs are you finding that you're able to pass that on to customers and.

Lucas: Should we expect any kind of a margin impact there over the near term.

Lucas: Thanks.

Jerrell W. Shelton: We have ordinary situations; we do have surcharges that we pass on where we pass on extra costs. So I don't think you should expect margin impact from the patrolling.

Lucas: Unexplored near situations, we do have surcharges that we passed where we pass on the extra cost.

Jerrell W. Shelton: I don't think you should expect margin impact from the petroleum increase.

Jerrell W. Shelton: Yes.

Lucas: Okay, thanks. And then just one more here. I guess going back to the China theme, you touched on a bit the initiative you have to begin manufacturing locally a little more over there. Are there any updates you can provide on how that's progressing and when that new capacity could come online?

Jerrell W. Shelton: Okay. Thanks, and then just one more here I guess going back to the China theme you touched on it a bit.

Lucas: Initiatives you have to begin manufacturing locally a little more over there.

Lucas: Are there any updates you can provide on how that's progressing and when that new capacity could come online.

Jerrell W. Shelton: Well, of course, it's a small initiative given the entire entirety of our company, and we are not in any hurry to make that investment right at this particular time, although that motion is still active. So you would probably see, probably mid next year, you'd probably see made in China products coming out of the Chinese factory. In addition to doors, it would be freezers as well.

Speaker Change: Well of course, it's a small initiative given the entirety.

Jerrell W. Shelton: Of our company.

Jerrell W. Shelton: And we are we're not in any hurry to make that investment at this particular time, although that motion as Phil still so active so.

Jerrell W. Shelton: You would see probably mid next year, you'd probably see made in China product coming out of the Chinese factory.

Jerrell W. Shelton: In addition to do or is it would be freezers as well.

Lucas: Okay, thanks. That's all I had.

Speaker Change: Okay. Thanks, that's all I had.

Speaker Change: Thank you.

Operator: Your next question comes from David Larsen from BTIG. Your line is now open.

Lucas: Your next question comes from David Larsen from.

David Michael Larsen: <unk> Your line is now open.

David Michael Larsen: Hi, can you talk a little bit more about these cost reduction efforts and I know that you've been very reluctant to reduce labor across your firm, that's certainly very admirable, but any more color there would be helpful. Do you expect to become EBITDA positive by say 4Q of 24 or any sense for the number of positions that might be reduced or anything like that would be very helpful, thank you.

David Michael Larsen: Hi can.

David Michael Larsen: Can you talk a little bit more about these cost reduction efforts.

David Michael Larsen: And I know that you've been very reluctant to reduce labor across your firm that's certainly very admirable.

David Michael Larsen: But just any any more color there would be helpful. Do you expect to become EBITDA positive by say for Q of 24 or any sense for the number of positions that might be reduced or anything like that would be very helpful. Thank you.

Jerrell W. Shelton: I just want to make a couple of broad comments and then turn to Robert for more specific comments, David. First of all, we're not reluctant to adjust our business in any way in the given circumstances after we have assessed them. We take great pride in being responsible for the way we manage our business and the assets that belong to the shareholders of this company. It's our fiduciary responsibility to be responsible, and we take that very seriously.

Speaker Change: I just wanted to make a couple of broad comments, and then turn to Robert for more specific comments David.

Speaker Change: First of all we're not reluctant to.

Speaker Change: To adjust our business in any way given circumstances.

Robert: After we have assessed them.

Jerrell W. Shelton: We take great pride in being responsible in the way, we manage our business and the assets along with the shareholders of this company. So it's our fiduciary responsibility to be to be responsible and we take that very seriously. So so we're not.

Jerrell W. Shelton: Business ebbs and flows, and when it's appropriate, we adjust. We adjust, just as I said in my opening comments with those initiatives that I mentioned there. Now to give you a little bit more color on your specifics, I'll turn it to Robert.

Robert: Things business ebbs and flows and when it when it.

Jerrell W. Shelton: It's appropriate we adjust we adjust just as just as I've said in the opening comments with those initiatives that I mentioned, there now to give you a little bit more color on your on your specifics I'll turn it to Robert.

Robert S. Stefanovich: Yeah, look, in general, we certainly, you know, our work involves getting back to positive EBITDA, and you're absolutely right, this is driven by some of the initiatives that we're taking related to cost reduction, related to, you know, picking up, you know, on top-line revenue. So, you know, these are things that we always do, but to give you maybe a few data points, just look at Q1. We had about eight, a little bit over eight million in cash burned. Of that, you know, a little bit over four million was related to CAPEX expenditures.

Jerrell W. Shelton: Yes.

Robert: In general, we certainly are working towards getting back to positive EBITDA.

Robert S. Stefanovich: Absolutely right. This is driven by some of the initiatives that we're taking related to cost reduction related to picking up the <unk>.

Robert S. Stefanovich: Top line revenue.

Robert S. Stefanovich: So these are things that we always do but does it gives you maybe a few data points.

Robert S. Stefanovich: So you look at Q1, we had about a little bit over $8 million of cash burn of that a little bit over $4 million was related to capex expenditures. So we are moving out so the capex as I mentioned earlier on the call just related to two initiatives that are not high priority certainly were.

Robert S. Stefanovich: So, we are moving out some of the CAPEX, as I mentioned earlier in the call, just related to initiatives that are not high priority. Certainly, we're still making investments in some of the key initiatives, such as IntegraCell, the cryoprocessing platform, and other key, key offerings that we've been working on and that have partially already been introduced into the market. As you would expect with any company, especially one that has made a number of acquisitions, we are looking to leverage our current capabilities and current resources.

Robert S. Stefanovich: Still making the investments and solve the key initiatives such as Integra settled the cloud processing platform and other key key offerings that we've been working on and that have partially been introduced into the market space.

Robert S. Stefanovich: As you would expect with any company, especially with a company that has done a number of acquisitions. We are looking to leverage our current capabilities and current resources. So can we leveraged shared services absolutely. Yes, we can do that can we fine tune the resources that we have and streamline it absolutely those are things that we have.

Robert S. Stefanovich: So can we leverage shared services? Absolutely, yes, we can do that. Can we fine-tune the resources that we have and streamline them? Absolutely. And those are things that we have been working on over the last few months that we've already started rolling out and that we expect to have an impact in Q2, towards, you know, moving us into positive EBITDA. And we're certainly very focused on maintaining a strong balance sheet, maintaining a strong cash balance, and that all feeds into that equation in terms of how we look at our operational capabilities and investment.

Robert S. Stefanovich: <unk> been working on over the last few months that we've had already started rolling out and that we expect to have an impact in Q2.

Robert S. Stefanovich: Towards moving us into positive EBITDA, we are certainly very.

Robert S. Stefanovich: Focus on maintaining a strong balance sheet, maintaining a strong cash balance and that all.

Robert S. Stefanovich: Feeds into that equation in terms of how we look at our operational capabilities and investments.

David Michael Larsen: Okay, that's helpful. Can you maybe talk a little bit about the revenue that's being generated from bio-storage, bio-services, and also IntegraCell and any update on storing allogeneic therapies? I know, obviously, a third of your trials are allogeneic in nature, but in terms of storing that actual cell tissue, has that started yet? Any revenue coming from that?

Speaker Change: Okay. That's helpful. And then can you maybe talk a little bit about the revenue that's being generated from bio storage bio.

David Michael Larsen: Services and also integra cell.

David Michael Larsen: And any update on storing allogeneic therapies I know, obviously, a third of your trials are allogeneic in nature, but in terms of storing.

David Michael Larsen: Actual cell tissue.

David Michael Larsen: Has that started yet any revenue coming from that yet.

Mark W. Sawicki: Mark and Robert both may have some additional comments here. They will have some additional comments, David. But IntegraCell is not a subject right now for revenue because it won't be coming online until the last half of the year, and that'll be the beginning of a ramp-up. And after that, you will see, you know, over time, IntegraCell producing significant revenues for the company. It's a service that's needed, and the partnerships are coming along well.

David Michael Larsen: Len.

David Michael Larsen: Marc and Robert both May have some additional comments here they will have some additional comments, David but integra. So there is not a subject right now for revenue because it won't be coming online until the last half of the year and that'll be the beginning of a ramp up in that.

Mark W. Sawicki: You will see.

Mark W. Sawicki: Over time, you will see integra sale producing significant revenues for the company.

Speaker Change: It's a service that's needed the partnerships are coming along well the factories are coming along well and we have great.

Mark W. Sawicki: The factories are coming along well, and we have great, great anticipation for IntegraCell. In terms of a couple of the other things on bioservices in particular, Mark can better comment on bioservices and how that's coming along. Yeah.

Mark W. Sawicki: Great anticipation of.

Mark W. Sawicki: Of Integra sale in terms of.

Mark W. Sawicki: Couple of the other things on bio services in particular.

Mark W. Sawicki: Mark and better comment on Val services, and how Thats coming along.

Mark W. Sawicki: Yeah, I'm going to focus on your specific question around allogeneic therapy as it relates to the need for storage and fulfillment related capabilities. So we have, obviously, as part of the infrastructure build over the last year and a half, built out competencies for secondary labeling and packaging requirements, which are all a basic need for allogeneic therapy distribution. These are currently being used by both clinical and commercial clients, both in the U.S. as well as in Europe.

Mark W. Sawicki: On your specific question around allogeneic therapy as it relates to the need for storage and fulfillment related capabilities. So we have obviously as part of the infrastructure build over the last year and a half built out competencies for secondary labeling and packaging requirements, which are all a base.

Mark W. Sawicki: Need for allogeneic therapy distribution those are currently being used by both clinical and commercial clients.

Mark W. Sawicki: Both in the U S as well as in Europe. So we've been very successful in transitioning net investment into into direct support of the cell and gene space itself.

Mark W. Sawicki: So we've been very successful in transitioning that investment into direct support of the cell and gene space itself. Obviously, the only real aloe product on the market right now is Atara, which is a low volume medication right now. So there's not going to be a significant financial impact on that in the short term. But there's also a contribution to bioservices over time for autologous therapies where we're supporting backup doses as well as other support elements, which also have the competencies over time to support additional revenues.

Mark W. Sawicki: Obviously, there is really the only real alloy product on the market right now is <unk>, which is a low volume indication right now so they're not going to be a significant financial impact on that in the short term.

Mark W. Sawicki: Also contribution in our biosciences over time for autologous therapies, where their support.

Mark W. Sawicki: We're supporting backup doses as well as other support elements, which also has the competencies over time to support additional revenues.

Unknown Executive: Lastly, maybe just to add here if you were looking for a dollar amount; the bioservices revenue grew 9% year-over-year to $3.5 million in the first quarter.

Speaker Change: Lastly, maybe I'd just add there you were looking for a dollar amount of <unk> revenue grew 9% year over year to $3 5 million in the first quarter.

Unknown Executive: Okay, and I think that there were two large facilities that are fairly new that came online recently. One in Texas, and one in New Jersey. Are those profitable now?

Unknown Executive: Okay, and I think that there were two large facilities that are fairly new that came online recently, one in Texas, one in New Jersey are those profitable now.

Unknown Executive: Look, we're still in the early stages of our bioservices initiatives. Both of those were introduced.

Unknown Executive: Look we're still in the early stages of a bar services initiatives at both of those were introduced.

Unknown Executive: And so where we're really working towards filling up and bringing up the revenue in bio storage by services. We're in the early stages, what mark is talking about utilizing them for for the commercial therapies. For example, obviously this is all just now commencing so we're we're not obviously not fully.

Speaker Change: At this point in time, David remember once we open those facilities and those facilities are open and I think it was.

Unknown Executive: And so we're really working towards filling up and bringing up the revenue in bioservices. We're in the early stages. When Mark was talking about utilizing them for commercial therapies, for example, this is all just now beginning. So we're not fully utilized at this point in time. David, remember, once we opened those facilities, and those facilities were opened in June a year ago, it takes six to 18 months for clients to come in.

Unknown Executive: June a year ago.

Unknown Executive: So it.

Unknown Executive: It takes 666 to 18 months for clients to come in they have to they have to do their audits do their trial runs and then they have to rearrange the traffic.

Unknown Executive: They have to do their audits, and they have to do their trial runs, and then they have to rearrange the traffic of what they're doing. So it's just now ramping up. Bioservices, we always anticipated an exponential development. So I think we're still down there right around that point of inflection, and I think you'll see it picking up over time. I just want to comment on this. Over the last 12 months in those facilities, we've actually onboarded 27 clients.

Unknown Executive: What theyre doing so so it's just now ramping up it does about services, we always anticipated exponential development. So I think we're still down there at around that point of inflection and I think youll see it picking up.

Unknown Executive: Over time, <unk> actually yes, I just wanted to comment on that so we have over the last 12 months in those facilities, we've actually onboard at 27 clients.

David Michael Larsen: Okay, and then just one more quick one. I think on last quarter's call, you talked about nine new therapies for 2024 and 17 filings in 2024. Does that mean nine new commercial therapies that you're supporting coming online in 2024? Is that what it means? And how is that number as of today? Is it still nine and 17?

Speaker Change: Okay, and then just one more quick one I think on last quarter's call you had talked about nine new therapies for 2024 and 17 filings in 2024.

David Michael Larsen: Does that mean nine new commercial therapies that you're supporting coming online in 2024.

David Michael Larsen: Is that what that means and how is that number as of today is it still mine in 2017.

Unknown Executive: We have had, so far this year, three new therapies get approved. That's CasGevi from the CRISPR Vertex product, Amtagvi from Iovance, and most recently, Anktiva from ImmunityBio.

David Michael Larsen: We have had so far this year three new therapies.

Unknown Executive: Proved that's <unk>.

Unknown Executive: Gary the CRISPR vertex products.

Unknown Executive: <unk> from.

Unknown Executive: From Io events, and most recently <unk> from immunity file.

Unknown Executive: In our reporting today, we're saying we could see five more new therapies approved this year, so that would give you eight. So it has one that I'll call pushed out. It hasn't gone away. It's probably going to be in 2025, and right now, we're seeing 16 more filings in 2024. Okay, thanks very much. I'll hop back in the

Unknown Executive: In our <unk>.

Unknown Executive: Reporting today, we're saying we can see five more new therapies approved this year. So that would give you eight so it has one.

Unknown Executive: I'll call it pushed out it hasnt gone away, it's just probably going to be a 2025.

Unknown Executive: And right now we're seeing 16 more filings in 2024.

David Michael Larsen: Okay, thanks very much. I'll hop back in the queue.

Speaker Change: Okay. Thanks, very much I'll hop back in the queue.

David Michael Larsen: Okay.

Operator: Your next question comes from Paul Knight from KeyBank. Your line is now open.

David Michael Larsen: Your next question comes from Paul Knight from Keybanc. Your line is now open.

Paul Richard Knight: Hi Mark, I have a question for you for starters, and that is, the Phase 3 trial customer count was up the most in that press release, meaning up 5.6 percent. Is this significant? An indication that Biotech's getting some money and getting back into the trial business at an early stage.

Paul Richard Knight: Hi, Mark Hi, My question for you for starters on that.

Paul Richard Knight: The phase III trial customer count was up.

Paul Richard Knight: Motion.

Paul Richard Knight: That press release, meaning up five 6%.

Paul Richard Knight: Is this.

Paul Richard Knight: Significant.

Paul Richard Knight: Indication that.

Paul Richard Knight: Biotech getting some money and getting back into the trial business early stage.

Mark W. Sawicki: Well, we are seeing a lot of new money starting to come back into the space, but we still see a lot of volatility. As we mentioned, we had a net add of 42 trials in the quarter with a net removal of 42 trials. You know, we always, our whole focus is around playing the portfolio, which means the collective average so that we, you know, we'll have winners and losers as it relates to those, but as long as we're supporting the vast majority of those trials in the space, then we're on the upside. And we remain confident in that. And with the funding position seeming to stabilize and improve in Q1, obviously, we need to see if that's sustainable. But that's a positive indicator.

Mark: Well, we are seeing a lot of money starting to come back into the space, We still see a lot of volatility in churn as we had mentioned we had a net add of 42 trials in the quarter with a net removal of 42 trials.

Mark W. Sawicki: We own our whole focus is around playing the portfolio, which means the collective average so that we will have winners and losers as it relates to those but as long as we're supporting the vast majority of those trials in this space and we're on the upside and we remain confident in that and look at funding position seeming to stabilize and improving in Q1.

Mark W. Sawicki: So we need to see if thats sustainable.

Mark W. Sawicki: Positive indicator.

Paul Richard Knight: And then I think the conference in Philadelphia had 8000 employees. I mean, that's obviously a record, and not employees, but attendees, and I think it was the American Society of Cell and Gene Therapy, right? Are you seeing an uptick in potential customer interest?

Mark W. Sawicki: And then I think the Congress.

Paul Richard Knight: 8000 employees I mean, that's obviously a record and non employees, but attendees in.

Paul Richard Knight: I think it was the American society of cell and gene therapy right.

Speaker Change: <unk> seen an uptick in.

Paul Richard Knight: Potential customer interest.

Unknown Executive: Yeah, I mean, there's a lot of new startups. And so a significant percentage of those 40 new pro 42 new programs came from new clients, which is very good.

Speaker Change: Yes, I mean, theres a lot of new startups and saw a significant percentage of those 40, New 42, new programs came from new clients, which is a very good sign.

Paul Richard Knight: And then, what's what I mean? We talked about a $7.7 million EBITDA loss. What do you really want to run the business at, Jerry? A few years out, is this a 30% EBITDA margin business, or is it 25%? Thank you. You know, Paul, I think our goals have...

Unknown Executive: And then.

Unknown Executive: I mean, we talk about a $7 7 million EBITDA loss, what are you really want to run the business that Jerry.

Paul Richard Knight: A few years out as of 30.

Jerry: 30% EBITDA margin business or is it 25.

Speaker Change: Thank you Paul.

Jerrell W. Shelton: You know, Paul, our goals have not changed. I mean, you know, our goals are 55 to 60% gross margin and 30% adjusted to built-up. Our goals have not changed, and we do examine them often, so those are the metrics that you should be looking for from us.

Speaker Change: Our goals have not changed.

Jerrell W. Shelton: Our goals are 55% to 60% gross margin and 30% adjusted EBITDA our goals are not changed and we do examine them often so that's the metrics that you should be looking for from us.

Speaker Change: Okay. Thank you.

Operator: Your next question comes from Yuan Zhi from B. Reilly. Your line is now open. Thank you for taking our questions.

Speaker Change: Your next question comes from <unk> <unk> from B Riley.

Yuan Zhi: Your line is now open.

Yuan Zhi: Thank you for taking our questions.

Yuan Zhi: Thank you for your questions. So can you help us better understand the weakness in biologic services in 1Q? Was it because of lower volume? And how about visibility and confidence in 2Q and beyond? And I have a follow-up question.

Yuan Zhi: Can you help us back understand the weakness in biologics there with this new long queue was it because of lower <unk>.

Yuan Zhi: And how about the visibility and confidence into <unk> and beyond.

Speaker Change: And very helpful.

Unknown Executive: Mark's going to answer your question, but this has to do with your

Speaker Change: Mark's going to answer your question, but this has to do with your <unk>.

Unknown Executive: Report that you put out just recently.

Mark: So you're talking about final surfaces.

Unknown Executive: I'm sorry, can you repeat the question, guys, because I think we're confused.

Speaker Change: I'm sorry can you repeat the question guys.

Unknown Executive: Brian.

Speaker Change: It was a little garbled over here I thought you said biologics Jerry.

Yuan Zhi: I thought you said biologics, Jerry Deutsch. I did, too. I thought you said biologics, he thought biologics. Repeat the question.

Speaker Change: No I thought you said biologics you saw a voucher.

Speaker Change: The question.

Yuan Zhi: So can you help us understand wait and ask Dan Pio logistics services, well, then it because of lower volume and how about visibility and confidence in <unk> and beyond.

Unknown Executive: Okay, Mark. I got it now, yes. So, biologists...

Mark: Yes, Okay I got it yes, yes, yes, so bio logistics revenue was softer than anticipated because we saw those 42 trial terminations and many others were established programs.

Mark: Active volume that was ongoing.

Speaker Change: Those were replaced by 42, new starts, but thus 42, new starts take time to ramp.

Mark: So just because we onboard them in the quarter, usually it's one to two quarters later before we start seeing a contribution as it relates to financial contribution.

Unknown Executive: So.

Mark: What we will see progressive improvement on that as those as those new programs come online.

Yuan Zhi: Got it. And then on MVE, it seems that it's dropping from the last quarter. And I'm just curious, was it because of the cancellation of orders, or was it because the customers are just not there yet?

Unknown Executive: Got it and then and we it seems not it's dropping from the last quarter.

Yuan Zhi: And I'm just curious what it would be cost terms, let me on there or what caused that.

Yuan Zhi: Customer I guess not there yet.

Unknown Executive: It was demand softness, continued demand softness, and again, mostly out of China. But it was not cancellations of orders.

Yuan Zhi: It was demand softness continued demand softness and again, mostly out of China. It was not cancellations of orders.

Yuan Zhi: Got it. And one last one from us. For the goals to reduce some capital costs or reduce some costs in the second half, I'm curious will that impact the revenue part because if you are cutting the workforce in sales and marketing, it could have a certain degree of impact.

Unknown Executive: Got it and one last one from us towards the goal to reduce capital costs or reducing some cost in the second half I'm curious what was that impact.

Yuan Zhi: The revenue part because if.

Yuan Zhi: If you are cutting workforce in sales.

Yuan Zhi: Sales and has certain impacts thank you.

Yuan Zhi: No. If you look at the actions that we're looking at related to as I mentioned some of the Capex that we're moving out these are not initiatives.

Speaker Change: Well, we'll have yes.

Yuan Zhi: The impact on our near term revenue, but not the high priority initiatives that we're working on the same with some of the headcount review. This is not something that we expect to have any impact on our revenue as well as on our client relationships.

Speaker Change: Hey, guys. This is <unk>.

Yuan Zhi: Reviewing the organization.

Yuan Zhi: Taking a closer look, especially after the number of acquisitions that we've completed that and then kind of refining in the organizational structure.

Yuan Zhi: Got it thanks wanted to ask for a helpful color.

Speaker Change: Thank you. Thank you.

Robert S. Stefanovich: Thank you.

Yuan Zhi: Your next question comes from David Saxon from Needham. Your line is now open.

Speaker Change: Great Thanks, and good afternoon.

Speaker Change: In between calls so I apologize.

Speaker Change: I apologize if I am repeating any questions, but Jerry maybe I'll start with you on the fourth quarter earnings call back in mid March you did seem to confirm expectations for sequential growth from the fourth quarter into the first quarter. So over the two weeks before quarter end.

Yuan Zhi: No, if you look at, you know, the actions that we're looking at, you know, related to, as I mentioned, some of the CAPEX, you know, that we're moving out, these are not initiatives that will have, you know, an impact on our near-term revenue. They're not the high priority initiatives that we're working on. And same with some of the headcount review. This is not something that we expect to have any impact on our revenue, as well as on our client relations.

Yuan Zhi: Were there any orders that got pushed out into the second quarter.

Yuan Zhi: What were the.

Yuan Zhi: Factors that drove the shortfall of sequential growth.

Yuan Zhi: Again, this is seen more as reviewing the organization, you know, taking a closer look, especially after, you know, the number of acquisitions that we've completed, and then kind of refining and, you know, the organizational structure. Got it. Thanks for the ask, Ron.

Yuan Zhi: We did we did speak with confidence.

Yuan Zhi: In the fourth quarter, we didn't know exactly how.

Yuan Zhi: The first quarter was good.

Yuan Zhi: It was going to turn out, but we didn't we didn't say we were having a strong first quarter. What we did say is we gave revenue guidance and we said we would progressively improved throughout the quarter and then the guidance came out higher than we expected it to come out but it did come out that way and we did have we recognize the weakness in the marketplace at that time and that's.

Speaker Change: Why we said we would have we would see a progressive improvement over the year and I did confirm our guidance today.

Operator: Got it. Thanks for the extra helpful comment.

Operator: That's what happened there was nothing specifically that I can say other than the market was slow and we knew it was slow at the time and it was a little bit slower than we anticipated. So we were.

Operator: We're disappointed in the first quarter, but mark may have something to add to that as well.

David Joshua Saxon: Your next question comes from David Saxon from Needham. Your line is now open.

Operator: Yep.

Operator: <unk>.

David Joshua Saxon: Great. Thanks, and good afternoon. I've been in between calls, so I apologize if I am repeating any questions. But, Jerry, maybe I'll start with you.

David Joshua Saxon: Yes, obviously, we don't give guidance right on a quarterly basis, we're really looking at the entirety of the year itself.

David Joshua Saxon: <unk>.

David Joshua Saxon: No.

David Joshua Saxon: Across the board between ourselves and other players in the space, we do strongly anticipate continuous progression in the second half of the year.

David Joshua Saxon: So you look at uptake in consumables for the life Sciences.

David Joshua Saxon: That's a very strong indicator as it relates to pick up.

David Joshua Saxon: That was picked up in Q1.

David Joshua Saxon: Which does indicate development of therapies that will need by our logistics and bio storage through the rest of the year. So.

David Joshua Saxon: Sequencing itself is sometimes difficult to ascertain because you can't have rollover from one quarter to the next question is things that come in towards the end of the quarter. If the even if they have a PEO or something else that slips that you don't anticipate it can have a fairly significant impact on that end of the quarter. Our revenue. So we did see some.

David Joshua Saxon: Yields and things like that slipped out of the first quarter into the second quarter.

Jerrell W. Shelton: So on the fourth quarter earnings call back in mid-March, you did seem to confirm expectations for sequential growth from the fourth quarter into the first quarter. So over the two weeks before quarter end, were there any orders that got pushed out into the second quarter? Or what were the factors that drove the shortfall in sequential growth?

David Joshua Saxon: Okay.

David Joshua Saxon: Maybe mark I'll follow up with some of the comments you just made so.

Jerrell W. Shelton: I appreciate the cadence might be kind of difficult to predict but I thought you said.

Jerrell W. Shelton: You expect continuous.

Jerrell W. Shelton: Improving in the second half so should we think about the second quarter being kind of flattish sequentially and then.

Speaker Change: We see some sequential growth in the second half to get to the guidance range and then I'll just ask my second question here this might be for both Jerry and Robert.

Jerrell W. Shelton: Bluebird expressed I'd love to hear how that integration is going and then.

Jerrell W. Shelton: By my estimate at least revenue contribution was around $3 million is that in the right ballpark.

Jerrell W. Shelton: And is that a good base.

Jerrell W. Shelton: That we can see growth.

Speaker Change: Thank you.

Jerrell W. Shelton: I'll, let Robert maybe you talk about the.

Jerrell W. Shelton: You know, we did speak with confidence, you know, in the fourth quarter; we didn't know exactly how the first quarter was going to turn out. But what we didn't we didn't say we were having a strong first quarter. What we did say was we gave revenue guidance. And we said we were progressively improved throughout the quarter. And then the guidance came out, you know, higher than we expected it to come out, but it did come out that way.

Speaker Change: Your first question, yes, just.

Jerrell W. Shelton: If you look at what we experienced in Q3 Q4 of last year, we saw.

Jerrell W. Shelton: A slight improvement in Q4.

Jerrell W. Shelton: And so.

Jerrell W. Shelton: <unk>.

Jerrell W. Shelton: The way we described it at year end with that drop off.

Jerrell W. Shelton: Tom mentioned in particular in Asia Pac.

Jerrell W. Shelton: In Q1.

Jerrell W. Shelton: Some of that will certainly unexpected.

Jerrell W. Shelton: And, you know, we did have a we recognized the weakness in the marketplace at that time. And that's why we said we would have, you know, we would see a progressive improvement over the year. And I did confirm our guidance today.

Jerrell W. Shelton: But what we did talk about is to see a progressive improvement throughout the year and that progressive improvement really weighted towards the second half of the year. So I can't give you specifics related to Q2, but I can give you those two data points as the progressively improving and then weighted towards the second half of the year.

Jerrell W. Shelton: Okay.

Speaker Change: Super Helpful. And then just on Bluebird Express.

Jerrell W. Shelton: Good.

Jerrell W. Shelton: Yes, Bluebird express is integrating very well with crowd PDP.

Jerrell W. Shelton: It's a small acquisition but.

Jerrell W. Shelton: We have done business with Bluebird Express for a number of years at ground Port systems, and it's a known quantity is having a very positive impact it knows the U S market is having an impact on the development of <unk>.

Jerrell W. Shelton: <unk> PDP.

Jerrell W. Shelton: Opening of three new logistics centers in the U S to build out that network.

Jerrell W. Shelton: I think we will have a good year aircraft PDP.

Speaker Change: Okay, and so it sounds like $3 million might be the right ballpark.

Jerrell W. Shelton: For <unk>.

Jerrell W. Shelton: Well, the lower end, but I think for modeling purposes looks fine.

Speaker Change: Okay, great alright, thanks, so much.

Speaker Change: Thank you.

Speaker Change: There are no further questions at this time speakers. Please proceed with your closing remarks.

Jerrell W. Shelton: So that's what happened. There was nothing specifically that I can say other than the market was slow. And, and we knew it was slow at the time. And it was a little bit slower than we anticipated. So we were disappointed in the first quarter. But Mark may have something to add to that as well.

Speaker Change: Okay. Thank you. Thank you for your questions in our discussions.

Mark: Our first quarter results echoed a challenging global environment.

Mark: So market improvements through market improvements in our actions, we expect our results will progressively improve during the remainder of the year.

Mark: Based on the recent momentum we've seen with cell and gene therapy approvals, we're encouraged and feel confident in our full year 2020 for revenue guidance.

Jerrell W. Shelton: <unk> is well positioned to capitalize on the growth of the life Sciences in particularly the cell and gene therapy industry as more therapies received FDA approval and achieve commercialization and our services and product initiatives take effect.

Mark: Even with the current economic and geopolitical climate the market is expected to expand substantially over the next few years and crop board is built to support its rapid growth.

Mark W. Sawicki: Yeah, um... Yeah, obviously, we don't give guidance right on a quarterly basis. You know, we're really looking at the entirety of the year itself. And, you know, across the board between ourselves and other players in the space, we do strongly anticipate continuous progression in the second half of the year. So you look at, you know, uptake and consumables for the life sciences, that's a very strong indicator as it relates to pick up, you know, and that was picked up in Q1.

Mark: In summary, while our start in 2024 was softer than we would've liked.

Mark W. Sawicki: Which does indicate the development of therapies that will need biosynthetics and biostorage through the rest of the year. So, you know, the sequencing itself is sometimes difficult to ascertain because you can have rollover from one quarter to the next. And the question is, you know, things that come in towards the end of the quarter, if they even have a PO or something else that slips that you don't anticipate, it can have a fairly significant impact on that end-of-quarter revenue. So we did see some POs and things like that slip out of the first quarter into the second quarter.

David Joshua Saxon: Okay. Maybe, Mark, I'll follow up with some of the comments you just made. So, and I appreciate, you know, the cadence might be kind of difficult to predict, but I thought you said you expected continuous improvement in the second half. So, should we think about the second quarter being kind of flattish sequentially, and then, you know, we see some sequential growth in the second half to get to the guidance range? And then, I'll just ask my second question here. This might be for both Jerry and Robert.

Robert S. Stefanovich: On Bluebird Express, I'd love to hear how that integration is going. And then, you know, by my estimate, at least, revenue contribution was around $3 million. Is that in the right ballpark? And is that a good base, you know, that we can see growth off of?

David Joshua Saxon: I'll let Robert come up. Yeah, maybe if you talk about your first question, just, you know, if you look at what we experienced in Q3, Q4 of last year, we saw actually a slight improvement in Q4, hence, you know, our outlook was, you know, the way we described it at year end. You know, with that drop-off, you know, as Tom mentioned, in particular in AsiaPAC in Q1, some of that was certainly unexpected.

David Joshua Saxon: But what we did talk about was seeing a progressive improvement throughout the year, and that progressive improvement really weighted towards the second half. I can't give you specifics related to Q2, but I can give you those two data points as they're progressively improving and then weighted towards the second half of the year.

David Joshua Saxon: We'll remain focused on our strategic priorities.

Robert S. Stefanovich: Okay, yeah, that's super helpful. And then just on Bluebird Express, if you could.

Jerrell W. Shelton: Yeah, Bluebird Express is integrating very well with Cryo PDP. You know, it's a small acquisition, but we have done business with Bluebird Express for a number of years at Cryoport Systems. And it's a known quantity; it's having a very positive impact. It knows the US market, and it's having an impact on the development of Cryo PDP. We're opening three new logistics centers in the US to build out that network, and I think we'll have a good year.

David Joshua Saxon: Okay, and so it sounds like 3 million might be the right ballpark for quality. Yeah, but there's one thing. I brought up the lower end, but I think for modeling purposes, let's... Okay, great. All right. Thanks so much.

Jerrell W. Shelton: There are no further questions at this time. Speakers, please proceed with your closing remarks.

Robert S. Stefanovich: <unk> to expand our position in our top accounts.

Jerrell W. Shelton: Okay, thank you. Thank you for your questions and our discussion. Our first quarter results echoed a challenging global environment. Through market improvements and through market improvements in our actions, we expect our results will progressively improve during the remainder of the year. And based on the recent momentum we've seen with settling gene therapy approvals, we're encouraged and feel confident in our full year 2024 revenue target. Cryoport is well positioned to capitalize on the growth of the life sciences and, particularly, the cell and gene therapy industry.

Jerrell W. Shelton: As more therapies receive FDA approval and achieve commercialization, and as our services and product initiatives take effect, the market is expected to expand substantially over the next few years, and Cryoport is built to support its rapid growth.

Jerrell W. Shelton: Delivering innovation and differentiated new services and products and remaining diligent on cost controls and productivity improvements to support increases in margins as we move through 2024.

Jerrell W. Shelton: In summary, while our start in 2024 was softer than we would have liked, we will remain focused on our strategic priorities, continuing to expand our position in our top accounts, delivering innovation and differentiated new services and products, and remaining diligent on cost controls and productivity improvements to support increases in margins as we move through 2024. Thank you for joining us today. We appreciate your continued 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. Thank you.

Speaker Change: Thank you for joining us today, we appreciate your continued support and interest in our company. We look forward to updating you on our progress again next quarter. We hope you have a good evening. Thank you.

Jerrell W. Shelton: Operator.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for joining us. You may now disconnect.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for joining you may now disconnect.