Cryoport Significantly Expands Sales and Becomes Provider of Choice for “Big Three” Carriers
Time for an update on Cryoport Inc (CRYX – $0.44), which provides cryogenic logistics solutions to the life sciences industry. The Company’s liquid nitrogen dry vapor shippers are validated to maintain a constant -150°C temperature for a 10-plus day dynamic shipment duration, and its Cryoportal Logistics Management Platform assists in managing the entire shipment process, including initial order input, document preparation, customs documentation and clearance, courier management, shipment tracking, issue resolution, and delivery.
Temperature sensitive storage and cold chain logistics in the medical and biosciences industries have existed for many years. In most cases, dry ice (carbon dioxide chilled to minus 80 degrees Celsius) is used as a coolant, which has several drawbacks. First, it doesn’t reach the cryogenic level of minus 136 degrees Celsius at which all biological activity ceases. Second, it doesn’t evaporate uniformly, leaving uneven temperatures in the materials. And third, because of the evaporation, someone must physically replenish it every two or three days en route. Cryoport eliminates all those issues.
Although we may have featured Cryoport a bit too soon at $0.51 earlier this year, the Company keeps progressing into the right direction. In fact, the last several quarters the Company continues to make significant strides in its business development efforts. Sales continue to grow rapidly and a number of strategic customer deals and partnership agreements that will contribute significantly to future revenue growth were recently closed.
Revenues for the second quarter, ended September 30, 2014, was $0.825 million, a 42% increase, as compared with $0.579 million for the comparable quarter in 2013. Cryoport’s revenues increased 65% to $1.8 million for the six months ended September 30, 2014, as compared to $1.1 million for the same period last year.
The increase was primarily driven by growth in overall demand for cryogenic logistics solutions in the life sciences industry and the addition of new clients as compared to the same period in the prior year.
Gross margins for the three months ended September 30, 2014 was 27% as compared with 12% for the three months ended September 30, 2013. The increase in gross margin was primarily due to improved economies of scale as revenues increased. Margins are expected to continue to benefit over the long-term as revenues increase.
Net loss decreased by $13.6 million to $1.4 million for the three months ended September 30, 2014, a 91% decrease compared with a net loss of $15.0 million for the three months ended September 30, 2013. The net loss for the second fiscal quarter last year included a debt conversion expense of $13.2 million.
Jerrell Shelton, CEO of Cryoport commented: “Our advanced technology ensures the reliable and efficient delivery of biologic materials, on a global scale. Our clients include companies working with biologic materials, including stem cells, cell therapies and cell line manufacturing and research, vaccines and other biologic drug development, IVF, animal health, and many other cell based sciences.”
With only a little over $100,000 cash in the bank at the end of the September quarter, we do expect the Company to raise some money shortly. We don’t foresee many problems as Cryoport has been successful in the past at financing its business.
New Clients and Partnerships
The Company continues to gain more important clients. In October, for example, it announced the first phase of deploying its “Regenerative Medicine Point-of-Care Repository Solution” for Liventa Bioscience’s AmnioClear therapy to orthopedic clinics in the US. The partnership between Liventa and Cryoport represents an important strategic alliance that provides a full solution for clinics from order entry through delivery.
Liventa Bioscience CEO, Robin Young, said, “Cryoport’s Solution is an integral and vitally necessary part of this groundbreaking new study. Cryoport’s cryogenic logistics solutions for life sciences are the most advanced solution available for both our AmnioClear cryopreserved tissue products and other advanced biologic and transplant products.”
According to one forecast, approximately $230 million of cell based biologic products for orthopedic uses were shipped in 2013 to hospitals and other clinics using dry ice and liquid nitrogen. Cryoport’s Regenerative Medicine Point-of-Care Repository Solution provides a cryogenic environment and eliminates highly inferior and less reliable dry-ice shipping as well as costly and cumbersome liquid nitrogen.
In recent months, Cryoport also initiated partnerships with UPS and DHL, two of the largest shipping companies in the world. Because Cryoport already had a similar agreement with FedEx, it can now access the life sciences customers of the three major freight carriers. This is a significant achievement and also validates the quality and reliability of the Company’s shipping solution.
To capitalize on the growing market demand in the life sciences industry for cryogenic logistics solutions, Cryoport has accelerated the expansion of its direct sales force. Curt Kole, who served as Sales Director for Cryoport, was promoted to VP of Strategic Business Development to lead the Company’s business expansion efforts. In addition, several Sales Directors, experienced in cold chain logistics, were added to the team.
Mr. Shelton stated, “Having completed multiple quarters of notable growth, we are pursuing parallel expansion programs to address specific market sectors, including IVF and animal husbandry. As a global company, we will expand our presence in Europe, Latin America, and Asia. Looking forward, we plan to continue to expand our marketing and business development efforts as well as adding sales personnel as our market grows.”
Cryoport has never been in a better position as it is today. That’s always very important to keep in mind when evaluating your investments.
The Company continues to post strong revenue growth, which leads to expansion of its gross margins. The sales and marketing strategies are gaining momentum as evidenced by an active and growing sales pipeline. Moreover, the life sciences industry is flourishing. A DHL report mentions that the worldwide shipping volume in the cold chain tripled from $56 billion in 2004 to $167 billion in 2013.
Thanks to the recently announced strategic collaborations with UPS and DHL, Cryoport is now the provider of choice for the three major carriers looking to deliver validated cryogenic logistics solutions to their life sciences and healthcare customers. The partnership with “the big three” is a validation of the Company’s technology-centric solutions and expertise in time- and temperature-sensitive logistics.
We expect Cryoport’s momentum and growth to continue. Because the Company may need to raise some money in the near future, we wouldn’t buy a big position at this moment, but these prices certainly justify adding some shares to your portfolio.
|Sign up for our weekly e-mail newsletter and be the first to receive our best ideas and updates.|
|For important disclosures, please read our disclaimer.|