Cryoport, Inc. Q4 FY2022 Earnings Call

Good afternoon, and welcome to Cryoport's Fourth Quarter and Full Year 2022 Earnings Conference Call. All participants will start in a listen-only mode. A brief question-and-answer session will follow the format presentation. As a reminder, this conference is being recorded. I will now turn the call over to your host, Todd Fromer, from KCSA Strategic Communications. Please go ahead.

Thank you, operator. Before we begin today, I would like to remind everyone that this conference call contains certain forward-looking statements. All statements that address our operating performance, events or developments that we expect or anticipate occurring in the future are forward-looking statements. These forward-looking statements are based on management's beliefs and assumptions, and not on information currently available to our management team. Our management team believes that these forward-looking statements are reasonable as 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 events or otherwise except as required by law. In addition forward-looking statements are subject to certain risks and uncertainties that could cause actual results, events and developments to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to those described in Item 1A Risk Factors and elsewhere in our Annual Report on Form 10-K filed with the Securities and Exchange Commission and those described from time-to-time in the other reports we file with the Securities and Exchange Commission. It is now my pleasure to turn the call over to Mr. Jerrell Shelton, Chief Executive Officer of Cryoport. Jerry, the floor is yours.

Thank you, Todd, and good afternoon ladies and gentlemen. We appreciate you joining our 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 have uploaded our fourth quarter and full fiscal year 2022 review document to our website. It can be found under Investor Relations in the Events and Presentations section. This document provides a review of our 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 and download it as it is elucidating in terms of our development pathway and the initiatives we are undertaking to assure our future. Now, I'd like to provide a brief update on our business, and then we'll move on to answering your questions. Today, we reported a solid finish to 2022 with record total revenue of $237.3 million led by a 24% increase in revenue from Cryoport Systems. Our annual growth at Cryoport Systems was fueled by strong demand for our comprehensive suite of products and services and strong growth in the cell and gene therapy market. At the end of the year, we supported a total of 654 clinical trials worldwide, a net gain of 52 clinical trials since year-end 2021, with 79 of these trials in Phase 3. At the end of the year, we also supported 10 commercial therapies, an increase from eight since year-end 2021. Further, we anticipate supporting up to 21 commercial therapies in 2023, as a result of our forecast of up to an additional 22 anticipated application filings, 11 new therapy approvals, and an additional 12 label or geographic expansion approvals for a combined total of 23 anticipated industry approvals in 2023. The regenerative medicine market continued its development in 2022 as one of the fastest-growing therapeutic segments while Asian demand remained robust. Our commercial revenue ramp was partially impacted sequentially due to our clients' continued cell therapy manufacturing capacity constraints, shortages of Fludarabine, and a pause in the shipment of ancillary therapy dosage to biostorage for a separate client due to their supply chain issues. Having said that, the recent introduction of new cell and gene therapies into the market has set the stage for greater activity levels in 2023. Over time, we expect the industry manufacturing capacity will increase in order to meet the pent-up patient demand. And as it does, Cryoport will continue to lead the way in the development of advanced temperature-controlled supply chain solutions that will support the advancement of cell and gene therapies as well as our growth. Notwithstanding current manufacturing capacity constraints, many analysts expect the Regenerative Medicine market to grow at a compounded annual growth rate of 25% to 30% over the foreseeable future. Part of the reason for our confidence today is that 2022 marked a year of significant achievement for Cryoport as reflected in our adjusted EBITDA which is $13.7 million for the year. We continue to make significant strategic investments to build out our informatic competencies, global supply chain center network, manufacturing capacities, bioservice offerings, and capabilities to support and accelerate our growth. These actions are designed to further expand our end-to-end solutions supporting the supply chain for the life sciences market and specifically the cell and gene therapy market. Our investments are designed to strengthen our market position and to create new and diverse revenue streams. To provide you with some examples of our investments, in June of 2022, we opened our first two global supply chain centers located in Houston, Texas and Morris Plains, New Jersey. These are state-of-the-art facilities that employ cutting-edge technologies providing advanced logistics combined with GMP Bioservices operations designed to support cell and gene therapy with storage, secondary labeling, kitting, and fulfillment. Clients have already begun to acknowledge the value of these novel services and others are in the process of qualifying our facilities to join those who are already enjoying its benefits. We also continue the development of SkyTrax, a revolutionary condition monitoring system and the next generation of the Cryoport Elite line of shippers which includes Elite Ultra Cold and the Elite Cryosphere which we will officially launch during the second quarter of 2023. At MVE Biological Solutions, we have strengthened the innovation pipeline and have a number of new initiatives that we will announce as they mature. Regarding CRYOPDP we continue to build out the most advanced global biopharma logistics network, which in 2022 has expanded in India and into Japan, Ireland, Poland, and Spain. And we have not forgotten the growth opportunities for our biostorage operations as CRYOGENE will be expanding into San Antonio and Philadelphia markets during 2023. Our strategic initiatives during 2022 included targeted acquisitions such as Cell&Co Bioservices in France and Cell Matters in Belgium. Cell&Co, a first-class biorepository, was acquired to provide a foothold for our global supply chain center network in EMEA, and we will soon expand that operation into Paris. The acquisition of Cell Matters provided us cryopreservation expertise for launching our IntegriCell platform. IntegriCell will offer the cell and gene therapy a standardized apheresis collection and end-to-end cryopreservation service for leukapheresis-derived autologous and allogeneic cell therapies. This is important to the cell and gene therapy industry as it will be the first time biopharma manufacturers will be able to source consistent, higher-quality starting materials from which to manufacture their therapies. Our actions in 2022 were a step in the development of initiatives that are designed to lay a very strong foundation to help drive our long-term growth. The development of our continually advancing technologies to meet industry needs and support requirements globally gives us an unmatched capability to support the rapid advancement of clinical and commercial cell and gene therapies. Considering these actions and the impact of our planned initiatives in 2023, we are providing full year 2023 revenue guidance in the range of $270 million to $290 million. This represents top line growth of 18% at the midpoint over 2022 revenue. Our 2023 outlook reflects our expectations of a continued solid demand environment, with macro conditions improving and the continued development of our exciting array of initiatives. As we closed a successful 2022 and headed into this New Year, we are excited and confident about 2023 and our long-term growth prospects. We believe Cryoport has never been in a stronger industry leadership position than it is today, as we enter 2023 with a strong balance sheet, cash position, and a fantastic team of highly motivated people. Our continually advancing technology and global footprint give us the critical infrastructure and unmatched ability to support the swift growth of cell and gene therapies from research to commercialization. We do not think that there is any other company that offers such a wide range of comprehensive end-to-end solutions to support these life-saving therapies. Now, we'll be happy to take your questions.

Thank you. We will now be conducting a question-and-answer session. Our first question is from the line of Puneet Souda with SVB Securities. Please go ahead.

Hi, you have Michael on for Puneet. Congrats on a strong finish to 2022. I was hoping to start with getting a bit more clarity on the guidance. I was wondering, how much of this is reflecting a recovery in MVE and CRYOPDP after some hiccups in 2022? And how much is strength in clinical trials or some of these new commercial therapies coming online?

I'll let Robert answer that question.

Yeah. Maybe just a couple of things on the guidance. One, we do have strong conviction on the revenue guidance. It's an 18% growth over '22 at the midpoint and 22% growth at the high end of the range. A couple of things to have in mind. One, if you look at MVE and CRYOPDP, yes, we do expect them to go back to double-digit growth. But a few things, we did have some unanticipated headwinds in 2022. If you just look at Q1 of last year, where we had the fire damage of our MVE, New Prague facility, where we had about a $9.4 million revenue loss. If you were to add that back to the '22 number and look at it at a constant currency rate, we will be about 14% constant currency with that add back. While comparing that with the 18% midpoint it's certainly achievable. More importantly, Jerry talked about some of the initiatives that we've put in place during 2022 and expanding our bioservices in Houston and New Jersey, the acquisition of Cell&Co which adds bioservice capabilities in Europe and then a number of key new product introductions in Q2 of this year. All of these will contribute to the revenue growth in 2023. So I think that's important to realize. The other part is, as you've seen in the growth of clinical trials, we're seeing not only growth in clinical trial basis, but also maturation of the clinical trials and advancement into the filings, as well as into expected approvals that we'll be supporting. So there's significant dynamics within our market that allows us to drive the revenue growth for 2023.

Alright great. That clarifies a little bit. And then I also had a question about the global bioservice network you're building now. I was just curious, what sort of incremental OpEx you expect that to drive and if there's any gross margin contribution we should expect as new capacity comes online?

Well, in general in terms of the margin contribution bioservices, a couple of things. We're still expecting overall targeted gross margin of 55%. That is our target. Clearly, we're not quite there yet with 43.8% of gross margins. If you look at the bioservices, it's a significant revenue capture opportunity. And all of our initiatives are really designed to capture revenue along the temperature-controlled supply chain, supporting the cell and gene therapy space. Bioservices is one of those components. And we expect certainly, the margin contribution to be accretive to our overall margin, based on that service. In terms of the operating expenses, if you look at Houston and New Jersey, those have been already baked in, because as we talked about in Q3, while we set up these bioservices capabilities, we have to have them fully staffed before clients can come in and do their audits. At this point, at Cryoport Systems, I think we have an audit every week. So that really further demonstrates the interest and the movement on bioservices.

Okay, great. If I could just squeeze in one more. I was just curious if you have any color on China. I know last quarter you mentioned some headwinds to MVE from the closure of Chengdu and we've heard some other tools players having headwinds with the COVID zero unwinding. I'm just curious if you have any thoughts there.

Yes, we do. We monitor China on a regular basis. China is an important country to us. We manufacture in China. We export from China. We manufacture domestic products and we import in China. And so far everything is working well. As the immunity builds up in the society then for COVID that becomes less of a threat and we haven't had any rolling shutdowns lately, and we don't expect any. So China we think is in good shape. Now no one knows what President Xi is going to do in the future and what his 2025 initiatives are going to entail, but we're prepared to work with those because we do have a strong internal base and we have a fantastic team in China.

Great. Thank you very much.

Thank you. Our next question is from the line of Brandon Couillard with Jefferies. Please go ahead.

Hey. Thanks. This is Matt on for Brandon. Maybe sticking with that theme. I think on the third quarter call, there were kind of three items you guys discussed for the guidance, where you said freezer pricing in China and then some headwinds at PDP. So you just touched on China, but I'd be curious, Jerry, to get your thoughts on kind of the updated status of the freezer pricing and trade down dynamic as well as some of the headwinds you saw in PDP, how those fared in 4Q and kind of how you're thinking about them heading into 2023. Thanks.

Thanks for your question. It’s worth noting that the MVE business faced challenges in the fourth quarter due to the macro environment and some pushback we experienced. However, we are seeing signs of stabilization and a positive shift. The uncertainties we encountered were related to capital allocation due to these macro conditions, but those issues are now starting to normalize and fade away. Regarding CryoPDP, our operations are progressing well. We have expanded our CryoPDP operations, and some initiatives have impacted our income statement as previously mentioned. We invested in five different countries last year, including four for expansion and a significant development in India, where we currently hold a leading position in CryoPDP services.

Thanks. That's helpful. And then, you guys have discussed a lot the slew of new products and services coming online in 2023 from the Cryosphere to the Cryoport Elite as well as some of the newer global supply chain centers ramping up in the Takeda service as well, just to name a few. Is there any way you can kind of talk about or quantify how those are expected to contribute to revenue in 2023? And maybe if you don't have dollars for each one, maybe stack rank which could be potentially the biggest new product catalysts as we think about 2023 here. Thanks.

Yes. Let's start with the IntegriCell platform, because I think that's the one that ties back into the Takeda and Syneos announcements. Just from our perspective, it is one of the most exciting concepts to hit the cell and gene therapy industry in quite a while. It's really the first opportunity for the space to be able to provide accessibility to fully standardized high-quality leukopaks. It also addresses a significant patient accessibility issue. Obviously, it's going to take some time to build this infrastructure out. It has to also go through, obviously, regulatory and audit activity with our clients. So we're not going to disclose anything financially on that at this point, but we do believe that we'll start to see revenue, although modest, late in 2023, and it will start to ramp and become more material in 2024. The other two platforms, the Cryosphere and the Elite platforms; so Cryosphere is, as Jerry mentioned, we'll launch in early Q2. It is ready to go. Our clients are now initiating validation related activity around it as well as the Elite line, which is really focused around gene therapy distribution. Those processes take a little bit of time because they have to go through a full validation process, which can take upwards of a year. Some of these have already been started like for example for Elite. We do have folks that have been actively working in conjunction with us for that validation and we'll see contribution on the negative 80 Elite line this year. Cryosphere, we won't see a material impact until next year.

Great. Thanks. I’ll leave it there.

Thank you. Next question is from the line of John Sourbeer with UBS. Please go ahead.

Hi. Thanks for taking my question. If you look at clinical trials year-to-date, I think, up around 9% and I think also in your prepared remarks you may be mentioned you think you're taking some market share. Can you just talk about some of the competitive wins at Cryoport System? And any just thoughts on what your market share is looking like across Phase 3 trials?

Yes. As we have mentioned, we're at 79 programs in Phase 3. We continue to add programs and increase our overall portfolio within the space itself. There's not a direct head-to-head competitor in the market. We have some folks that are complementary to certain aspects, but it's not a completely threat correlation from that perspective. So we don't have a concern from that regard. We are the clear market share leader in the supply chain support. As you guys are aware, cell and gene therapy is a very, very fast-growing market within life sciences. We'll continue to grow that base and the related revenue. So we are anticipating upwards of 11 new commercial approvals on Cryoport portfolio companies this year, as well as another potential 12 line and geographic expansions of existing portfolio. So that's going to really start to drive obviously revenue on the commercial side.

I appreciate that. Building on your point, if we think long-term, you've mentioned that Regenerative Medicine is growing at 25% to 30%. Currently, you're forecasting around 18% for the midpoint in the 2023 guidance. Do you see an opportunity, as these trials progress and move towards commercialization, to potentially accelerate your growth to align more closely with the projections from some industry analysts?

Yes. All of these therapies advance in a stepwise fashion. We have faced challenges related to the ramp-up due to a couple of factors. One is manufacturing capacity, and many of our commercial portfolio entities have been making significant efforts to enhance overall capacity. The second issue our clients are currently experiencing is evident in recent earnings commentary, where they are only meeting about 30% of patient demand. This is primarily due to patient accessibility challenges. We launched the IntegriCell platform to improve accessibility and support their ramp-up efforts. As these initiatives come online, we firmly believe they will lead to an acceleration in that figure.

And maybe just to add to it, if you look at Cryoport Systems, the revenue growth there was 24% and actually commercial revenue grew 27%. So it is continuing to increase. Then as Mark alluded to, there are significant dynamics in 2023 that will further help revenue increase.

And remember the commercial is almost a net number. They also account for programs that have dropped out. We have seen the second half of the year, a little bit more volatility on the number of drops in adds. So it is a net number.

I’d like to ask about the recent declines in additions. Could some of that be related to macro funding issues or a slowdown in projects? Any additional insights you can share would be helpful.

Absolutely, not in slowdown. No slowdown at all. In fact, we see accelerating activity with a lot of our clients. There was still over $12.5 billion put into the market in a bad fiscal year, which is a significant investment in the space.

Great. Appreciate all the color. Thanks for the questions.

Thanks.

Thank you. Our next question is from the line of David Larsen with BTIG. Please, go ahead.

Hey. Congratulations on a good quarter. Can you talk a little bit more about MVE, like roughly, what percentage of total revenue is coming from MVE? And we're now almost through February or two out of three months in the first quarter. Have you seen an uptick in the large freezer shipments? And with a warmer sort of summer have energy costs improved over in Europe? Is that having a favorable impact? Just any more color there what you're seeing through February, would be really helpful. Thanks.

Yes. As I mentioned earlier, MVE is returning to normalcy. It will grow in the next year, and there’s not much to discuss regarding the impact of energy prices in Europe at this time. We did experience a slight blip, but nothing progresses in a straight line, and while the market remains positive for Cryoport Systems, MVE had a pause that has now been resolved, and we are making progress. Product orders are back to the normal mix.

Okay, great. And then, for Cryoport Systems, 24% year-over-year revenue growth, that sounds very high to me. Just can you provide any color around what the mix is between incremental clinical trials that you've picked up versus pricing versus additional products that you're selling into those customers? What's driving that 24% growth?

So as you guys recall, I mean, a lot of these initiatives that we've been really focused on building are starting to pay dividends. We're really focused around revenue diversification of our portfolio of clinical and commercial entities. What you're seeing is that disconnect between the number of trials added versus revenue is a manifestation of that strategy, a successful manifestation of that strategy related to revenue diversification.

Okay. And then just one last one. Any thoughts on your clients' investments into manufacturing capacity? Are you generally seeing that across the board with companies like Bristol, Novartis, and Gilead? Are you seeing that happen now? And should that provide a tailwind in 2023?

There has been a significant investment in manufacturing capacity, and it is continuing. Kite launched a major facility in Frederick, Maryland, in the middle of last year. BMS is actively working on building two additional facilities, one in Massachusetts and another in the Netherlands. We will certainly observe an increase in activity related to this.

CDMOs are also building out, Dave. So it's the outsourced manufacturing is growing in addition to the customer direct on manufacturing.

Okay. Great. Thanks very much. Congrats on a good quarter. I’ll hop back in the queue.

Thank you.

Thank you. Our next question is from the line of David Saxon with Needham & Company. Please, go ahead.

Thank you for the question and congratulations on the quarter. I want to follow up on your previous question regarding customer capacity. In the past, you mentioned that revenue per therapy falls between $2 million and $28 million. However, it seems that none of your therapies are currently meeting that range. Do you have a strategy for achieving that, considering your insights into customer manufacturing capacity expansion? Additionally, how should we estimate the time it will take to reach a steady-state run rate once a therapy is approved?

These programs are still in the early stages of development from a pharmaceutical perspective. One of the important factors in reaching the $28 million revenue target is expanding the accessibility of that product line by moving from fourth line to third line, and from third line to second line, in addition to geographic expansions. These factors will significantly contribute to accelerating revenue from these therapies. For instance, looking at the BMS products, their patient population increased from 8,000 to 14,000, which is nearly a twofold increase in the number of patients that can be treated with that therapy. This illustrates the potential upside opportunity for us as just one example.

Thanks. Regarding the profit and loss statement, it was encouraging to see a slight improvement in gross margin; however, SG&A expenses were significantly higher than I anticipated. What is causing that increase? Also, how should we approach operating expenses for 2023? Lastly, I recall you mentioned last quarter that you might provide updates on a long-range plan concerning the $650 million to $750 million. Any updates on that? Thank you for addressing my questions.

Certainly. Regarding the gross margins, the full year gross margin was 43.8%, showing a slight increase compared to last year. In Q4, we achieved approximately 43.5%, which represents a 250 basis point rise from the fourth quarter of the previous year. Both services and products have seen a rise in gross margin. However, we have several initiatives in place for 2022 and 2023 that are still influencing the overall margin contribution. I encourage you to refer to the quarter-end review documents, as they provide a breakdown of our activities in 2022, outlining the initiatives we've undertaken and their effect on our EBITDA. If you look at the analysis, you will observe that we've made substantial investments—around $22.1 million in CapEx for 2022, which is a slight decrease from 2021. Geographic expansion is likely impacting OpEx, contributing approximately $7 million to EBITDA from new service offerings related to IntegriCell and bioservices, in addition to other technology and software investments. Overall, the total impact of these initiatives in 2022 aimed at revenue generation is about $23 million, establishing us as a key player in the cell and gene therapy supply chain. As for our guidance for 2025, we recognize the demand for long-term projections. However, due to current macroeconomic conditions, market volatility, and significant uncertainty, we believe it's not the right time to issue long-term guidance. Factors such as inflation, supply chain challenges, COVID-19, and the situation in Ukraine are still prevalent. Therefore, we feel it’s best to hold off on providing that guidance right now. We are continually assessing this situation and will share a long-term outlook when we find it appropriate.

Okay, great. Thanks so much for the color.

Thank you. Our next question is from the line of Jacob Johnson with Stephens. Please go ahead.

Thanks. Good afternoon everybody. Maybe following up, a couple of follow-ups on those last questions. Maybe Robert just first on the path to mid-50% gross margin, can you just talk about the product lines or the areas where there's the greatest opportunity for margin expansion as we think about that path to the mid-50%s from where we are today on the gross margin side?

Yeah, absolutely. I think the critical area for margin improvement is clearly on the services side. On the services side really within both the Cryoport Systems offering and the broadening of the offering as well as CRYOPDP more and more into cell and genes especially CRO logistics. But if you look at Cryoport Systems and we said that early on, we're still at the early stages of cell and gene with only a couple of meaningful therapies in the market that have been launched globally and are contributing revenue. Now if you fast forward in the next two years, you'll see really a significant number of new approvals of cell therapies coming into the market both autologous as well as allogeneic. As we're expanding our solutions and expanding beyond the cold logistics into bioservices into the IntegriCell offering, you'll see significant operating leverage in improving the margins. It's really based on the maturation of these clinical trials to commercial launch and then the maturation in the industry on a commercial basis.

Okay. Got it. And then Robert just another long-term question and then I have one other kind of quick follow-up on guidance. But the other long-term question you guys talked about 25% to 30% growth from the end market. Certainly, most of us agree there's bright days ahead for the industry. But as we think about the freezer business that's probably one that moves around a little bit more than the services side of things flattish last year, I guess double-digit growth expected in 2023. Is there any way to think about the long-term kind of growth outlook for MVE?

Yes. I mean, I think, one thing to have in mind looking at last year is the fact that there was a onetime event in the New Prague facility that had an impact on the revenue of about $9.4 million. Because of the significant order backlog that we have for that part of the business we weren't really able to make up that revenue during 2022. So you do have to look at that when you look at kind of apples-to-apples 2022 over 2021. Having said that, MVE obviously has a very strong reputation in the market for quality and we see demand. We have a very, very strong distributor network on a global basis. I think we have line of sight acknowledging certainly that there's still a lot of uncertainty in the marketplace in general, but we do and did a very kind of bottoms-up view for the next year and outwards to see what we can expect. One part I do want to mention on MVE, they have a good gross margin. I think there's still some upward mobility on the gross margin. But more importantly, they're a solid profitable company. So they have good EBITDA contribution and we expect that to continue.

Okay, great. And then just last one for me. Can you quantify the headwind to the commercial revenue in the quarter? And then the other question on commercial revenue you talked about 11 potential approvals this year. Is that something that's included in guidance or is that something that perhaps could be upside as the year plays out?

Yeah. So the headwinds approximation about $1 million in the quarter for Q4 was the headwind on the commercial number. If you account for that, our growth rate on commercial is really closer to 35% for the year, which is obviously a very strong number. We have modeled although conservatively, obviously, the commercial launch activity because as everybody is aware there's a lot of volatility associated with timing even though there is an expectation for the potential of 11 new therapies coming to market and 12 line expansions. We don't know the exact timing of that. If they all come to fruition on schedule, there obviously is upside opportunity associated with that. We do account more conservatively for those launches from a guidance standpoint.

Got it. That’s helpful. Thanks for the update. Thanks for taking my questions.

Sure.

Thank you. Our next question is from the line of Yuan Zhi with B. Riley Securities. Please go ahead.

Good afternoon. Thank you for taking our questions. I have a couple of them. So for the 11 new approvals, you guys are anticipating without disclosing who they are, can you comment on how many of them anticipate are anticipated to get FDA approval in the US?

Yeah, hold on one second. That'd be nine.

Got it. And there are a few of the commercialized or near-commercialization cell and gene therapies did not use logistics services provided by Cryoport Systems. As we see more manufacturing sites coming online, is there a plan to take market shares from those territories?

Are you talking about therapies that are on the market that are not using Cryoport currently, or are you referring to potential new approvals that won't be using Cryoport?

I guess, both, if there are any.

There are some gene therapies that are approved that are not cryogenic shipments that we're not supporting today. They're primarily at minus 80 or the dry ice temperature range. Now that we have our Cryoport Elite minus 80 Ultra Shipper, which is being released in conjunction with one of our new gene therapy customers, I think you'll see us weigh into those other gene therapies that haven't had a Cryoport solution before. We're going to target that. I don't know, Mark, do you want to comment more?

Yeah. I mean, the whole point of the Cryoport Elite Ultra Cold Shipper was actually designed in conjunction with one of our key gene therapy partners, who has a significant amount of filing activity coming around their portfolio. It's been custom built specifically for cell and gene, and we do believe strongly that and the feedback from the industry has been extremely positive that we'll be able to pull share from other existing offerings on the market today that are supporting gene therapies in queue.

Got it. Thank you for that. Thank you for the helpful insight there. And one last question from us. So for CRYOPDP, can you remind us whether it provides services to those therapies beyond cell and gene therapies? Could it provide logistics for radiopharma radiopharmaceuticals as well for which I see a lot of similarities between cell and gene therapy and radiopharmaceuticals?

Yeah. There are some similarities. With CRYOPDP, it was focused on biopharma and with a focus on moving to cell and gene therapy. That's the direction – biopharma and cell and gene therapy with CRYOPDP.

Got it. Thanks a lot for taking our questions.

Thank you.

Thank you. As there are no further questions at this time, I would like to turn the floor back over to Jerry Shelton, CEO for closing comments.

Thank you, operator, and thank you for your questions and our discussion today. In closing, during 2022 we took a number of strategic actions to drive Cryoport's long-term growth. They are outlined in our quarter and year-end review. Now as we enter 2023, we're excited about our prospects as we're prepared to launch several new products and services with more to come. We continue to be driven by the rapid growth of cell and gene therapy, and will benefit from the expansion of industry manufacturing capacity. Our team is committed to our vision, mission, and we look forward to demonstrating this to you in the coming months. We want to thank you for joining us today. We appreciate your continuing support and interest in our company. We look forward to updating you on our progress again next quarter. From Nashville, Tennessee, we bid you a good evening.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.