Earnings Call Transcript - CYRX Q1 2020

Operator, Operator

Thank you for being here. Welcome to Cryoport, Inc.'s First Quarter 2020 Earnings Call. All participants are in listen-only mode and the conference is being recorded. There will be a chance for questions after the presentation. I will now hand the floor over to Todd Fromer, Managing Partner of KCSA. Please continue.

Todd Fromer, Managing Partner of KCSA

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 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, 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 other reports, which we filed with the Securities and Exchange Commission. I would now like to turn the call over to Mr. Jerrell Shelton, Chief Executive Officer of Cryoport. Jerrell, the floor is yours.

Jerrell Shelton, CEO

Thank you, Todd. Good afternoon, ladies and gentlemen. Thank you for joining us during this special time. Before we begin, I want to talk about the actions, dedication, and commitment of our entire Cryoport team. Thanks to them, when the coronavirus pandemic was declared, we were ready with pandemic plans and actions to ensure the safety of our people and the integrity of our operations. Our entire global logistics network has not missed a beat. No shipments have been missed or delayed, and our operations have continued to function seamlessly. We do have some people working remotely with the aid of collaboration and communications technologies, and we have people working from offices while practicing the appropriate precautions. In total, our personnel have acted responsibly and taken the appropriate actions when necessary. I'm impressed by our team at large and the way we have planned, acted, and controlled the effects of the COVID-19 pandemic. With me this afternoon is our Chief Financial Officer, Mr. Robert Stefanovich; and our Chief Commercial Officer, Dr. Mark Sawicki. As a reminder, we have uploaded our first quarter 2020 in review document to our website. It can be found under the Investor Relations section in the Events & Presentations section. This document provides a review of our recent financial and operational performance and general business outlook. If you have not had a chance to read it, I would encourage you to go to the website and download it. As with previous quarters, on this conference call, we will provide you with a brief general update. Then we'll move to addressing your queries regarding our company's results. We reported revenues of $9.8 million for the first quarter of 2020, an increase of 47% from the first quarter of 2019. This was primarily driven by record revenues from our commercial agreements supporting Gilead's YESCARTA and Novartis' KYMRIAH, which contributed $2.9 million in the first quarter of 2020, representing a 110% increase compared to the first quarter of 2019. In addition, bioservices revenue was $1.3 million and not included in last year's numbers. We are pleased to report that in April, Gilead renewed its agreement with Cryoport, which covers Gilead's entire portfolio of therapies in development as well as YESCARTA for our temperature-controlled solutions. We expect the ongoing rollouts of both YESCARTA and KYMRIAH to patients in the Americas, EMEA, and APAC to drive continued ramp in activity, as related to our agreements supporting these commercial products. Two Cryoport-supported therapies filed for commercial approval during the first quarter of 2020 and a third filed subsequent to the quarter end, demonstrating the continued focus in the biopharma market on bringing these potentially life-saving therapies to market, even with the current challenges and uncertainties resulting from the COVID-19 pandemic. As providers of mission-critical logistics solutions to the healthcare industry, we are carefully monitoring the spread of COVID-19 and any potential impact it may have on our clients. While we have experienced minimal disruption to our commercial portfolio resulting from the COVID-19 pandemic, a meaningful number of our clinical trials we support have been temporarily paused. We are pleased that none of our trials, to our knowledge, have been terminated as a result of COVID-19. As I said at the beginning, I am proud of our great team of leaders who have implemented multiple business mitigation plans, and I am confident in our ability to navigate the uncertainties plaguing the world and our markets today. As a business that is a lynchpin in the life sciences industry and one that prides itself on supporting resilient supply chains, mitigating risk and having best-in-class validated cleaning and disinfection processes that ensure effectiveness, we are fortunate to have continued business and to have considerable resources at our disposal, allowing us to continue to operate during this time. We have not laid off any employees as a result of the pandemic and expect to immediately be in a position to ramp up our support on paused trials as soon as they are restarted, new trials as they begin and, of course, commercial products as soon as they're approved. In the meantime, we will do everything in our power to contribute to the fight against COVID-19. For Cryoport, this means that we are currently providing comprehensive logistics support for six clinical trials that are potential COVID-19 treatments and vaccines. As the life sciences industry leader in temperature-controlled logistics and biostorage of life-saving advanced cell and gene therapies, vaccines and other fragile and high-value biologics, we are proud to be in a position to use our expertise to support the development of these much-needed therapies and vaccines. Fortunately, we are also supported by a strong balance sheet, along with long-term agreements providing vital solutions to the life sciences and healthcare industry. We benefit from an exceptionally loyal client base, which we attribute to our consistent performance, unparalleled experience, which includes partnering with industry leaders and pioneers and our cutting-edge solutions based on the most advanced technologies. As a result, we can be confident in our future, and we will continue to execute on our plans to expand our capabilities in anticipation of the expected growth in demand for our supply chain solutions. Now, I'd like to turn the call over to the operator to open the telephone lines for your questions.

Operator, Operator

Thank you. We will now begin the question-and-answer session. The first question is from Puneet Souda of SVB Leerink. Please go ahead.

Scott Mafale, Analyst

Hi guys. This is Scott Mafale on for Puneet. Thanks for taking the question. So, I want to dive a little bit more into the trial delays that you mentioned. Was curious if the rate of new pauses that you're seeing has been slowing in recent weeks. Or in other words, do you expect most of the trials that are going to be paused kind of already have been paused, and it's kind of behind you?

Jerrell Shelton, CEO

I think that's a question for Dr. Sawicki.

Mark Sawicki, CCO

Yes. Thanks. We've actually seen the activity from our perspective bottom out, and we're already starting to see some improvement in volumes. So, obviously, we can't determine if that's going to be consistent over time. But we're cautiously optimistic that we're starting to come out of it.

Scott Mafale, Analyst

Okay, I understand. It's great to see you're involved in some COVID trials. Should we expect even more business from this in the future? Was this just the beginning? Can we anticipate more growth as the year progresses? Any additional insights you can share would be appreciated.

Jerrell Shelton, CEO

Well, it's difficult for us to say if there's additional support we can provide for the COVID-19 issue. Is that what you are asking?

Scott Mafale, Analyst

Yes, if you expect to maybe bring on any more trials from the six you mentioned?

Jerrell Shelton, CEO

Go ahead, Mark.

Mark Sawicki, CCO

Yes, I mean, the bottom line is that we're constantly being requested by our portfolio companies to support different aspects. If any of them do make a determination to start additional programs, our expectation is that we will get them. So I mean, there's a net upside of six already. But obviously, our core activity of clinical trial and commercial activity, we haven't seen any material impact on the total number of trials that we're supporting from that perspective. So, we're still looking forward to three commercial filings, which already had six more this year. And we think that there's still going to be three commercial approvals and 13 filings next year. So, we're very positive.

Scott Mafale, Analyst

Okay, got it. If I could just slip one more in on the international business. Could you just talk about maybe how the European business is doing and if you're running into any difficulty shipping internationally due to the restrictions? And just in general, kind of speak about the state of the business over there. Thanks, guys.

Jerrell Shelton, CEO

Mark, could you share your thoughts?

Mark Sawicki, CCO

Yes, I mean, Europe is tracking very similar to the U.S. We saw an impact last month due to the activity due to COVID. With the countries over there starting to loosen up some of the restrictions, we are starting to see an increase in activity.

Operator, Operator

The next question is from Brandon Couillard of Jefferies. Please go ahead.