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Edited Transcript of CYRX earnings conference call or presentation 5-Mar-20 10:00pm GMT

Q4 2019 Cryoport Inc Earnings Call

Lake Forest Mar 27, 2020 (Thomson StreetEvents) -- Edited Transcript of CryoPort Inc earnings conference call or presentation Thursday, March 5, 2020 at 10:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jerrell W. Shelton

Cryoport, Inc. - Chairman, President & CEO

* Mark W. Sawicki

Cryoport, Inc. - Chief Commercial Officer

* Robert S. Stefanovich

Cryoport, Inc. - CFO, Treasurer & Corporate Secretary

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Conference Call Participants

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* Andrew Jacob D'Silva

B. Riley FBR, Inc., Research Division - Senior Analyst

* Mason Owen Carrico

Stephens Inc., Research Division - Research Associate

* Paul Richard Knight

Janney Montgomery Scott LLC, Research Division - MD, Head of Healthcare Research & Senior Equity Research Analyst

* Puneet Souda

SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst

* Richard Kenneth Baldry

Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst

* Stephen Scott Unger

Needham & Company, LLC, Research Division - Senior Analyst

* Todd Fromer

Kanan, Corbin, Schupak & Aronow, Inc. - Managing Partner

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Presentation

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Operator [1]

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Welcome to the Cryoport, Inc. Full Year 2019 Earnings Conference Call. (Operator Instructions) And the conference is being recorded. (Operator Instructions)

I would now like to turn the conference over to Todd Fromer, the Managing Partner, KCSA. Please go ahead.

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Todd Fromer, Kanan, Corbin, Schupak & Aronow, Inc. - Managing Partner [2]

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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 experiences 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 file with the Securities and Exchange Commission.

I would now like to turn the call over to Mr. Jerrell Shelton, Chief Executive Officer of Cryoport. Jerry, the floor is yours.

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [3]

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Thank you, Todd. Good afternoon, ladies and gentlemen. Thank you for joining us today. With me this afternoon is our Chief Financial Officer, Mr. Robert Stefanovich; and our Chief Commercial Officer, Dr. Mark Sawicki.

As a reminder, we've uploaded our 2019 Year in Review document to our website. It can be found in the Investor Relations section under Events & Presentations. This document provides a review of our recent financial and operational performance and a general business outlook. So 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. And then we'll move to the question-and-answer session, where we will address your queries regarding our company's results.

Now for the update. We reported record revenues of $33.9 million for fiscal year 2019, an increase of 73% from fiscal year 2018. This strong result was driven partly by our commercial agreements supporting Gilead's YESCARTA and Novartis' KYMRIAH, which contributed $8.3 million in the 12-month period, an increase of 295% or $6.2 million compared with the prior year. Revenue from our commercial agreements is expected to continue to grow throughout 2020 and will include revenue from the commercial launch of bluebird bio's ZYNTEGLO, commencing during the first quarter of 2020.

A record total of 5 Cryoport-supported Marketing Authorization Applications and Biologics Licensing Applications were filed during the fourth quarter of 2019. We expect approximately 10 additional Cryoport-supported MAAs and BLAs to be filed in 2020 based on internal information and forecasts from the Alliance for Regenerative Medicine.

As the number of cell and gene therapies and clinical trials increased, we secured new clients and expanded our market share with the global regenerative medicine market. During our fourth quarter, we added a net total of 11 clinical trials, bringing the total number of regenerative therapy clinical trials supported by Cryoport to a record 436, of which 56 are currently in Phase III compared with 357 trials at the end of 2018, of which 47 were in Phase III.

During the year, to further advance our leadership position, we invested in enhancing our platform by entering the biostorage market with the acquisition of Cryogene and launching the first ever Cryoport Express Advanced Therapy Shipper product line, which guarantees each shipper has been used only for human use, is cleaned with 99.9999% effectiveness and provides complete traceability of all equipment, components and commodities. As a result of these investments last year, we're now providing our global clients with an expanded platform of critical solutions that include both highly differentiated temperature-controlled logistics and biostorage services.

With the regenerative medicine market growing rapidly, Cryoport is developing the network of partners, processes and systems that support a Compliance Unified Ecosystem within the life sciences industry. We have successfully secured several top-tier partnerships, including Lonza, Vineti, McKesson, EVERSANA and further integrating other solutions into the life sciences industry by providing scalable, standardized and compliant solutions focused on the supply chain of regenerative therapies.

In 2020, we are continuing to expand our global supply chain network and platform of advanced therapies for life sciences, including through the build-out of Global Supply Chain Centers in Morris Plains, New Jersey; and Houston, Texas. We believe that Cryoport's strong business model and balance sheet has us well positioned for both continued organic and acquisitive growth. Our market-leading position and superior technology platforms also give us the ability to scale our operations and to expand our support of the global regenerative medicine ecosystem as the market continues to demonstrate rapid and accelerating growth.

Now I'll turn the call over to the operator to open the telephone lines for your questions and our answers.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Brandon Couillard with Jefferies.

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Unidentified Analyst, [2]

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This is [Matt] on for Brandon. First one, if we look at the clinical trial revenues or the noncommercial biopharma revenues, essentially flat in the second half of the year versus the first half of the year, even though you added more than 20 new clinical trials in the -- versus the first half. Can you just help us reconcile the trend of your ongoing growth in supported clinical trials across the 3 phases? Is it simply timing issues as the trials transition and ramp from their various clinical phases? And then as a follow-up to that, are the ballpark revenue ranges or bands you have historically laid out by clinical trial phases still relevant today?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [3]

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Yes. So there's not all of that in the answer, but I'm going to turn that over to Mark Sawicki to answer the question.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [4]

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Yes, thanks. So the bottom line on clinical trial activity and associated revenue is that we use clinical trials as a pipeline for ultimately commercial revenue, which has by far a larger revenue basis associated with a given program and cycle. Clinical does, in its inherent nature, have more volatility. And volatility can be associated with interruptions in trials, holds between phases or terminations due to lack of progression, which obviously, we outlined in the earnings release.

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Unidentified Analyst, [5]

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And then on the biostorage side, you made some progress cross-selling to your existing customer base there and recently onboarded several clients to the Cryogene platform. Curious if you can just kind of provide any initial feedback, what it is about their offering that's resonating with your customers? And then anything you're penciling in for 2020 in terms of revenue synergies from Cryogene?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [6]

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You want to take that, Mark?

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [7]

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Sure. So we're absolutely seeing crossover between the Cryoport and Cryogene businesses, which is one of the reasons we moved forward with the acquisition last year. And we do believe that, that will accelerate in this fiscal year. The primary driver behind that is folks moving towards an integrated or a single-supplier supply chain, so they want to not only be able to support the distribution aspects through our supply chain logistics platform, but also storage.

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Operator [8]

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The next question comes from Puneet Souda with SVB Leerink.

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Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [9]

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So Jerry, first one for you and maybe

Mark can chime in into it too. Wanted to understand why commercial revenue was stepping down here when revenue for both the commercial therapies were up. Can you provide maybe how much of that was ASP driven? Or is there some other dynamic that we're unclear on? And just wanted to understand if -- how is that shaping up in the first quarter.

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [10]

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Yes. Yes, that is a good question, Puneet. The commercial revenues that we report are divided into 2 primary categories. One of these is patient and shipping-related revenues. And the second category is services, where, for example, our customers asked us for consulting or lane validations or custom secondary packaging or program management and that sort of thing. So in the fourth quarter, there was a bit of a drop from the third quarter revenue as a result of the nonshipping services-related revenue dropping.

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Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [11]

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And would you expect that to recover again here in the first quarter? Or what's your expectation on that revenue? Or is that something we should expect to decline through the year?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [12]

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It's a constant flow. It just had a drop in that last quarter. But it's -- there's constantly activity in these areas. There's always a need here.

This is evolving -- this is an evolving space. And so it's just -- it's going to continue to develop.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [13]

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Yes. Puneet, it's -- as Jerry has said -- yes, the numbers will rebound.

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Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [14]

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Sorry, I didn't catch that. Can you repeat?

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [15]

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I said -- yes, I said the numbers will rebound.

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [16]

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Mark said the same thing I said in a different way. He just simply said, the numbers will come back if we just had a drop for a quarter in those numbers.

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Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [17]

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Okay. All right. And then on clinical trials, I have a bigger question. I mean I appreciate there were 2 high-volume trials that were impacting the quarter. But wanted to get a view into what you're seeing so far in the year. Was that sort of onetime phenomena, one-off phenomena that you saw here? And I understand these are large clinical trials, but any sense that you're getting in 2020 so far on any other trials or a recovery in -- for Phase III trials?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [18]

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Well, Puneet, I'll start and let Mark add to it. But we do have pauses, as we've explained. And we will -- we just had that confluence in that last quarter. So I don't -- we don't anticipate that being a continuation, especially as the population grows in both clinical trials and commercial activity.

Mark, would you like to add anything to that?

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [19]

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No, I think Jerry is absolutely right. I mean we're very bullish on the overall clinical activity. We have 5 BLAs or MAAs filed in the fourth quarter alone. We expect another 10 to be filed this year. And there's been very, very aggressive financing activity in the space, to the tune of almost $10 billion raised in 2019. So there's a lot of money that's being put into this space that will continue to support the clinical trial activity.

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Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [20]

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Okay. And then my last question is on -- given the impact we're seeing here from coronavirus, what are you expecting for your European shipments, given that this is largely shipping and logistics? Anything we should note for the first quarter and the first half of the year versus the second half? And how should we think about any disruption? Or so far, what's been -- what are you seeing in the market among your customers?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [21]

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Well, so far, Puneet, we're not seeing any significant impact. 14 of our 436 trials certainly are in the APAC region, the most affected region. But we haven't seen any trials being notably delayed or stopped because of the virus. We are like anyone else, and we will have to see how this unfolds. But we don't see any notable delay or stoppage at this point.

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Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [22]

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But you are not expecting any disruptions from shipping purposes and logistics in Italy or Europe or any other locations?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [23]

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Well, again, we're subject to the same things and the same issues as everyone else. We don't know how everything is going to unfold. What I can tell you for sure is we've had no impact up to this point. But I can't tell you what's going to be happening over the next months.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [24]

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Yes. Let me just add to that briefly. So one of the things we have seen feedback on is a client coming back and he asking us for our pandemic management strategy, in essence. One of the unique things that Cryoport has is we have a validated cleaning protocol that Jerry mentioned in his opening remarks that disinfects our equipment down to 5 logs, basically, 99.9999% reduction. And that validated cleaning protocol has demonstrated ability to render coronavirus inactive, so it destroys coronavirus. So it's actually a very positive thing for us.

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Operator [25]

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Our next question comes from Paul Knight with Janney Montgomery.

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Paul Richard Knight, Janney Montgomery Scott LLC, Research Division - MD, Head of Healthcare Research & Senior Equity Research Analyst [26]

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Jerry, I know on the clinical trial, it's no surprise that the number of Phase I filings are slower in the industry, while commercial therapies seem to be the ramping factor. Can you talk about Phase I, is it academics have limited budget? What do you think are the factors going on with the slower growth we're seeing from the industry on the Phase I side?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [27]

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Paul, Mark is actually in a better position to comment on that than I am. So I'll turn it to him.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [28]

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Yes. So Paul, the real factor is the maturation of the market. Early on, when these therapies were still starting to move into market, obviously, they're going to move into a Phase I situation. Now that the market is starting to mature, a lot of the follow-on studies themselves because they only have safety data on the target of interest, can actually move into a late-phase or even a Phase II trial for a different indication immediately. So I actually think it's a demonstration of the maturation of the market more so than anything else.

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Paul Richard Knight, Janney Montgomery Scott LLC, Research Division - MD, Head of Healthcare Research & Senior Equity Research Analyst [29]

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And then you talked about your expansion in Houston and Morris Plains. What kind of a CapEx do you need to do this year to achieve that level? And then more specifically, I understand you have storage in Houston. But what will the Morris Plains facility, what will be there? Will it be storage? Could you -- just a little color on what a Global Logistics Center, what it looks like and what it costs, in your vision?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [30]

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Yes. I'll turn the financials over to Robert in just a moment. But let me explain what these centers are. These are Global Supply Chain Centers and the difference in a Global Logistics Center and a Global Supply Chain Center is Bioservices. So these 2 operations will be rolled out by the fourth quarter of this year and then will be -- they will be an advancement in our global supply chain network, which will offer Bioservices in addition to our world-class advanced logistics.

So Robert can tell you the investment that we're making in both of those places.

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Robert S. Stefanovich, Cryoport, Inc. - CFO, Treasurer & Corporate Secretary [31]

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Yes. Just as you remember, in the past when we set up our logistics center as we announced in New Jersey, that we had clearly defined investments and executed on those. If you look at this next phase where we're setting up 2 Global Supply Chain Centers here in the U.S. in Houston and New Jersey, you look at investments between $3 million and $5 million, we have a clear kind of plan for those. Size-wise, they're between 15,000 and 20,000 square foot. And they'll provide services around our Global Logistics Solutions as well as Global Bioservices.

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Operator [32]

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Our next question comes from Richard Baldry with Roth Capital Partners.

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Richard Kenneth Baldry, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [33]

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Sort of following up on that. Will any of the operating cost of those facilities come on sort of earlier in the year? Or will those be coincident with the expected completions in the fourth quarter?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [34]

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Robert?

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Robert S. Stefanovich, Cryoport, Inc. - CFO, Treasurer & Corporate Secretary [35]

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Yes. So you'll see, obviously, costs that will come in over the next couple of quarters as we start setting up the infrastructure and building all of the facilities. They will go online in Q4. So that's when you should expect costs to start getting -- the cost of sales as part of the wholly operational Global Supply Chain Center.

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Richard Kenneth Baldry, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [36]

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And when I look at the gross margins, they're actually pretty strong in the quarter despite some revenue headwinds. So can you talk about sort of where that strength came from, whether there's anything onetime oriented or how we would see those trends playing out as revenue scales throughout 2020?

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Robert S. Stefanovich, Cryoport, Inc. - CFO, Treasurer & Corporate Secretary [37]

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Yes. I mean you can't really see trends at this point yet because we're in the midst of building out the infrastructure, right? We've been able to, I think, maintain solid kind of 50%, 52%, 53% gross margins. So it's not really a trend. There's not onetime events that are impacting gross margin in Q4. Our stated goal is still 60% in gross margin.

Obviously, if you look at this next year, we're building out the supply chain centers. We're not going to get there at that point in time. So you'll still see some up and down in the gross margins. But ultimately, again, as we can start leveraging the facilities that we have, we will see the gross margin starting to increase.

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Richard Kenneth Baldry, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [38]

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And I understand you don't give guidance, but the OpEx side has bounced around a little bit throughout 2019, had some strong quarters and some others, and there's been some onetime stock things built in. What should we look at as a normalized baseline? Is the fourth quarter a good baseline to work from and work up from as you scale the infrastructure to match the top line? Or is -- again, is there anything sort of onetime about the fourth quarter that wouldn't make it a good baseline for 2020?

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Robert S. Stefanovich, Cryoport, Inc. - CFO, Treasurer & Corporate Secretary [39]

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I think if you compare 2019 with 2018 that we had about 37% growth in operating expenses. It's going to continue because we are building out infrastructure, we're building out capabilities. So you will see an increase in operating expenses over 2019 into 2020. But you have to understand that, again, we're still in the early phases of this industry. We're building based on the demand that we're seeing. It's very, very clear to us in terms of our expectations of revenue growth in this market. And that's why we're making these investments in setting up these supply chain centers.

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Richard Kenneth Baldry, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [40]

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Okay. Last would be, to the extent you have some insights, how do you think about the likelihood that the next commercially approved therapies would either ramp sort of similarly to the first that came -- first 2 that have come before? Or do you think there were lessons learned in the industry that might accelerate that? Because people have done some larger-scale trials, is it easier to ramp faster once commercializations are approved? Sort of how do we gauge, assuming when we watch some approvals, how that commercial ramp will be versus the first 2?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [41]

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Rich, I'm going to -- I'll turn it over to Mark in just a moment. But the -- we don't expect any of these to ramp exactly the same because they have different strategies, they're different companies and so forth. I mean like ZYNTEGLO is going to be introduced in, I think it's Germany, right, in Germany first and so -- as opposed to the United States. And we don't expect that the patient population is as big as for KYMRIAH or YESCARTA. So you really have to look at the therapies, but Mark will add to that.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [42]

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Jerry is absolutely right. I mean the bottom line is that each of these are independent and unique. The one variable that is beneficial, though, is that a lot of the reimbursement structures have been vetted and have been cleaned up over time as well as the manufacturing strategies and the regulatory guidance from the FDA continues to mature, which will provide them with a much better understanding at which -- how to move forward from a commercialization standpoint. And a lot of these guys now also have what are called certified set of points of care. And so the end users are getting comfortable with using them and understanding how to introduce them to the patient population.

So those are positive factors, I think, that will impact the overall cadence of these. But each of them will be independent on how they roll them out on a global basis and what the patient population looks like.

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Operator [43]

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Our next question comes from Jacob Johnson with Stephens Inc.

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Mason Owen Carrico, Stephens Inc., Research Division - Research Associate [44]

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It's actually Mason on for Jacob. I just have a 2-part question.

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [45]

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Jacob, we can't hear you.

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Mason Owen Carrico, Stephens Inc., Research Division - Research Associate [46]

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Can you guys hear me?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [47]

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A little bit better, but not much.

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Mason Owen Carrico, Stephens Inc., Research Division - Research Associate [48]

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All right. Sorry about that. So this is actually Mason on for Jacob. I have a 2-part question. First, as it relates to the coming regulation and draft guidance for the industry, when could these guidelines be finalized? And then second, once finalized, what needs to happen for these standards to become the norm? And how likely are they to change behavior or shipping methods?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [49]

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That's a great question. And Mark's prepared to answer that one.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [50]

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Yes. So the primary guidance document that folks have been working through, which is also receiving feedback from 2 steering bodies, one is the Standards Coordinating Body with the Alliance for Regenerative Medicine, and the other one is Foundation for the Accreditation for Cellular Therapy, is the ISO/TC 276 regulation or guidance document. It's set to be submitted to the FDA in the second half of this year. We would expect that to be received and reviewed by the FDA and having refinements around regulatory requirements in early 2021 would be our expectation at this point in time. We do believe that, that guidance document because we're participating in its construction, will be very favorable to our systems and processes, in particular compliance -- Chain of Compliance-based platform and the additional scrutiny that we provide to our clients and management and distribution aspects of our equipment in our systems. So we're actually looking forward to it.

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Operator [51]

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Our next question comes from Steve Unger with Needham.

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Stephen Scott Unger, Needham & Company, LLC, Research Division - Senior Analyst [52]

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The 32 new clients in the quarter, that's a big number. And I was curious if that had an impact on the active trial numbers that you had -- you have presented in the quarter. Or does that come in, in 2020? And then when it comes to new clients wins, are these coming in, in the early phase or in the Phase I? Or is this across the phases?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [53]

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That's a good question. I'm going to turn that over to Mark, Steve.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [54]

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Yes. So I mean obviously, one of our key goals as an organization is to pull as much share out of the market as we can. And that share constitutes existing relationships and the expansion of clinical programs within those existing relationships as well as capturing new clients, either start-ups or clients that haven't been using Cryoport traditionally. So we're very active in capturing as many of those clients as we can. Honestly, I think that the increase in the rate of customer acquisition is a testament to our platform and folks understanding the importance of compliance and traceability factors that we have from a logistics distribution standpoint. So I think that that's obviously some of the biggest drivers that we're seeing at this point in time.

The timing associated with the clinical activity around those is very, very specific to a given client. Some of them will -- are already shipping from a clinical standpoint. Others may not initiate clinical trials for 6 to 9 months based on some of the pre-trial activity and consulting work that needs to get done prior to initiating any given program.

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Stephen Scott Unger, Needham & Company, LLC, Research Division - Senior Analyst [55]

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Got it. That's helpful. And then was there an impact in the quarter from the Lonza relationship? And if not, do you have some sort of way of characterizing the revenue impact that you expect from Lonza in 2020? That's primarily outside of clinical trial activity is my understanding.

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [56]

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We won't be giving guidance on any kind of an impact by Lonza. But what we can tell you is this, we've had a good -- we've had a continuing relationship with Lonza for several years. And then we struck the special relationship, the special MSA that we announced and the special partnership we announced last year, during 2019. And that relationship is developing very nicely. All of our teams meet on a regular basis, and we're actually starting to see some commercial -- but that's a rollout, and that's going to have a strategic impact for Lonza as well as for us.

And Mark, you may wish to comment on that further.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [57]

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Yes. I think the only other thing I'd add there is that we are already seeing crossover revenue associated with the signing of that relationship late last year. It's obviously very early in the development of that, but we are 100% confident that we will see accretive benefit on that relationship in 2020.

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Stephen Scott Unger, Needham & Company, LLC, Research Division - Senior Analyst [58]

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Got it. Okay. And then I wanted to touch on the reproductive win, the Inception Fertility. What is your expectations for just your reproductive medicine business? It had a good growth year in 2019. Is that core growth then expected to continue when you layer on the Inception Fertility impact to accelerated growth?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [59]

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It's a good question, Steve. We had -- we have big plans for reproductive medicine. And heretofore, as I've stated before, we didn't have the bandwidth to really push reproductive medicine or animal health, but we're making investments in both of those, good resources. And we just employed our first person in EMEA, for example, to focus on that area. But the -- make no mistake about it, the Fertility deal was a -- is big. It's a big deal for us. And I'll let Mark to take it from there and comment on it further.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [60]

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Yes. Just as a context, the Prelude Inception network is the largest clinic network in the United States. And so signing a deal, obviously, every single transportation event that occurs in their entire network will be running through Cryoport moving forward. And we do believe that, that will have substantial upside on our IDF numbers for 2020 over 2019.

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Operator [61]

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Our next question comes from Andrew D'Silva with B. Riley FBR.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [62]

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And really sorry if you touched on any of this, just let me know, I have been hopping between a couple of calls. But maybe can you elaborate a little bit on the cadence you saw in 2019 and directionally, what you think we should look out for in 2020, frankly, as it relates to biopharma growth? Do you think where The Street is or where -- the growth rate you saw in previous years is kind of a reasonable expectation as we look at '20?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [63]

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Andy -- Andrew, you're coming through a little bit fuzzy. And I don't want to assume that we've heard your question when we didn't actually hear it very well. So can you restate your question? We just couldn't hear you very well.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [64]

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Absolutely. Can you hear me better right now?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [65]

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Yes. That's better.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [66]

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Okay. Good. So effectively, what I was curious about was, when we look at the biopharma cadence over 2019 and we think about 2020, should we expect a similar growth trajectory? And do you feel comfortable kind of where consensus is as a whole? Really any color on how biopharma should shape out would be really useful, just because there are several end points that could take place this year depending on how they go, could be pretty significant variances.

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [67]

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Okay. I'm going to turn that to Mark.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [68]

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Yes. So obviously, one of the things that we're looking at for 2020 are the fact that we have 5 BLAs, MMAs -- MAAs filed in the fourth quarter alone on our portfolio of clients. Obviously, the timing of those, from a launch standpoint, has an impact on the cadence for 2020. But we anticipate the 5 new commercial launches this year as well as 10 additional BLA or MAA filings for the quarter. So we're very bullish on the year. But the -- obviously, the cadence at which those roll out will impact what the ultimate number looks like.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [69]

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Okay. Okay. Fair enough. And then can you just touch on maybe expanding the offerings? You referenced Cryoshuttle before. I was curious if ideas like that, offerings like that are things that are being brought on through requests from clients, and if so, if there's been any success to date that you can highlight?

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [70]

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Well, look, I think that there -- we're -- I've said this over and over in our calls about expanding both horizontally and vertically. And if you just think about where we've been and what we've talked about, we've made the acquisition of Cryogene last year, expanding into Bioservices. We also announced the Cryoshuttle which is picking up, and it's on target. It takes a while to get validated and to have people change their methodology and so forth. But it is picking up, and we expect good things out of the Cryoshuttle, and we expect that need to grow in the future.

And then consulting, we've -- we certainly -- our consulting is picking up because we're authoritative in our field and people recognize that and the word is getting around and it's growing. And then you've seen us expand the product line with the revolutionary Cryoport Express Advanced Therapy Shipper, which no one in the industry has or can touch. And it's -- so it's those kinds of things that we're doing to expand our footprint. So we're moving on an incremental basis and then -- and a very disciplined basis as well.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [71]

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Okay. Great. Last question, you really talk about the total trials being -- increasing year-over-year. I'm assuming those are just ongoing trials. You're involved in 436. Can you maybe talk about how many trials you were just generally involved in? Because obviously, some of them fell off or weren't successful. I'm sure the net gain throughout the year is much more than 79. Am I accurate in thinking that?

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [72]

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Yes, you're accurate.

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [73]

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Mark, I'm assuming you will take that.

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [74]

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Yes, you're absolutely accurate in that. As an example, I think Q4, there was a net increase of 11, but I think we had almost 30 trials drop out over the quarter. So it wasn't -- so the net of adds was in the 40s prior to the terminations, somewhere in that range. And I don't have the numbers in front of me, but that's typical cadence for what we see.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [75]

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Okay. So I mean you're really kind of going through the revolving process, but continuing to grow, even in a -- I think the fourth quarter had an anomaly, just when you look at the market in general, the macro trends that there was a lot more fallout or pushing towards getting things finished than maybe in previous quarters in the year. And so you're still, even with that kind of frequency, able to grow. Is that more indicative of just the market trend or -- and but a trend being just more and more regenerative medicine and cell and gene therapy clinical trials coming underway? Or is that maybe a little bit more related to earlier companies, the companies you haven't worked with before just now understanding the really importance of what you offer?

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Mark W. Sawicki, Cryoport, Inc. - Chief Commercial Officer [76]

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It's all of the above, to be honest. It's us pulling share from other parties. It's our existing clients maturing. But clinical trial activity in its nature is volatile and it's volatile because it's experimental in nature. Our whole strategy is around long-term capture of share that drives commercial revenue through commercialization events. And so our -- we're really focused on building our share in this space and maintaining those relationships as they run through towards commercialization. And we're starting to see the fruits of that, obviously, with the 5 BLAs and MAAs filed at the end of the year last year. And we did another 10 this year. So we could theoretically be looking at going from 2 commercial therapies we supported in 2019 to 8 or 9 or 10 by 2021.

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Operator [77]

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This concludes the question-and-answer session. I would like to turn the conference back over to Jerry Shelton for any closing remarks.

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Jerrell W. Shelton, Cryoport, Inc. - Chairman, President & CEO [78]

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Thank you, operator.

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Operator [79]

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This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.