Have you heard of this company? Cryoport (CYRX)

Cryoport is a logistics company specializing in solutions for the life sciences industry. The company provides a complete range of solutions for the unique needs of the nascent regenerative medicine field, including CAR-T therapy (discussed below). Cryoport currently has a market capitalization of $225 million and is headquartered in Irvine, California.

Cryoport's customers include biotech and pharmaceutical companies, medical research laboratories, universities, as well as fertility clinics involved in reproductive medicine, and veterinary companies involved in animal health. 

Of the company's revenues over the last four reported quarters, 76% came from biotech and pharma customers, 14% from customers involved in human reproductive medicine, and the remaining 10% from customers involved in the animal health industry. The company saw revenue growth in each segment over the past year, at a rate of 11% growth in revenues from the reproductive medicine segment, 34% growth in revenues from the animal health segment, and 72% growth year-over-year in revenues from biotech and pharma segment.

The astonishing growth in the biotech and pharma segment can be attributed primarily to the advent of a new paradigm in regenerative medicine, requiring patient samples and especially manufactured treatments to be shipped at temperatures below -136 degrees Celsius, much colder than the temperatures achieved with dry ice. Dry ice has a temperature of -79 degrees C, which is cold enough for the safe shipment of some types of treatments, but not for the new CAR-T and related treatments described below, which have only just begun to be approved for use with patients outside of clinical trials (the first two such treatments were approved by the FDA for patients in the US as recently as fall of 2017).

This relatively new field of regenerative medicine uses the body's own defense mechanisms, specifically the T-cells of the patient's own immune system, to fight diseases (especially cancer) which would otherwise be able to hide from the immune system. The video below gives a broad overview of the concept:

"Immunotherapy" is the term for treatments which use the patient's own immune system to fight a disease such as cancer, typically by adding information to the immune system to enable it to fight the problem that it otherwise would not be able to detect. Among the first types of immunotherapy to make it through clinical trials have been therapies using a technique known as CAR-T, which stands for "chimeric antigen receptor" in the T-cell, because these therapies use T-cells which have been altered to express a protein which otherwise would not be present, which is referred to as a chimeric antigen receptor.

In order to help the T-cells in the immune system of a patient fighting a specific type of cancer, CAR-T therapies take the T-cells from the individual patient to be treated, and then use a retrovirus to write new code to the T-cells causing them to express new antigen receptors which can defeat the "masking" capabilities described in the video above. The patient's own T-cells, modified with the chimeric antigen receptor protein, are then shipped back to the patient and introduced to the patient's own immune system, in the hope that they will enable the patient's own immune system to defeat the disease.

So far, some of the results for achieving complete remission from certain types of cancer have been extremely promising, with one CAR-T therapy for a type of leukemia which primarily affects children yielding complete remission in just over 80% of cases, versus chemotherapy alone, which achieved complete remission in less than 10% of cases. In another type of cancer afflicting primarily adults, complete remission was seen in nearly 40% of cases, versus only 8% for chemotherapy alone (some light chemotherapy is typically used on the patient prior to the re-introduction of the modified T-cells). Also, unlike other types of treatments, CAR-T therapy is typically a one-time treatment.

Logistically, these new types of regenerative medicine require the treatment (consisting of the  patient's own modified T-cells) to be kept in cryogenic suspense between the manufacturing facility (the lab where they are altered using a retrovirus to express the chimeric antigen receptor) and the hospital or other facility where they will be reintroduced to the patient. Additionally, if the sample does not stay below -136 degrees C the entire time, there is no easy way of knowing that just by looking at the sample -- it does not change color or appearance, and it does not change smell. Thus, keeping it at cryogenic temperatures, and knowing for certain that it has been kept at cryogenic temperatures the entire time, is extremely important.

It goes without saying that the logistics side of these treatments is extremely critical. Someone's life is depending on the treatment, and the effectiveness of that treatment is dependent upon keeping it cold enough the entire time until it is given to the patient. Additionally, the treatment itself tends to be very expensive, as it is a new type of therapy, it is manufactured specifically for each patient individually (using that patient's own T-cells), and it takes about eighteen days to manufacture each patient's individual treatment.

In other words, there is a lot riding on the integrity of the logistics solution in these treatments.

Cryoport's unique value proposition is a logistics solution which not only provides the containers which can keep a sample at temperatures below -150 degrees C, but which is also equipped with numerous sensors to track and record the temperature throughout the shipment, as well as to monitor other important readings which can help catch and correct problems before they lead to a "temperature excursion" which would compromise the treatment.

Cryoport designs their own cryogenic dry vapor dewars which are charged with liquid nitrogen and capable of keeping temperatures of the contents below -150 degrees C for up to ten days. Their dewars and related shipping containers (some of which are shown in the photograph at top) have certain patented features which distinguish them from others available in the logistics world.

However, the real differentiator of the Cryoport logistics solution is the ability to monitor the shipment throughout its entire journey on Cryoport software which enables both Cryoport and the customer to see where the product is at any given time, as well as to see the container's internal and external temperatures, the dewar's angle of tilt (if the dewar stays tilted too much for too long, its cryogenic temperatures will be compromised), the barometric pressure, the humidity and moisture levels present, the time and location of any "shock events" such as from accidentally dropping the container, and (using a light sensor) how many times the container is opened (which must sometimes take place if going through customs, for example).

Cryoport's software incorporates custom algorithms to help them manage the shipment very closely, and sends alerts if a shipment appears to be hung up in customs, or if conditions indicate the potential for a temperature excursion. Cryoport can then send personnel to remedy the problem, correcting the tilt, or recharging with liquid nitrogen, before cryogenic temperatures are ever compromised.

Cryoport's solution has been selected by all of the biotech and pharma companies who are active in developing immunotherapy or regenerative medicine treatments, including Novartis, MesoBlast, Atara Bio, bluebird bio, Bristol-Myers Squibb, Juno Therapeutics (now part of Celgene), and Kite (now part of Gilead). These and other companies currently have over 200 therapies in clinical trials which are using Cryoport for their logistics (214 in total).

The first two CAR-T therapies to make it through clinical trials were approved in the second half of last year: Kymriah from Novartis and Yescarta from Kite (now Gilead). Logistical requirements typically grow steadily as a therapy moves from Phase I to Phase II to Phase III of clinical trials. However, once a treatment is approved for commercial use, logistical requirements can increase significantly, as patients will then be located in many more locations, and their T-cells will have to be shipped to the pharmaceutical company's manufacturing facilities (laboratories) and the personalized treatments sent from there back to the patient's location.

In addition to the first two treatments to make it to FDA approval, there are now 26 therapies in Phase III clinical trials whose companies use Cryoport for their logistical solutions. If only 50% of these therapies make it to final FDA approval (which is an approximate estimation for therapies in Phase III trials, although there is no way to predict for certain, especially since this area of medicine is very new and there have been some treatments which have had severe problems during clinical trials and had to be discontinued) then that would suggest that Cryoport could have 12 to 13 additional therapies to service in the relatively near future.

The area of regenerative medicine is still in its infancy, and there are issues (particularly the cost of treatment) which will have to be addressed in the future. However, as noted above, there are some very promising indications that immunotherapy can become a new tool in helping the body's own immune system to fight disease, producing success rates well beyond the current treatments.

We believe that Cryoport has a logistics solution which addresses the unique needs of this exciting new field of medicine, one which is trusted by the major players in the industry, and one which is eminently scalable and can grow to meet the needs of patients and providers as the industry grows. Further, we believe there may be advantages to investing in Cryoport rather than trying to predict the clinical success of any one specific experimental treatment or any one specific biotech or pharmaceutical company participating in the regenerative medicine market.


At the time of publication, the principals of Taylor Frigon Capital Management owned securities issued by Cryoport (CYRX). At the time of publication, the principals of Taylor Frigon Capital Management did not own shares of any of the other companies mentioned (including FedEx, UPS, Novartis, or Gilead).

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