Cryoport, Inc. (CYRX) Earnings Call Transcript & Summary

Hi, everyone. My name is Casey Woodring from the Life Science Tools team here at JPMorgan. Welcome to our Annual Healthcare Conference. I'm pleased to introduce our next company in Cryoport. Just a quick reminder before I hand it off to the management team here. If you'd like to ask a question during the Q&A portion of the presentation, there's an option to do so on the website. So with that, I'll turn it over to Robert. Thanks.

Thank you. Good morning. My name is Robert Stefanovich. I'm the Chief Financial Officer of Cryoport. Our CEO, Jerry Shelton was expected to give today's presentation, but unfortunately, was called away on urgent matters. He sends his regrets to all of you. With that said, I'll be giving today's presentation together with Tom Heinzen, our VP of Corporate Development. We will be taking questions after the presentation. I hope you'll share our excitement about the cell and gene therapy market we have and how we uniquely we're positioned to support this new pillar in Life Sciences. Please note that our presentation including the forward-looking statements will be available for download on our Investor Relations page on cryoport.com. Let's move to Slide 2. When people think about Cryoport. They mainly think about us as the leading company enabling the delivery of cell and gene therapies globally. However, there is more to Cryoport than that. And we also now own 1 of the leading specialty [indiscernible], CRYOPDP; the world's largest cryogenic manufacturer for the Life Sciences MVE Biological solutions. Combined, I'll describe this as best-in-class platform to support the growing supply chain needs in the cell and gene therapy market, which is the main driver for our future growth. If you step back, the American Cancer Society estimated that 1.9 million new cancer cases were diagnosed, over 600,000 people died because of cancer in 2021. About 60% of the therapies we support are targeting oncology. That means that every day patients and their families are counting on Cryoport to deliver to them their potentially life-saving therapies in the right condition and on time, whether there is a pandemic or not. If we move to Slide 3. Today, Cryoport supports more cell gene therapy clinical trials and commercial therapies than any other company. At the end of fiscal year 2015, Cryoport supported 59 trials, about $3.9 million in revenues. Flash forward 6 years, we are now supporting 582 clinical trials, 8 commercial therapies and our Q3 revenue was over $56 million. While in 2020, we only had about $78 million for the full year. If you move to Slide 4. The left side of this page graphically presents what third parties are forecasting for future FDA approvals. And you can see even more recently over the last couple of days and weeks, a lot of new announcements. On the conservative side or pessimistic side, 56 more therapies will be commercialized in the next 5 years. On the optimistic side, there will be upwards to 120 additional therapies approved in the next 5 years. On the right side, you can see how the number of approvals translates into the number of patients treated with the CAGR ranging from 23% on the low end to 43% on the high end. If you move to Slide 5, the overall regenerative market has been growing tremendously for years and continues to set records. In 2020, a record $19.9 billion was raised in the industry for 2021. As reported by the Alliance for Regenerative Medicine this last Monday, $23.1 billion was raised, so a 16% increase from an already very strong prior year. The clinical trial count reached 1,320 in the first half of 2021. We view these metrics along with the growth in the cell gene manufacturing capacity as leading indicators for Cryoport's future growth. We anticipate that this growth in the regenerative medicine clinical trials and future therapy approvals will be the main driver for Cryoport's growth for many years to come. So if you look at Slide 6. How do we do it? Let's start with Cryoport systems or the legacy Cryoport prior to the acquisitions that I'll talk about that we concluded in October of 2020. Cryoport Systems provides a fully outsourced set of solutions that's integrated. Starting with our packaging, if you look at 12 o'clock, proprietary and fully validated smart shippers covering the full temperature range, a focus on cryogenics because of the needs in the cell therapy arena, but also minus 80 Celsius, 2 to 8 Celsius controlled room temperature. It includes a full documentation of all process and procedures. And [indiscernible] life science is obviously heavily regulated, our clients develop SOPs around our procedures. So it's a very, very sticky solution with our clients. We provide ongoing condition monitoring, chain of custody track, comprehensive logistics both internally and through integrated partners. And then our Cryoport and [indiscernible] software, these are key aspects of our solution. Very often overlooked because you see a shipper, you see the dry vapor of liquid nitrogen, but the software, the technology, the analytics, the embedded algorithms that we use to manage the entire process are probably the most important part of our suite. And lastly, and we'll talk about that later more, Biostorage and Bioservices capabilities, coupled with the consulting. As a leader in the industry, our clients are looking to leverage our knowledge in this market, our expertise to design specific customized solutions for their specific needs. As I mentioned, all of these services are fully integrated, providing transparency, audit trails and a single source of truth to our client base. If you move to Slide 7 on the left side of the slide, you can see images of our proprietary Cryoport Express Shippers. These Cryogenic Shippers are powered by liquid nitrogen dried vapor. They're nonhazardous and hold cryogenic temperatures for at least 10 days in dynamic shipping. On the right side, you can see the image of what our customer sees when they log on to our cloud-based Cryoport logistics management system. The Cryoport, as I mentioned, is the backbone of everything that happens at Cryoport. It is integrated with our partners such as FedEx, DHL, UPS, McKesson, Be The Match, Lonza and many others. It handles all of the order entry, keeps track of our global inventory and importantly has the algorithms for predictive analysis on every shipment globally. Our customer service team works on an exceptional basis. If their column is green, they don't really have to pay a lot of attention to that specific shipment. There's no issues. If it's yellow, it's a flag to keep an eye on and ensure that if there's actions needed, then we take them. If it's red, that means the holding time or other aspects may be at risk. So there's a risk for the shipment not making it at the required condition and time to the patients and that's where we interact, take actions, have virtual intervention teams. So that's, I think, 1 very, very critical part. And when you look at these therapies, cell therapy is going to be anywhere from $300,000, $500,000 of therapy, very, very difficult to reproduce and there's patients on the other side waiting for the therapy. And gene therapy can be upwards to [ $1 million ]. So it's a really, really big issue to ensure that these are delivered at the right conditioning and in time. If you look at Slide 8. Inside to Cryoport is our chain of compliance. That's a very, very critical piece to the cell gene therapy space in our belief and really marks our leadership in this industry. This chain is important for regulatory reasons and for risk mitigation. Risk mitigation is a very, very key aspect when it comes to the supply chain of cell and gene therapies. Every 1 of our shippers has its own ID. Every 1 of our SmartPak condition monitoring system has its own ID. Really, everything that we use more than 1 has an ID that is attached to it for its entire life. So I can pull any shipper out of the inventory and tell you where it has been, who it was shipped for, what was inside, how the shipper performed during transit and when it came back to us, who preferred the validated cleaning and so forth. So a very, very critical and a big differentiator to any other solution in the market. All that traceability is inside our Cryoport Software System. If you don't use Cryoport and a cryogenic package shows up at your door, you don't know where it has been. You don't know what was inside of it. You won't even know if it had been properly cleaned before the use. Those risks are not something that our clients are willing to take. Now moving on to Slide 9. This is a really important slide to understand our revenue model. Especially our analysts spend a lot of time looking at the clinical trials, commercial therapies, expected approvals and how that translates into revenue for Cryoport. The left side of the slide shows our progress in growing the number of clinical trials that we support. The dark color represents North America; the light blue, Europe, EMEA; and the purple will be Asia Pacific region. On the right side breaks down our 582 clinical trials that we currently support into the phase. So we have Phase I, II and III and then ultimately, the commercial aspect of these therapies. Phase I trial and full run rate is probably $15,000 to $75,000 a year; phase II, $75,000 to $150,000 a year; and Phase III because of the [ extended ] patient population it's already $200,000 to $1 million annually. Again, at full run rate when all patients have been up and running, [ things ] that have been up and running and are being treated. These trials are important because we get written into clinical protocols, clients develop our SOPs I mentioned before based on our solution, and we have a very, very sticky, strong relationship with our customers. [indiscernible] customer vendor relationship, it's really a partnership with our customers. The larger revenue opportunity, of course, comes when the therapies are commercialized. We estimate that a commercial therapy can work somewhere between $2 million and $28 million annual revenue once fully globally around. Now I realize that's a large range. But it has to because if you look at some of the products and the addressable market, the number of patients can be quite small. The commercially approved product, the [indiscernible] therapeutics addresses a very small orphan market. At full ramp, we'll be on the small side and it doesn't have the potential lever to become a large revenue producer for us. However, we are supporting some trials that address very large markets, when you grow you become large annual revenue sources for Cryoport. If you think back to that slide that forecasted future therapy approvals between, 56 and 120 therapies commercially approved by 2027. You take the midpoint of 80 and you take a midpoint of our revenue of $15 million per approved therapy, you'll get to $1.2 billion of revenue. That may seem like a lot of approvals, but it's only about 14% of the current pipeline of 582 clinical trials and note also that we continue to add additional trials on a quarterly basis. If you move to Slide 10, not only do we work directly with pharma and biotech companies like the largest Amgen, Gilead, Bristol-Myers, we also work with the who's who in the CRO space and the CDMO space because there is a shortage of cell and gene therapy manufacturing capacity, having relationships with the outsourced manufacturing companies is vital. The manufacturers can focus on their core competencies while Cryoport provides logistics, Biostorage, Bioservices, et cetera. And I'll talk a little bit more about that in future slides. We are also looking to integrate with the manufacturers, such as with our global partner, Lonza, to provide fully integrated solutions to our customer base. If you look at Slide 11, here, we have a time line of our progress over the last 12 months. As you can see, we've been quite busy. This time line contains milestones for acquisitions. I'll talk about funding activities. We now have roughly about $635 million in cash and short-term investments one, present a strong balance sheet; two, obviously deliver organically; and three, continue down the path of M&A and also commercial approvals. We do a lot of forecasting inside of Cryoport, and we do it from the ground level. Every trial, every therapy. We have a lot of visibility in terms of the expectations our clients have in their commercial rollout as well as the clinical trials. We have quarterly business reviews with our customers for these forecasts. And we have to track adherence to those forecasts. So this is all critical, and I'll explain a little bit why that compelled us to embark on the acquisition of CRYOPDP at that time the third largest specialty courier headquartered in France. So if you move to Slide 12, CRYOPDP focused on life science, specialty courier solutions, temperature control solutions. They've won a number of awards over the last few years when we acquired them they were the third largest aside for [indiscernible]. We paid approximately EUR 49 million for CRYOPDP. For that, we received a company that produced about $42 million in revenues, was accretive, had a strong management team and a very strong global presence. It expands our total addressable market by providing technologies that reach warmer temperature ranges and by allowing us to capture first and last mile freight revenue. So if you look at Slide 13. Most importantly, CRYOPDP brought us 25 facilities in 14 countries. So this is a significant expansion of our platform. It was completed October 1, 2020 with very, very strong results since the acquisition as we reported over the last 4 quarters through the third quarter. So combined with Cryoport Systems, we now have 33 facilities in 15 countries. To put this into perspective, in the past, pre-COVID, it would cost us around $6 million, $7 million and take at least 6 to 12 months to get a single logistics that are up and running. Now we don't need to be like a Starbucks. We don't need to have a facility on every corner of the street. If you do a heat map of all where the manufacturers are, the biotech companies are, there are certain areas where we obviously want to have a presence on a global basis to support the global cell and gene manufacturing that's taking place. With the CRYOPDP acquisition, we instantly expanded our global network to cover most of those locations and we gained a profitable, well-run company. As I mentioned before, this was an acquisition that we've seen significant progress over the last 4 quarters, a significant departure from their past growth rates. So a very successful acquisition. Now if you move to Slide 14, it was somewhat of an unusual, I think, incident that we did 2 acquisitions at the same time and both closed on October 1, 2020 and both saw significant departures from that past very, very successful. So while we were in the process of acquiring CRYOPDP, we learned of the opportunity to acquire the largest global manufacturer of cryogenic equipment for the life sciences. About 8 years ago, we outsourced the manufacturing to our cryogenic [ viewers ] to the MVE, division of Chart Industries, obviously a U.S. public industrial company, and industrial gas company. We selected MVE because they are the best at cryogenic manufacturing, and they produce the highest quality products. By acquiring MVE Biological Solutions from Chart, we not only have vertically integrated, but we also have secured our future growth from inventory, expanded into cryogenic storage and play defense by keeping anyone else from acquiring MVE. Additional note, we have stated for years that our largest competition are companies that are trying to manage cryogenics together with all of their other temperature control logistics [indiscernible]. While most of those companies were buying from MVE. So the way we acquired our largest competitor too. But most importantly, they are the largest on a global basis, the largest manufacturer of cryogenic freezers solutions and cryogenic shipper solutions and they have a strong innovation pipeline. If you look at Slide 15, I'd like to explain a little bit where Cryoport is heading in 2022 and beyond. Today, we have 33 logistics centers. But in the future, key locations will be transformed into supply chain centers that provide Bioservices. So aside of the logistics that we're already providing, we will be providing biostores and Bioservices. The approved therapies that we are supporting today are autologous or personalized therapies. That is blood taken from a patient, sent to manufacturing, turned into the therapy and then sent back to patients. However, about 30% of the clinical trials that we support today are allogeneic or off-the-shelf. In fact, 30% of the 70 Phase III clinical trials that we support are allogeneic. When those therapies commercialize, the paradigm for delivery will change. With allogenic therapies, blood is taken from a healthy donor and then from there, the manufacturer creates a batch of therapies. Once that batch is created, we will ship it to the network of our global supply chain centers. We'll be storing our customers' approved therapies throughout our global network. Then once patients is identified, we will do the picking, packing fulfillment, kitting and then, of course, the logistics to transport the therapy to the patient at the point of care. Going to Slide 16, you just see 2 of the supply chain centers that we're opening now. One is in Houston, Texas, where we already have a footprint through our business unit, Cryogene. And then Morris Plains, New Jersey, again, another hub for biotech and life sciences that both will be opened early this year. And this is based on customer demand. And future build-outs will be based on customer demand. So a successful, we'll have the only global network to handle autologous and allogeneic therapies. If you look at Slide 17. We obviously aren't standing still in regard to our innovation pipeline and improving our products and services. Earlier this year, the Cryosphere and the Cryoport Elite shippers will hit the market. The Cryosphere is a cryogenic shipper and we have a patent pending for that, that is really revolutionary in the industry of cryogenics. One of the main issues plaguing all cryogenic shippers today is thermodynamics. Shippers tilted on it side, upside down, it may not maintain cryogenic temperatures causing the loss of product or the potential loss of product. The cryogenic [indiscernible] inside the Cryosphere, the engine, so to speak, is not shaped in the cylinder like all of the other traditional cryogenic shippers, but as a sphere weighted on the bottom and encased in a nearly frictionless environment. So no matter how the shipper is positioned upside down on its side, the cryogenic sphere is always upright securing the holding time, so securing and ensuring that the therapy maintains cryogenic temperatures through the duration of the logistics. This is critical as these therapies are expensive to manufacture, difficult to reproduce, and most importantly, a patient on the other end is waiting. If you look at the Elite shipper this is aimed at the dry ice or minus 80 Celsius temperature range for high-value materials. The shipper was designed, as an example of our consulting expertise, in conjunction with the gene therapy customer of ours that needed a more robust solution for their gene therapy that could not be shipped at cryogenic temperatures. This Elite shipper allows us to move to have a differentiated and more robust packaging solution for viral vectors and the segment of gene therapies that can be shipped at cryogenic temperatures. If you look at Slide 18, as you can see on the slide, 9 applications for commercial approval were filed by our customers in the first 9 months of 2021. We're expecting another 21 more Cryoport-supported therapies to file for approval in 2022. So when you start looking that, when you start modeling and you look at the slide I showed you earlier about revenue potential, this is a significant revenue potential that's unfolding for Cryoport over the next years. We obviously will be providing updated outlook when we report our Q4 and full year results in late February. As I mentioned, there's a lot going on. There's a lot of new news, a lot of new positive news. If you look at Slide 19, in February of 2021, we announced the initiation of our ESG journey. We have always thought of ourselves as a green company, but we never have disclosed any formal information in this regard. Our first step last year was to highlight some of the positive impacts Cryoport is making. And when we report our Q4 and full year year-end results, we'll give more details around the formal launch of our ESG program and sustainability framework. Think about getting it in place a foundation for this program. We're taking the serious. This is not a check the box. And we've seen actually a lot of good response from investors that wanted to understand the approach we're taking and how we're making impact in our industry. If you look at Slide 20, while we are primarily focused on supporting cell gene therapies, we do have the ability to help in the fight against COVID-19. To be clear, we are not supporting the logistics for the approved vaccine. However, we are supporting 36 clinical trials around the world. Most of those trials are cell-based therapies that are designed to treat patients that are in the hospital with COVID. And we don't expect this revenue to be significant. Certainly, this is not our core focus. But yes, we've missed to mention it since we are supporting this space as well. And for me, this just demonstrates kind of our leadership in temperature-controlled solutions we've been asked for advice and in many aspects of this. If you look at Slide 22, if you look back at Cryoport's history, until March 2017, we didn't have any international institutional ownership, and there wasn't 1 sell-side analyst covering us. Today, we are well over 90% institutionally held, including Blackstone owning over 10%. And we currently have 9 analysts covering us, and we're working on JPMorgan to cover us eventually. Corporate governance is important to us. EY is our auditor, Deloitte assists with SOX initiatives, and we're in good standing with the SEC. These are all the important aspects to us as we grow our company and build our reputation. If you look at Slide 23, on the left side of the slide, we are highlighting our excellent Q3 organic growth of 38% year-over-year. It was important for us to show after these 2 acquisitions in October 2020 to give investors a visibility how are we tracking organically, how are the acquisitions track. And on both sides, we're showing significant year-over-year growth, obviously year-over-year pro forma for the 2 acquisitions MVE Biological Solutions and CRYOPDP and organically. From our perspective, going into 2022, this is not all organic revenue, and we'll be looking at the additional acquisition candidates. The other thing I want to reiterate, when we did the acquisitions, We provided an aspirational goal of hitting between $650 million to $750 million revenues by year-end 2025. I want to reiterate that because it's important to understand the revenue potential that we now have with the combined group of companies that is focused on the cell gene therapy space and focused on supply chain outside of manufacturer. So anything supply chain related that's not directly related to the manufacturing, that's what we're targeting. If you look at Slide 24, we operate as a holding company. All of our operating companies operate independently, but cooperate and drive synergies. They all have their own leadership, revenue margin targets. And this is the best model for our business in this rapidly growing industry and provides us a good platform for future additional M&A. Slide 25, just to wrap this up, and then we'll move into the Q&A. Cryoport is the leading temperature-controlled supply chain company focused on primarily the cell and gene therapy space. We support the lion's share of clinical trials. The most commercial therapies now have a global network of 33 facilities and we own the largest cryogenic manufacturing company in the world. While we are forecasting a record number of therapies to file for approval this year, the cell and gene therapy space is expected by many to grow rapidly in the next decade, and Cryoport is well positioned to benefit from the growth today and for the years to come. This is an exciting opportunity for us. We are [indiscernible] it doesn't mean that we don't think in daily increments in quarterly results, but this is a long-term play. We always have and we'll continue to invest so that we can look in 5 years and 10 years to be the dominant player in supply chain for the cell and gene therapy space. So with that, I want to thank you for your attention. And Tom and I are ready to take any questions.

Thanks, Robert. That was a great overview. I guess starting with a few questions that just came over e-mail. First 1 is around Biogen's reimbursement news. What kind of impact does this have to expected revenues and ultimately what impact does it tell you -- or I'm sorry, what impact does it have for your [ neuro ] end market in general?

I'll take that. Let me give Robert voice a chance to rest. Getting over a cold and he made it all the way through, a great job, Robert. So we don't support Biogen's product. It's not a cell therapy. It has no impact on us at all. The reimbursement for CAR-Ts in general, is picking up steam around the world. Now in the United States, we have a DRG code for CAR-T therapies. So on that side, it's moving forward. So Biogen, no impact at all.

Got it. And the next 1 would be, how should we think about the competitive landscape, especially with the increased infrastructure push that came from COVID. Are there any logistical networks today or a lot more networks today than 3 years ago that can handle cold temperatures and presumably, would be from bigger companies. So does that mean M&A of smaller companies as a risk, especially if Pfizer buys them?

Great question, Casey. I'll start. Maybe Robert, you can tag in here. So COVID, most of the storage around that is minus 80 Celsius or warmer. Refrigerated, you can think of up to minus 80 Celsius. The bulk of what we're doing is minus 196 Celsius are cryogenic. So it's a much different temperature range. The cell and gene therapies are stored at minus 196. You're talking really a different kind of a network is what we're building out. And the reason why we're at minus 196 and this is important, cellular activity is still going on, unless you get below minus 150 degrees Celsius. So if you're shipping a cell therapy, warmer than cryogenic, warmer than minus 150, these cells are changing or the cells are dying in transit, and you don't want that, obviously, it affects efficacy and safety. So our network is quite differentiated to the networks that have been built out to handle the COVID vaccines around the world. Robert, do you have any other?

No, I think, look, this is a very dynamic market. It's fast growing. It's expected to grow a lot. So there's always a lot of questions around competition. My view is and our view is there's a lot of coop. You cooperate. We have partnerships with [indiscernible] with Thermo Fisher and others and some areas we compete. This is a growth market. We think we're obviously very, very uniquely positioned because of the fact that we've already captured the lion's share of clinical trials that gives us not only the revenue base and all that, but it gives us insight into where the industry is going, gives us insight into where they have weak spots, things that they need to have covered. So it's really something that we're leveraging to further build out our solution. And obviously, with the acquisitions, that gave us an ability to really accelerate some of the growth plans that we had. If you would have done it organically, we're taking a lot longer, and we were able to do that both with kind of revenue already accretive, good management team teams and now accelerate forward in building out that supply chain network.

Had a few more come in the e-mail here. How should we think about the financial profile on revenue and margins for the company for allogeneic versus autologous?

Look, it's a little bit different. It's not so much margins, not at this point, allogeneic therapies have not hit the market. So this is something that's going to develop over time. We're building out our Bioservices. What I can say is when we look at the revenue potential and you look at the allogeneic needs when it comes to Biostorage, Bioservice, kitting, packaging and so forth, it actually expands our revenue potential. At the upper end, we had somewhere around $20 million. Now we're saying it's about $28 million. So certainly, the revenue capture because of the expanded offering that we can bring to bear in this market is higher. But I can't really speak to difference in margins to us related to the 2 therapies. I think that's too early to talk about.

Any supply chain issues that may be worsened through Q4 here? And does that change your outlook to 2022? And then also any view on the allogeneic clinical hold lift?

Yes. Just real quick on the first part, there's no change. I mean, this is an exciting market. There's a lot of positive dynamics in those 3. When we talk to our clients, we see a lot of advancements. So we're very bullish about 2022 and beyond. I don't really see any changes there. In terms of supply chain, look, every company is to deal with some form of supply chain challenge. Now we are a supply chain company so you can bet on us being -- putting that front and center and addressing that. So I think we've already taken a lot of actions towards the end of Q3, during Q4 to mitigate supply chain risks. Now you still have elevated costs, whether it's transportation, whether it's for shipping specifically on the MVE Biological Solutions side. So there's some impact there. It can be a delay of a shipment. Things like that happen, but it's really not close to any of the challenges that a lot of other industries are experiencing and even companies within the life sciences are experiencing.

Got you. So moving to the 8 current commercial programs. Do you expect to see revenue from all of them in 2022? And which programs do you think will grow the fastest in terms of revenue next year?

Well, we don't want to give too much color on the revenue because it becomes a little bit of a confidentiality issue with our clients. We have to typically refer to what they publicly talk about in their expectations. But Tom, I don't know if you want to give a little bit of color just on a higher level.

Well, generally, I'd say all of them except ZYNTEGLO, which pulled out of Europe where it's approved should generate revenue in 2022. They're all commercially launched and going. That ZYNTEGLO product is due to file a BLA bluebird bio said that just yesterday, I believe, in their update. So we look -- hopefully, it will commercialize in late this year or early next year. But again, it's a small gene therapy market. It's not a huge driver of revenue for us. There have been a lot of our customers giving updates because of your conference, which is nice. 2seventy bio, the spin-off a bluebird yesterday predicted Abecma sales would double in 2022. So that's great to see. But overall, we expect to see more approvals, more filings and the continued ramp of all the therapies, not only in the United States, but EMEA, APAC as well.

That's helpful. On the geographic footprint side, it certainly changed as a result of CRYOPDP and some of the other bolt-on deals you've done. I guess at a high level, can you talk about where your footprint stands today and how that could change in the next couple of years and maybe where geographically you're focusing investment?

Yes. I think if you look, obviously, we have a very good geographic footprint as is already. CRYOPDP has a very, very strong footprint in Europe in all the key areas and in APAC, and they're building out the U.S. competencies. Now in addition to that, we did do some bolt-on acquisitions. So it's called tactical acquisitions with the strategic impact. Both of them this year were part of CRYOPDP. So 1 acquisition was Fargate in Belgium. The other acquisition was CTSA in Australia in April and May of 2021. This was to further expand into certain areas that we saw as critical based on our customers. Belgium because you saw some of the movement from the U.K. because of Brexit into the Benelux countries. And in Australia, because you had the large being approved, there's manufacturers, a lot of activity in Australia and further also expands our capabilities in the APAC region. In addition to that, we set a joint logistics centers between Cryoport Systems and CRYOPDP in Singapore, in Osaka, Japan. You look at recently announced relationship with Mitsubishi Logistics. And then obviously, China is a target as well. So you'll see more initiatives in that area to further bolster our global structure. But the other aspect is with that global structure that we currently have in place, certain locations will be transformed into supply chain centers. So offering the expanded capabilities of not only the logistics in specialty courier side, but also the Biostorage and Bioservices.

That's helpful. Maybe shifting to MVE quickly. I think you have record backlog there. What are you doing to enhance your capacity and the ability to kind of bring that backlog down a bit?

Yes, it's really 2 steps. Certainly, when you look at MVE before we acquired them. They had low single-digit growth rates that were noncore to Chart Industries coming out of the gate in Q4, they had very, very strong double-digit growth every quarter year-over-year. We have a very -- continuing very, very strong demand, very strong backlog. I will note this is not driven by COVID. This is driven by the overall need for cryogenic solutions and the advancements in the cell and gene therapy space. And I think the acknowledgment that there's not enough footprint out there. And so that's really driving [ us ]. So what are we doing initially, the initial steps are the optimizing flows. It's kind of the nuts and bolts, adding second shifts. In 1 case, we have manufacturing sites in Georgia, Minnesota and in China. In Minnesota we added weekend shifts. So that's kind of the first steps. I think the longer-term steps. But this is what we're talking about in the next couple of years is to look at also greater automation. So we're certainly expanding the footprint and we'll be making some investments in automation as well over the next years because this demand is expected to continue, and then we want to make sure that, like you said, we can bring some of the backlog down. Some of it is also related to just because of the overall view of supply chain, we have a number of clients that wanted to make sure they have their orders placed so that they get their product when they need it. So that has also contributed to the expansion of that backlog.

That's helpful. We're bumping up to the end of the second session. Maybe 1 quick last 1 here. So you just raised some more capital. I think the balance sheet has around $600 million in cash. Can you just talk about your appetite for M&A, what the pipeline looks like? And what sort of gaps in the portfolio that you can kind of fill organically here in the short to medium term?

Yes. We have in excess of $630 million in cash and short-term investments. after write-offs, we don't have to go to the market for organic growth or for our strong balance sheet. So M&A is certainly part of what we're doing. When I talked about our aspirational goals earlier, this is based on the current footprint, maybe some tuck-in acquisitions. It's not based on additional more strategic acquisitions. So there is a strong pipeline, and I'll let Tom talk about that because he's front and center on that, but it covers a broad range of areas within the supply chain. So we're not looking at it very narrowly as you can see by the acquisitions of MVE and CRYOPDP. We're looking at it more broadly, where is the cell and gene therapy space is going to be in 5 years from now or 10 years from now. What capabilities do we need to have to be the dominant player in this industry. Tom, do you want to add to that?

Yes. Thanks, Robert, and well framed. We have a whole pipeline full of as our CEO calls on prospects and suspects it's packaging, it's transportation, it's information technology. Many people kind of overlook that. It's really -- once that therapy has been approved or manufactured, what happens next? So what happens next phase is where we're focused. And on the other side of it, how does it come into the manufacturing side. So that's where we're looking at when you think the supply chain. But we are sticking to our discipline just because we have $630 million, we're not just throwing it out there. It got to be accretive, well-run, cultural fit. We ideally want the management teams to stay in place. We're not going to try to turn around something or fix something out of bankruptcy. That's not it at all. We want to take best-in-class well-run companies and add them to ours and make them grow even faster.

Got it. Well, it looks like we're out of time. This is a great overview. Thanks, Robert and Tom, and enjoy the rest of the conference, everyone.

Thank you, Casey. Thank you, everyone.