Cryoport, Inc.
Q3 2016 Earnings Call Transcript

Published: 14 Mar 2017

[Operator:]

Good afternoon, ladies and gentlemen. Welcome to the CryoPort's Quarter Ended December 31, 2016 Earnings Conference Call. Today's conference is being recorded [Operator Instructions] Now I'd like to turn the conference over to Mr. Todd Fromer , Managing Partner of KCSA. Thank you. You may begin.

[Todd Fromer:]

Thank you, operator. Good afternoon, everyone, and thank you for joining us today for CryoPort’s quarter nine months ended December 31, 2016 earnings conference call. Please note CryoPort has changed its fiscal year end to December 31 to align CryoPort's business calendar with that of its clients in life sciences industry. Therefore the nine months period ending December 31, 2016 constitutes the abridged fiscal year from April 1, 2016 to December 31, 2016. 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 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. For those of who you that have dialed in by phone, there is a slide deck to accompany these comments which can be found on the event page of the investor relations section of the company's website cryoport.com. I would now like to turn the call over to Mr. Jerry Shelton, Chief Executive Officer of CryoPort. Jerry, the floor is yours.

[Jerry Shelton:]

Thank you, Todd. And good afternoon, ladies and gentlemen. Thank you for joining us today. With me this afternoon is our Chief Commercial Officer, Dr. Mark Sawicki, who will later during this call; will provide you with an update on the progress we are seeing in the biopharma market. And Robert Stefanovich, our Chief Financial Officer, who will present our financial results. We closed 2016 on a very positive note with revenues for the quarter ended December 31 up 53% year-over-year. During the quarter we experienced strong revenue momentum across all three of our target markets, biopharma, reproductive medicine and animal health. Biopharma revenue was the primary driving force behind the strength of our performance with the 58% year-over-year growth rate. For this reason and in keeping with our strategy the primary focus of this call will be the continuing positive outlook in the biopharma market. Revenue from our biopharma clients accounted for a record 69% of total revenue in the quarter ended December 31, 2016. We secured 30 new clinical trials during that quarter. In addition to adding several new master service agreements with leading companies in regenerative medicine market. We also expanded service agreements with Kite Pharma scenario and others. The biopharma market is undergoing a revolutionary stage in its development as groundbreaking scientific advancement within regenerative medicine are bringing these ambitious new approaches to medical treatments closer to market. Advances in cell biology, immunology and related fields are creating new opportunities to develop novel therapies that produce treatments using once own immune system to fight cancer or fully regenerate tissue or cells that have been damaged by disease, trauma or congenital issues. For patients this means the potential to fully cure or significantly change the course of life threatening or chronic diseases. This medical paradigm shift that is underway today is a shift from current palliative treatments that address symptom through a focus that is curative and targeted on the root causes of illnesses. The aligns for regenerative medicine estimates that there are over 770 companies that are actively developing regenerative medicine or advanced therapies and at least 804 ongoing regenerative medicine clinical trials for variety of clinical indications. As these therapies reached commercialization most of them are required cryogenic logistic support in order to deliver efficacy. In that's a big part of CryoPort's future. The scale of this opportunity for CryoPort is very large and it is for this reason we started focusing our sales strategy on the biopharma markets some 18 months ago. Our role is to provide cryogenic logistics including storage, distribution and information which is the only effective method that will ensure the efficacy of a biologic product to yield therapeutic benefits. For regenerative medicine companies, cryogenic logistics is now a strategy concern in the design and implementation of clinical trials and the delivery of commercial products. Cryogenic logistics requires proactive reliable monitoring since in almost all circumstances is temperature excursion can affect the efficacy of the therapy. For regulatory business and scientific purposes, this data collected must be stored and in used for validating the condition of the subject commodity. CryoPort is unique in its cryogenic logistics solutions in that it delivers all these services via advanced technologies, operating procedures and quality assurance programs. Traditional logistics services are wholly inadequate in addressing this complex, real time needs of these new groundbreaking therapies. During the quarter ended December 31, the Moffitt Cancer Center, a prominent leader in cancer research, selected CryoPort to support its immunology cancer research and therapy programs. Moffitt is ranked sixth of US news world --on US news world reports annual list of best hospitals for cancer. Moffitt management credited our advanced, round the clock real time monitoring and tracking capabilities for biologic commodities shipments as well as our demonstrated intervention capability to mitigate logistics go risk in transit as the primary reasons they selected CryoPort to be their logistics partner. Another client Gradalis extended its use of CryoPort solutions and support of its clinical trial for its product Vigil, an investigational cellular immunotherapy technology. CryoPort is supporting Gradalis' phase II, III trial for higher risk stage III and IV ovarian cancer patients and its trial for Ewing's sarcoma. CryoPort was also recently chosen by ProMab Biotechnologies to provide advanced cryogenic logistic solutions to support the development of its CAR-T gene therapy for use and research and preclinical studies. CAR-T gene therapy is an exceptionally promising field of immune therapeutic alternatives for the treatment of cancers. With development activities and manufacturing house both in United States and China, ProMab will employ CryoPort's cryogenic logistic solutions for the movement of biologic materials throughout China. In China, there are an expanding number of companies and institutions making significant investments in immunotherapies including CAR-T cells. The global nature of our client agreements demonstrates success of our strategy to position CryoPort as a market leader in biopharma worldwide. I also want to bring attention to the achievements of Kite Pharma, pioneer in cancer immunotherapy. Kite recently announced exciting top line data for its lead CAR-T cell candidate for use in tough to treat patients with rare forms of blood cancer. Within the remainder of 2017, Kite anticipates FDA approval and the launch of its therapy KTE-C19. Reports are that this solid response rates paved the way for possible approval this year. In 2016, CryoPort expanded to support a clinical trial for Kite and currently support all seven of Kite's clinical trials for their further and clinical stage therapies. We are proud to be a trusted partner with Kite in supporting its progress towards advancing novel immunotherapy treatments. Kite is the first company in the regenerative therapies place who filed the VLA application which is a request to the FDA for permission to commercialize a biologic product. We view this is an exciting beginning for the industry. 2016 was a crucial year for us from a technology perspective as we began important systems upgrade within our infrastructure, launch new products and further ensure that our solutions provide the most reliable and advanced technology in the industry. This is a part of our ongoing R&D strategy which provides us with the ability and both technology and infrastructure to take on even the most complex support agreements with confidence. This is specially important as biopharma companies are increasing investment dollars as they advanced to later stage trials for our advanced dependable, comprehensive logistic solutions are in demand. We are happy that we've been able to achieve such a strong foothold in the regenerative medicine market, as well as the broader biopharma industry. We believe it is a co-vertical that holds tremendous opportunity for CryoPort. In 2017, we expect revenue growth as a result of the 129 clinical trials we currently support, 18 of which are in phase III. On further considering the possible commercial launches during 2017, we have the potential of a very good year. I'd now like to make some brief comments about our animal health and reproductive medicine markets. For the nine months ended December 31, 2016, our revenue from animal health decreased approximately 3% year-over-year. However, we saw signs of improvement for the end of the year and for the three months ended December 31, 2016 we are reporting a 23% year-over-year increase in revenues. We think we have a significant opportunity for growth in the animal health market in 2017. In January, CryoPort was chosen by the Jackson Laboratory to support its Cryopreservation group. Once we are fully onboard we expect 600 to 1,000 shipments annual to be completed from its site in Bar Harbor, Maine and Sacramento, California. CryoPort's reputation for reliability and safety were critical for Jackson Laboratory when deciding to entrust us. Revenue from the reproductive medicine market increased 20% for the nine months ended December 31, 2016. And for the three months ended we had a 52% year-over-year sales increase. In late 2016, we began to launch our CryoStork Next Flight cryogenic logistic solution for the reproductive medicine market. CryoStork is the fastest solution in the market for reproductive health patients providing express transportation across the United States for human sperm, eggs and embryos. We believe CryoStork will become a primary method of delivery for the reproductive medicine market within the next few years. Many couples struggle fertility problems, in fact approximately 6.7 million women in the United States are unable to have a child for the American Society of Reproductive Medicine. We expect our CryoStork Next Flight out solution to be a winning solution as we continue to drive growth in this market. Now I'd like to turn the call over to Mark Sawicki, our Chief Commercial Officer to give you an update on the trends we are seeing in the regenerative medicine industry with the focus on how these may affect CryoPort. As a reminder, please hold your questions for Mark until the question-and-answer period. Mark, floor is yours.

[Mark Sawicki:]

Thank you, Jerry. It is a pleasure to have the opportunity to speak with you today. As you know, we cover three markets in life sciences. Biopharma, animal health and reproductive medicine. And as we have reported over these last quarters, our focus has been on the biopharma market. Therefore, my objective for the call is to provide you with synopsis of CryoPort's progress within this market, specifically within regenerative therapy. I also want to provide more detail surrounding the business impact of CryoPort's recent client announcements and how they fit in our strategy as we engage the market and drive revenue in our current fiscal year. We believe biopharma and more specifically regenerative medicine represents the future of healthcare. There are now 804 clinical trials which includes 68 Phase III programs involved in gene and cell therapies worldwide. It is worth noting that the recently passed United States 21st Century Cures Act optimizes the approval pathway for regenerative medicine within the FDA. Including priority review and accelerated approval processes demonstrating its importance within the industry. This is a time when the industry anticipates several commercial filing and/or launches during the current year which includes Kite's KTEC-19, Spark therapeutics for antigen [napa wake, Novartis CTL019, TiGenix CX601 and Kiadis Pharma's ATIR101. Many of which CryoPort is actively supporting. Commercialization activity has been further reinforced by the $5.3 billion raise in 2016 for information from the alliance for regenerative medicine. This includes over 9 ITOs and announced collaborations such as Biogene and the University of Pennsylvania, acquisitions such as Pfizer's purchase of Bamboo Therapeutics and licensing agreements such as Takeda and TiGenix collaboration on CX601. Cryoport continues to be very active in client engagement in the space as we are now recognized as a critical component to successful implementation of clinical trial and commercial launch strategies. As of today, we've expanded the number of clinical trials we support to 129 which includes 18 Phase III trials. Of these 129 clinical trials, 111 are in the regenerative therapy space and represent approximately 14% of the total clinical market for regenerative medicine. This is an increase of 43% over the last nine months, which indicates rapid progression in therapy development as well as CryoPort's growth. The 18 Phase III trials we now account for represent 26% of the Phase III pipeline which coincidently represents a 28% increase in Phase III trials for CryoPort over the last nine months. Additionally, we are now actively supporting one commercial program, have been selected as primary cryogenic logistics provider for three late stage Phase III programs which are tracking towards commercialization, and if progression takes place as anticipated adding at least another four additional Phase III programs to our support portfolio over fiscal year 2017. Of the 18 Phase III programs, we are engaged in commercialization discussions with several of these companies regarding their respective commercial launch requirements. Three of which have already awarded to CryoPort. In addition to the regenerative therapy space, CryoPort has been successful in landing large pharma support projects supporting their worldwide biologics manufacturing. We were recently awarded two global program support contracts in addition to projects already supported. These are significant wins and will take time to onboard and implement. They entail each client dissolving its own cryogenic fleet and shifting all cryogenic logistic support to CryoPort. Finally, we've conducted a comprehensive review of our business and client engagement practices, improving our go-to-market business model for existing and new clients. Through our cost and innovation culture we are actively transitioning our current client base to our enhanced business models which will of course provide accretive benefits to our revenue as we continue to set the leading phase in the development of the most dependable, advanced services and temperature controlled logistics for the life sciences. And with that I'll turn the floor back to Jerry.

[Jerry Shelton:]

Thank you, Mark. And now for discussion of our financial report for the quarter, I'd like to introduce our Chief Financial Officer, Mr. Robert Stefanovich. Again, please hold your question for Robert until the question-and-answer period. Robert?

[Robert Stefanovich:]

Thank you, Jerry. Good afternoon, everyone. I'll now review the financial results for the quarter and nine months transition period ended December 31, 2016, provide some additional comments, and then turn the call back over to Jerry. Before I delve into the results, I wanted to remind you that we have changed the company's fiscal year-end from March 31 to December 31. This decision was made to align CryoPort's business calendar with that of the majority of our clients in the life sciences industry and for ease of reporting. As a result of the change, CryoPort’s quarterly reporting periods will be comprised of the calendar months ended March 31, June 30 and September 30. Now year-end beginning this year will be December 31. Today, the company filed its Form 10-K for the transition period from April 1, 2016 to December 31, 2016. For the purpose of this all, we are reviewing the audited nine months period ended December 31, 2016 with the unaudited nine months ended December 31, 2015. Moving to the nine months results. Our net revenues for the nine months period ended December 31, 2016, were $6.1 million, an increase of 41.5%, or $1.8 million, as compared to $4.3 million reported for the same period in 2015. The biopharma market continues to be the leading driver behind our current revenue growth. Revenues in the biopharma market increased by 60.4%, or $1.6 million over the prior-year to $4.3 million for the nine months ended December 31, 2016, driven by overall increase in the number of clients utilizing the company’s solutions, complemented by growth and frequency from our current clients. During the nine months ended December 31, 2016, we added 89 new pharmaceutical clients and currently support 129 clinical trials of which 18 clinical trials are in Phase III, representing what we believe to be significant revenue potential to CryoPort moving forward. Revenue in the reproductive medicine market increased by 20.4% to $1.2 million for the nine months period compared to the same period in 2015. This increase was primarily driven by revenue growth in the United States market of 46.3%, and partially offset by a decline in international markets of 2.3%, which continues to be impacted by restriction on reproductive tourism in certain Asian countries. Our revenue from the animal health market was $633,000 for the nine months ended December 31, 2016, representing a 3.3% decrease over the same period in 2015. This was due to a reduction in shipping volumes from one of our larger clients in this market. Gross margin for the nine months ended December 31, 2016 was 41%, or $2.5 million compared to 30% and $1.3 million compared to the same period in 2015. This improvement reflects several management initiatives to drive margin growth towards our target of 60% as we grow the business and benefit from economies of scale. The improved gross margins was driven by both increased business volume and pricing adjustment. Operating expenses increased by $1.2 million or 16.7% to $8.7 million for the nine months ended December 31, 2016, as compared to $7.4 million for the same period in 2015. A continue portion of our operating expense is non-cash stock based compensation. Overall, the increases in salaries and associated employee costs incurred to expand the sales and logistics force, and complemented then increased in non-cash stock based compensation expense. Net loss attributable to common stockholders for the nine months period ended December 31, 2016, was $10.4 million, or $0.68 per share, compared to a net loss of $12.3 million, or $1.96 per share for the same period in 2015. Now moving to our three months results. For the quarter, net revenues increased by $770,000 or 53% to $2.2 million for the three months ended December 31, 2016, as compared to $1.5 million for the same period in 2015. This growth was driven by an overall increase in the number of clients utilizing our solutions, complemented by growth in current clients. Revenues in the biopharma market increased by 58.4% over the prior-year to $1.5 million for three months ended December 31, 2016, driven by an overall increase in the number of clients utilizing our solutions, complemented by growth from our current clients. We added 30 new clinical trials during the December 2016 quarter. Revenue in the reproductive medicine market was up by 52% over the prior-year, and increased to $465,000 for the three months ended December 31, 2016. This increase was driven by revenue growth in the U.S. market of 68% and growth internationally of 34% year-over-year. Our revenue in the animal health increased 23% to $218,000 for the quarter compared to the same period in 2015, due to an increase in business margin from one of our clients during the quarter. Gross margin for the three months ended December 31, 2016, was 42% or $941,000 as compared to 26% or $384,000 for the period in 2015. The increase in gross margin was primarily due to the economies of scale from increased business volume and pricing adjustment. Operating expenses decreased 4% or $120,000 for the three months ended December 31, 2016 as compared to the same period in 2015. This increase is primarily a result of one time write off of capitalized cost of $98,000 in 2015 and the capitalization of software development cost in 2016 to further enhance our Cryoportal logistics management system. General and administrative expenses as well as sales and marketing expenses were flat at $1.7 million and $ 1.1 million respectively for the quarters ended December 31, 2016 and 2015. Interest expense is decreased $62,000 for the three months ended December 31, 2016 as compared to the same period in 2015 due to a decrease in the amortization of debt discount from related party promissory notes. Net loss attributed to common stockholders for the three months period ended December 31, 2016 was $4.3 million, or $0.25 per share, compared to $3 million, or $0.42 per share in the quarter December 31, 2015. We reported $4.5 million in cash and cash equivalents as of December 31, 2016, compared to $2.8 million for the fiscal year ended March 31, 2016. During the quarter, we received approximately $3.7 million in gross proceeds from warrants tendered and exercised in connection with our previously announced warrant exchange offer that we completed on October 28, 2016. Lastly please we filed our Form 10-K for the transitional period from April 1, 2016 to December 31, 2016 with the SEC today. With that I'll turn back to Jerry. Jerry?

[Jerry Shelton:]

Thank you, Robert. I'd like to thank all of our loyal, long-term shareholders for your continued support during this exciting time in the development of our company. We believe the steps that we are taking to develop CryoPort's services, technology and brand are positioning us to continue to scale our temperature controlled logistic solutions and services for the life sciences and especially the rapidly growing biopharma market. As we continue to add significant numbers of clients to the biopharma market, our reputation as the go-to-company for advanced, dependable cryogenic logistic solutions for the life sciences is growing. As a result of our unique position in the regenerative therapy space, we have a unique view on the activity and progress in this market. That is we can actually see the activity pathway to commercialization and the formation of a new industry. Consequently, we have decided to share our view with the biopharma industry, the financial markets and others who might have an interest. To this end, we are launching the CryoPort Biotech Regenerative Therapy Activity Index which will be known as the CoBRA Index. Now for the first time, clinical trial progress and the regenerative therapy space is quantified into a ground breaking index. I encourage you to visit cobra-index.com to learn more. In closing this call, I'd like to say that I am immensely proud of my colleagues who tirelessly worked individually and collectively to improve CryoPort daily. As a result, our company has never been in better shape. From our research and development team who upgrade and then maintain our technologies to world class standards through our operations and logistics team who cut through the most complex of problems to make it look easy. To our sales and marketing team who have forged new client relationships and expanded existing ones, to our Board of Directors who continuously flutter the interest of our shareholders, I extend my sincere gratitude. Thank you for joining us on this call today. Now, I'd like to turn the call back to the operator for your questions.

[Operator:]

[Operator Instructions] And our first question comes from [Lynn Yati from Static Partners] Please go ahead.

[Lynn Yati:]

Thank you very much and thanks for that overview. I was fortunate to be able to attend the Cowen and Company Healthcare Conference this past week. And two of the doc panels were on CAR-T immunotherapies and the docs were as you have seen with advances more excited than they have been before on Kite's regimen for DLBCL Novartis for pediatric ALL and Kite in their company presentation spoke about their expectation to be on the market no later than next year. And they talked about the size of the market and how they scaled up the facility near the LA airport to ease logistics and they talked about the proprietary nature of several in the company's involved in logistic chain. And I was just wondering if you could discuss for us either on a revenue per patient basis what you would expect to realize as being involved as the cryo shipper or on a total therapeutic basis so that as we get a sense from these various companies as they are getting to closer commercialization what the patient population are that they expect to treat, what the revenue that would have accrued to CryoPort could possibly be? Thank you very much.

[Jerry Shelton:]

Lynn, thank you for that question. Kite is definitely a very important client. And we anticipate that there LA being approved and certainly they are anticipating thousands of clients. But I am going to turn that question to Dr. Sawicki as he is actually closer to the ground on that question and perhaps can give you a bit more detail and color than I. Dr. Sawicki?

[Mark Sawicki:]

Thanks, Jerry. Hi, Lynn, how are you? Obviously we can't discuss financial aspects of a given contract with the client. I think that we have put forth projections from our perspective based on the given phase or average phase of a given trial or program. And in that data itself what we projected is traditionally and it's obviously depended on the breadth of the commercial launch and the anticipated patient population but our expectation that a commercial launch could support anywhere between $2 million and $20 million a year number depended on how mature and broad that patient sample set is. Obviously, we can't comment on any data that Kite has given in regards to commercial launch projection. But I think that's a reasonable goal to look at from our first phase. I wish I could give you more data but I just can't, eventually cannot at this point.

[Operator:]

[Operator Instructions] And our next question comes from Brian Marckx from Zacks Investment Research. Please go ahead.

[Brian Marckx:]

Hi, guys. Congrats on the progress and the financials everything. Looks pretty good and exciting going in 2017. On Kite, anything more that you can talk about Jerry or Mark in terms of what your role will be in terms of commercialization obviously of course assuming if they do -- get approval and launch.

[Jerry Shelton:]

Go ahead Mark.

[Mark Sawicki:]

Yes. I was going to say it's very simple, Brian. At the end of the day CryoPort is responsible for ensuring the integrity of the commercial product that's being distributed out to the patient themselves. And so every patient that obviously is being dosed will be transported in a cryogenic state. So it will be -- so there is a very direct relationship between what their successful enrollment and obviously the breadth of our role in that commercial rollout.

[Brian Marckx:]

Mark, you used the word enrollment. So we are talking about commercialization right.

[Mark Sawicki:]

Correct.

[Brian Marckx:]

So we are talking after the product is already launched, right.

[Mark Sawicki:]

Well, I mean we are still -- I mean we are doing the same thing in the clinical at stage which is supporting obviously the patient distribution, their clinical materials. So it's in essence similar nature, just patient population obviously is radically different and the regulatory scrutiny and barriers that are required to support a commercial product versus a clinical product create obviously other space for additional revenue so to speak and additional requirements and need.

[Brian Marckx:]

Okay. So is your agreement with Kite right now that you will support the commercial product or is it -- you are supporting clinical trials now and there is a potential that you will support the commercial product once launched.

[Mark Sawicki:]

Well, I can't disclose anything that hasn't been publicly released but we have and continue to support everyone at their clinical programs. And if you obviously review the text of our conversation today I think it gives you an indication is to our expectation in that area. I can't say more than I think at this point.

[Brian Marckx:]

Yes, that's helpful, appreciate that. You guys have talked about relationship with Bristol-Myers in the past. Is there anything else that you can talk about that I think in the prior call you were undergoing some regulatory requirements and some other aspects, if you kind of just update us on that that would be great.

[Mark Sawicki:]

Sure. Happy to, so any of these development or programs in which you assume responsibility for a commercial product, there is a whole cascade of these regulatory hurdles you have to jump through. And with each of those you obviously start to see an increase in the responsibility and support element that you get out of any given relationship. And so Bristol-Myers relationship itself, we are making steady progress through that process, this typically takes a year is what we've seen on average. So that announcement was disclosed last June I believe it was or July in that timeframe. So I think that from our perspective that is a consistent with our expectations in regards to seeing a complete implementation. And then we have two other programs similar nature to that which we just won which Jerry alluded to on the call and I think Jerry is comfortable with that he can disclose who those two partners are. And they are also top 10 pharma. Jerry you want to give a little color on those.

[Jerry Shelton:]

Or you want me too? Yes. We don't have an announcement on this yet there. And we will a bit later on but the first one was Sanofi and supporting one of their operations in one of their therapies. And then second one is Johnson and Johnson Company and we are very excited about those. And there will be more coming out as we move forward but that's the two I referred to.

[Brian Marckx:]

Okay. Do you think you will identify the specific programs from those two in the future as well?

[Jerry Shelton:]

We well, later on, we certainly will.

[Brian Marckx:]

Okay. Mark, while I have your attention you guys had conducted a study with KCAS and Heat Biologics recently that seemed to demonstrate the importance of having a reliable cryogenic shipper and logistics. Given the fact that your customer base is life sciences and drug adoption and utilization is based on clinical data. So that's pretty much the language that they speak. Is there any intention that you guys have to may be built on that data to use as additional marketing support?

[Mark Sawicki:]

Yes, absolutely, in fact we are -- I am sorry Jerry.

[Jerry Shelton:]

Mark, excuse me before you delve into that answer I want to just preface it a little bit, Brian. That you -- one really needs to recast that work that we are doing. I mean the work that we did with the Kansas City Laboratory and with the Heat had to do with our first steps in scientifically including some of the science into perspective around the importance of proper logistics. So it wasn't just improving we had a good vessel or we had a good this or that, it was the total concept that we were in the sciences behind what we practice and what we do that actually protects and enables therapies to get to market with efficacy. Because there is much more to it that meets the eye. So this was just a first study and we do intent to more of that kind of work as proof but it is certainly in keeping with the advancement of biology in general. So, Mark, I just want to add a few senses or so please proceed.

[Mark Sawicki:]

No. You are absolutely right, Jerry. So, Brian, the shorter answer is yes. We do have specific plans to expand upon the research that's been conducted. And in fact we have two of our folks out at the society for toxicology meeting who have actually presented that data conjunction with Kansas City Analytical Services earlier today to better highlight it. The market response to that data has been very, very positive. In fact, we have multiple large companies that have asked to in essence to do some co development or co-study in conjunction with some of their strategic planning around materials management, around their clinical program. So we would anticipate that we will see more joint efforts in line with the Heat, KCAS program in this fiscal year.

[Operator:]

[Operator Instructions] And if there are no further questions, I would like to turn the floor back over to management for any closing comments.

[Jerry Shelton:]

Well, we like to thank you all for listening to the call today. And thank you all for your support.