Cryoport: Upping 2020 Price Target From $14.50 To $20.00 (CYRX, Buy, $6.89)

Overview

Before reading this report, I would suggest reviewing my initiation report on Cryoport of April 12, 2017 and my update report of July 19, 2017. Without information contained in these reports, it might be difficult to put my comments in this note in perspective. Based on new guidance from CEO Jerry Shelton, it appears that my revenue estimates for logistics sales derived from support of commercial CAR-T products from Novartis and Kite in 2020 of $3.5 million is extremely low and that $19 million be a better estimate. As a result, I am raising my 2020 price target from $14.50 to $20.00 and reaffirming my Buy on the stock. The party appears to have only just begun.

 

New Guidance from CEO Leads to Increased Sales Projections

Cryoport announced today that it had been selected by Novartis to provide logistics for NVS’ lead CAR-T product tisagenlecleucel (also known as CTL-019) upon approval. I can’t imagine that tisagenlecleucel will not be approved on or before its October PDUFA date following the unanimous recommendation for approval at the recent FDA Oncologics Drug Advisory Committee meeting and the breakthrough therapy status accorded it by the FDA. The Novartis decision is in no way surprising as Cryoport provided logistics support in the phase 2 pivotal trial and if you have followed my analysis, you will know that I believe that it is extremely unlikely (nearly impossible) that Novartis would even think about not using Cryoport in the commercial phase. The logistics services provided by Cryoport are part of the CMC section of the BLA filing and changing to another provider might (probably would) require a new bridging trial to demonstrate that such a change would not alter product characteristics. Obviously this is not going to happen.

The press release of July 25th covering this announcement did not go into much detail. However, CEO Shelton later commented in a Bloomberg interview that he believed that the upcoming launch of tisagenlecleucel in pediatric r/r ALL would lead to $8 to $10 million of global revenues for Cryoport when fully launched. I assume that fully launched refers to when tisagenlecleucel hits peak sales potential. Pediatric r/r ALL has a small addressable market of 650 or so patients in the US. These patients are in a life threatening situation and there is no other viable drug alternative. Comments in the recent AdCom meeting suggested that tisagenlecleucel may be able to cure 60% of these patients. Given the small number of patients and amazing efficacy, I think that the market can be quickly penetrated so that peak sales of in the US might be reached in 2 to 3 years with the rest of the world perhaps taking a little longer.

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Comments

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Dick Kaplan 2 years ago Member's comment

SmithOnStocks, the link to your "initiation report on Cryoport" doesn't work. It's requiring a login.

Alpha Stockman 2 years ago Member's comment

The link works, but it looks like it is only viewable by his paying subscribers.