Shares of CYRX have been the best performer in the Tailwinds Select Portfolio. Since we initiated coverage on March 28, 2017, the shares have increased 133%, going from $2.09 to last night’s closing price of $4.86.
With the substantial share price increase, Cryoport has become the largest piece of the Portfolio, giving us almost double the exposure of the 2nd largest component of the Portfolio. Based on this huge outperformance relative to the rest of the Portfolio, and the overall market, it begs the question of what to do with the position???
When we initiated on CYRX and bought our position, the target we had in mind for the company was $10 a share…sometime in 2018. We now have more confidence than ever in this target being reached and possibly exceeded. This confidence comes from the Company’s ability to land more trials every quarter, as well as the success that the first movers on drug development in personalized therapies are seeing. As a result of this, we now believe the market for Cryoport’s services is larger than expected and will be coming sooner than expected…It’s a perfect storm for this industry with CYRX a prime beneficiary.
There are several catalysts coming for Cryoport, starting today with the FDA Panel Review of Novartis’ CAR-T therapy, CTL-019. Looking out a little further, we expect Novartis to get final approval on this drug by the end of summer and for Kite Pharma to have approval for their CAR-T therapy by year end. We also expect as many as 4 more BLAs could be filed in 2017 on products for which Cryoport would be the ideal logistics partner.
It’s important to note that each approved drug should result in shipping/logistics revenue to CYRX of $2-20M dollars. For a Company on a run rate of just over $10M in 2017, this would drive tremendous growth. We saw a sample of this in Q1, just on the back of the numerous Phase III trials that Cryoport is delivering…we expect to see another numbers beat when they report their second quarter results in August.
At Tailwinds we are keeping CYRX in the Tailwinds Select Portfolio despite the run-up in the shares. While the stock may consolidate here, and might even retreat on a technical basis, we would view any weakness as a buying opportunity for those who missed the last move and are scared to be too aggressive here. This Company truly is sailing with a major tailwind and we are going to let this further run its course before taking our profits.