Welcome to the Cryoport first quarter 2023 earnings conference call. Our host for today's call is Todd Fromer, KCSA. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the call over to your host, Todd Fromer. You may begin. Thank you, operator. 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, but not on information currently available to our management team. Our management team believes that 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 or 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 experience 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. It is now my pleasure to turn the call over to Mr. Jerrell Shelton, Chief Executive Officer of Cryoport. Jerrell, the floor is yours. Thank you, Todd. Good afternoon, ladies and gentlemen. We appreciate you joining our earnings call today. With us this afternoon is our Chief Financial Officer, Robert Stefanovich, who is joining us remotely as he just discovered he had contracted the COVID virus, and our Chief Scientific Officer, Dr. Mark Sawicki, and our Vice President of Corporate Development and Investor Relations, Thomas Heinzen. As a reminder, we have uploaded our first quarter 2023 in review document to our website. It can be found under Investor Relations in the Events and Presentation section. This document provides a review of our financial and operating performance and a general business outlook. If you've not had a chance to read it, I would encourage you to go to the website and download it. I'll provide a brief update on the business, and then we'll move on to your questions and our answers. Cryoport reported first quarter results today with revenue of $62.8 million. This represents top line growth of 20% or 22% at constant currency, which was fueled by continued demand for our temperature control supply chain solutions for the life sciences. We achieved double-digit growth in each of our markets, including biopharma, reproductive medicine, and animal health. We continued to produce consistent growth in biopharma, with revenue increasing 19%. The regenerative medicine market continued its momentum in 2023 and drove commercial revenue growth of 28% for the first quarter. Patient demand has been robust in cellular therapy and continues to outpace commercial cellular therapy supply, which is restricted by the industry's current manufacturing capacity constraints. Having said that, we continue to see biopharma companies and CDMOs working to increase capacities. For example, Kite Pharma has announced plans to expand its global cell therapy supply chain operations located in Frederick, Maryland, with a 70,000 sq ft warehouse adjacent to its existing facility for the purpose of centralizing its raw material storage and testing. As industry manufacturing capacities increase to meet demand, Cryoport is in an excellent position to benefit from the anticipated growth in the cell and gene therapy industry with our advanced temperature control supply chain solutions, as well as our continued investment in new technology and facilities to support this demand. Turning to animal health, revenue increased 30% year-over-year. This growth was driven by the rising animal population, increased demand for animal protein, and increased ownership of companion animals in developed and emerging markets. These favorable trends are driving greater demand for therapeutic innovation in this industry. We're seeing higher activity from top global animal health pharmaceutical companies. Cryoport is well-positioned to serve the supply chain needs of this industry. We believe animal health is a solid market and has significant growth potential for the future. We also see significant growth potential in the reproductive medicine area which grew 12% for this quarter. This market is primarily driven by IVF technology advancements and a rising number of fertility clinics supporting increasing fertility across the globe due to demographic and environmental challenges to childbearing. Cryoport is strengthening its presence here. Our growth during this quarter was primarily driven by our continued progress in contracting with key reproductive clinic networks, as highlighted in our recent announcements regarding our support for Inception Fertility and Boston IVF. Cryoport Systems Reproductive Medicine Solutions, which are sold under the brand name, CryoStork, excuse me. Our financial performance for the first quarter reflected the strength and dedication of our team around the world. The saying goes, "You're only as good as your people," and at Cryoport, we believe that. The results also reflect the breadth of our diversified operations, the depth of our technologically advanced supply chain solutions, as well as the strength and potential of the end customers we serve. Looking to the months ahead, recognizing current manufacturing capacity constraints for cell and gene therapies and macroeconomic headwinds, we plan to continue our momentum through the remainder of 2023. We expect to benefit from attractive trends and medical advancements that are driving growth in the cell and gene therapy industry. As of the end of the first quarter, Cryoport supported 10 commercial therapies and a total of 652 clinical trials globally, with 82 of these in phase III. We expect up to an additional 18 anticipated application filings, 10 new therapy approvals, and an additional 11 label or geographic expansion approvals in 2023. We are a clear leader in the development of advanced therapy and advanced temperature control supply chain solutions for the life sciences industry, we intend to further enhance our competitive advantages by remaining at the forefront of innovation. Along those lines, we recently launched the Cryoportal version 2 logistics management system. The Cryoportal version 2 is a ISPE GAMP 5 validated solution, provides many new features and enhancements. In fact, to our knowledge, it is the first ISPE GAMP 5 validated logistics management system serving the life sciences industry. This month, we began rolling out our next generation Cryoport Elite shipper line, beginning with the Elite Ultra Cold. The ELITE Cryosphere will follow with introduction near the year-end. These cutting edge advanced therapy shippers will provide additional de-risking, longer temperature hold times, more advanced communication features, and new security controls for our customers. We're pleased with the early feedback on the launch of the Elite Ultra Cold. Customer feedback has been quite positive. Skytrax condition monitoring system, a revolutionary condition monitoring system, is scheduled for release by year-end. This sophisticated technology platform is a generational leap to an advanced condition monitoring system that supports temperature ranges from control room temperatures to cryogenic temperatures inclusively. Turning to CryoPDP, we continue to build out one of the world's most advanced global biopharma logistics networks. This includes increased build-out in the United States and further expansion in India, Ireland, Japan, the Philippines, Poland, and Spain. Cryogene our biostorage operations, will be expanding into the San Antonio and Philadelphia regions during the course of the year. In addition to these activities, we also continue to increase our growth prospects through other means, such as our partnerships with Syneos, which provides for integration with our new IntegriCell platform. This platform, that is IntegriCell, is intended to supply autologous and allogeneic cell therapies, a standardized apheresis collection process, and end-to-end cryopreservation services for leukapheresis derived therapies. We are very excited about IntegriCell and believe it has potential to be transformative for the cell and gene therapy industry. In summary, through our many actions, our teamwork, and our commitment to make sure that Cryoport can deliver the best solutions supporting temperature control supply chain solutions for the life sciences, which in turn support life-saving cell and gene therapies, Cryoport is stronger than ever before. I wanna thank you, and open the floor for questions. Operator, please open the lines. Thank you. If you would like to ask a question, please press star one on your telephone keypad now. You'll be placed into the queue in the order received. Please be prepared to ask your question when prompted. Once again, if you have a question, please press star one on your phone now. Our first question today comes from Puneet Souda with SVB Securities. Yeah. Hi, guys. Thanks for taking my question. First one on MVE and CryoPDP. I don't know if you provided that, and apologize if I missed that number. And just, given the sort of, evolving macro environment here in biotech funding, you know, is there any change to the sort of the low teens, I believe, for MVE and PDP growth expectations for this year? Are you seeing any, you know, change in the demand in the business there for the cryogenic products there as well as the shipping services? You know, is this Puneet? Yes. Puneet, this is. Yes. They're good questions. Look, we are not immune to macroeconomic headwinds. You know, we see some mixed activity going on and nothing that I can finger on and put and tell you that with a definition that there's anything disruptive or so forth. We, we are not immune to those general conditions. MVE is returning to normal mix and normal production levels. CryoPDP is also, you know, it is currently working at its current production, normal production levels, what we had forecasted. Cryoport Systems is moving along very nicely, as is Cryogene. Across the board, you know, we have our fingers crossed. We're optimistic that, you know, our guidance will be, you know, continue to be is exactly what it is and what we've reiterated this quarter. Okay. That's helpful. Maybe if I could just follow up on overall, the biotech funding environment has been tougher. Just wondering what your conversations have been on the CDMOs end and that might be seeing some of this and directly with emerging biotech. In past, you've called out some headwinds related to customers trying to preserve capital. We saw some attrition here in phase I trials in the quarter as well. Just curious to hear what you're hearing with the earlier stage biotech. Maybe a question for Mark, if he's there. It's more on business development activities. Can you give us sort of what you're hearing from the customers? Thank you. Yeah. I'll start off, Puneet, and then turn it to Mark. Look, the things that we've said before, we continue and what I just said to your earlier question, the macroeconomic environment is unclear. If anyone has clarity on it, I would certainly like to hear it because I don't have it and I don't see it. That is how do you face it? In some places you're doing well, some places you're not doing so well. Sometimes you get encouragement, sometimes you get discouragement. It's not. It's just a, you know, probably a magnification of normal business times. You know, the MVE, as I said earlier, MVE has returned to it, you know, its normal, you know, mix of products. You know, our discussions with customers that you, that you ask about, I think, you know, indicate, you know, there is some reservation about starting new trials perhaps. You know, most of our retract contraction was in phase II. It wasn't in phase I, this time. I, it's mixed. I'll turn it to Mark, who's closer to the marketplace. Yeah, Puneet. You know, overall, I think what you're seeing is the folks are really focusing on their winners and really driving those programs that have the highest probability to monetize as quickly as possible. We do see a consistent progression of programs through the pipeline. You know, we see phase I going to phase II, phase II going to phase III. We see a robust filing activity. What we anticipate continuing to see that robust activity throughout the balance of the year. You know, I don't think it's necessarily a negative environment. I think the environment is really focused around putting their cash against those programs will have the quickest return on investment. That's what I think we're seeing for the market. You know, our contract partners, you know, all have a very optimistic view of the cell and gene space, you know, overall. I don't think that from a contract research or manufacturing standpoint, there's any reservation around the cell and gene space right now. Can I just add one other thing in here, Puneet, for you for some more color? Yes, please. This is in the Q1 review piece that you may not have had a chance to go through. In Q1, of the 37 trials that topped out, 21 of those trials were completed versus 16 terminated. That's a good sign because those trials can move on to the next phase. That's the maturation that Mark was talking about. The number of adds we had in the first quarter was 35, and the number of adds we had in the fourth quarter of last year was 31. We are still seeing new trials come in and new trial starts, and the good news is the pipeline keeps maturing. Right. Yeah. The activity is still there. It's they're just focusing it. Got it. That's helpful. If I could, just to squeeze a last one in around commercial. You know, we're hearing about capacity expansions, efforts for capacity expansions around cell therapies, among some of the larger companies maybe, or the larger companies are seeing projects from some of the smaller companies just because they have, you know, more larger resources and capacities in terms of cell therapy. Are you know, Maybe this is a question for Mark. Are you seeing any, you know, upside from that? What are your expectations for the commercial expansion of the existing sort of therapies through the year? Thank you. Yeah. Puneet, I think the best thing to do is to take a look at page four in our quarter and review. There's a really good chart in there that really clearly conveys the impact on volume and revenue associated with additional capacity coming online. You can see that very, very clearly when Kite brought their site in Maryland online. You know, it more than doubled their volume in a very, very short period of time. We know that, you know, obviously there's very active efforts ongoing with both Janssen and BMS around additional capacity, bringing that online to support their product lines. As soon as that capacity comes online, we wholeheartedly anticipate seeing that similar cadence. You also may have seen just, I think it was early this week or late last week, J&J/Janssen/Legend did a deal with Novartis, whereby Novartis is gonna be making a product for J&J Legend Janssen. Right. Out of the facility in Morris Plains. Yeah. Yeah, correct. The Legend Biotech one was I was referring to. Okay, all right. Great, guys. Thanks so much. Thanks. Your next question will come from Brandon Couillard with Jefferies. Thanks. This is Matt on for Brendan. Robert, maybe start on gross margins. Revenue was up $2 million quarter-over-quarter, but gross margins actually contracted a bit here. Can you just provide a bit more color on what drove that? Sounds like you're still seeing some elevated costs tied to the supply chain. Any color around gross margins moving through the rest of the year, should Q1 be the low point? When do you expect those supply chain headwinds to hopefully abate? Well, that's a great question. I do wanna get some clarity on that because if you look at the gross margins for the quarter compared to last year's quarter, it's a slight improvement for the overall gross margin. If you look at the services margin, we actually have an increase from 43.1%-46.8%. It's about 3.6 percentage points positive. We're seeing a little bit of operating leverage on the services side, both for Cryoport Systems as well as for CryoPDP's business. If you look at the product side, that's really a one-time impact. You see a drop, which is really unusual for the MVE business, from 42%-38%. We expect to only see that in Q1. That's specifically related to, you know, unfavorable manufacturing variances as a result of inflationary pressures as well as, you know, building up safety stock during the second half of the year. It's only partially offset by, you know, favorable product mix that, you know, Jerrell was mentioning. This is something that we only expect in Q1. We expect that to normalize in Q2 and for the rest of the year. You know, again, you know, positive upside on the services if you look at Q1 compared to the previous margin for Q1 of last year and Q4, and really an unusual one-time event for MVE related to the buildup of safety stock in the latter part of last year. Thanks. That's really helpful color. I know you guys, you know, don't talk maybe as much about specific companies, but you mentioned it in the Q1 recap. You know, Sarepta has been in the news here a lot ahead of their potential regulatory approval. Just given kind of the evolution of portfolio and how it's expanded over time, any chance you could provide some color on where exactly you potentially serve them today, whether it's on collection, fulfillment, storage, where you might be supporting them? Yeah, we do have a relationship with Sarepta. It's not public knowledge exactly what we're doing for them. I honestly can't tell you the extent of what that relationship is. I do think that it'll become clear in the next couple of months for you guys. Okay, thanks. Then, maybe one for Jerrell. You know, as we approach the one-year anniversary in June of the formal opening of thetwo new global logistic facilities in New Jersey and Texas, just talk about how, you know, progress has trended at those centers, now that you've got a few quarters under your belt, where utilization is today and, you know, have the various services you expected to have been brought online there, those all fully, you know, up and running today? Thanks. Yeah. Yeah, absolutely. They're part of Cryoport Systems, so I'm gonna defer to Mark in just a moment. Basically, they're on schedule. It does take time to get facilities of this nature up to full capacity, we're making a lot of progress. Mark, do you want to add to that? No, Jerrell's absolutely right. The facilities are fully open. They are operational. The assets are averaging over one audit a week right now, which is a very, very good indication of onboarding client activity. You know, if you take a look at that, there's a cycle time obviously associated with onboarding based on going through the supplier approval process. you know, that robust of an audit schedule is extremely positive. Super. Thank you. Our next question will come from John Sourbeer with UBS. Hi. Thanks for taking the question. You know, I think you serve currently one allogeneic therapy. There's potential for a couple additional approvals here throughout the year. Just any color, if you look back on just, you know, currently where you're serving on some of those additional revenue opportunities there, given some of the allogeneic therapies and how you see that potentially playing out here over the next year? I mean, you know, as you can see in our, in our activity, I mean, over 30% of our portfolio is allogeneic at this point in time, which is a very good ratio. A fairly significant number of those are in late-stage clinical, getting ready to initiate, obviously, a commercialization activity as well as, you know, Atara, which we've historically supported and do support their commercial launch activity. Okay. Got it. I guess just, you know, digging in further on those commercial revenues and adding on to what Puneet asked earlier. I guess, you know, when you talk to your CRO, CDMO partners or, you know, pharma biotech partners, I guess, you know, how do you think that this is going to ramp, you know, over the next 12 months with some of that capacity coming online? As it relates to the overall portfolio or allogeneic portfolio? The overall portfolio, yeah. Yeah, I mean, it's directly related to the overall manufacturing capacity. Basically, you have a couple of different factors at play here, right. You've got manufacturing capacity in any of the markets that they've been launched or they have reimbursement agreements with that particular entity, it's gonna be strictly a capacity play. You know, obviously, when you're looking at other environmental factors where they may not have regulatory approval yet or they're trying to drive to an earlier line approval status, those will have more complex ramp considerations, which will play into reimbursement as well as, you know, the overall addressable patient population. Obviously, moving from fourth line to second line, like BMS just announced in Europe, is a huge contributor to demand and will absolutely drive significant ramp once that new capacity they're building out comes online. Maybe just to add to it, if you look at the commercial revenue for Cryoport Systems, you know, you note in our earnings release, we mentioned that, you know, the commercial revenue grew year-over-year by about 28% and sequentially over Q4, you know, about 19%. Right. Appreciate it. Last one here on my end. Just any thoughts around, you know, capital deployment, M&A. You've done a couple tuck-in deals over the last couple years. Just thoughts on, you know, what opportunities are out there, what you're seeing on valuations. You know, we're constantly looking at acquisitions and deployment of capital for the benefit of the company. That's a constant thing. That's about all I can say about that. Appreciate it. Thank you for taking the question. Maybe just to add to it for investors. You know, we are obviously really well-positioned. We have a very strong balance sheet. You know, we have, you know, convertible notes at very, very, you know, good interest rates. We're well-positioned both to drive organic growth as well as to continue, you know, looking at acquisition opportunities. Thanks. Your next question will come from David Larsen with BTIG. Hi, congrats on the good quarter. Can you talk a bit about MVE and demand for large freezers? How is that trending? Thanks very much. You know, the mix is pretty much back to normal, David. Okay. I mean, we saw a really good growth in product revenue, you know, I think, up almost 40% year-over-year. The mix is back to normal and demand and shipments for large freezers is, you know, has stabilized, right? Yeah, it's, we had a good quarter. Okay. Is there any impact to, like, the public health emergency that's concluding in May? On the hospital side, we're seeing acute care volumes are up significantly year-over-year. I mean, is that having any impact on your business overall, like, access to clinical trial sites or anything like that? Is that noticeable or not really? Not really, David. Yeah. Yeah, we haven't noticed any impact on that. Okay. Then just any color on the Cryoportal version 2 logistics management platform, like what capabilities will this bring to your business? Any color there will be very helpful. We actually launched that on Monday of this week. The implementation is ongoing. It's been rolling out into our clients and obviously supporting our activity moving forward. There's a couple of big, big implementation changes with the V2. First and foremost, it's a GAMP 5 validated product, which is a, you know, it basically, it significantly enhances the regulatory data security of the platform itself. It will have a lot stronger analytics built in. It's indexable, and it has the ability to do complex assessment of the data in the system. The reason that we're doing that is that we're seeing a significant increase in requests and of our clients that wanna integrate with the platform and tie the transportation data to the patient outcomes data. They wanna have that conduit and the ability to analyze that data more effectively than the historical platform. as well as it's also going to ultimately be much more amenable to mobile systems, remote security considerations around product security, as well as providing a wider variety of implementation on a platform basis with all the new products that we're rolling out. There's a whole host of different elements that tie into it. Okay, great. Thanks. I think, Robert, you mentioned, something about building up safety stock on the MVE side. Can you just provide any more color around that? Like, are you facing any inflation headwinds on the MVE side for the cost of, like, raw materials or semiconductors or steel or freight? Are you raising prices to help offset that? If so, are those price increases being received well by the market? Are you able to get price to maintain margin? I probably can answer that question. Yeah, actually what I. You know, Robert, let me just start off with that. Yeah. First of all, David, at MVE, we have a paradigm of pricing that includes surcharges and sometimes there are temporary charges. We have price increases, and we have surcharges, we have temporary charges. It depends on the cost of the element. That was at a high point earlier on. It's no longer as significant. What Robert was referring to is we have had to increase our raw material inventory because there is some overhang in the supply chain from COVID. So in order to get economics on the material and to obtain the right materials, we did increase our inventory slightly. We went from 60 days to 90 days. So it was an increase. We don't really have pricing pressures there. We have no resistance in the market because we explain our pricing and why we have the surcharges, we have the temporary charges or we have the price increases. Robert, you wanna add to that? No, the other thing I wanted to clarify, what I was referring to was really, last year, the buildup of safety stock, and that kind of bled into Q1, and that had an impact and kind of like a one-time impact on margins in Q1. That was really my reference. It was really related to the second half and the fourth quarter of last year. Okay. Thanks very much. Congrats on a good quarter. Thank you. Thanks. Thank you. Thank you. Your next question will come from Paul Knight with KeyBanc Capital. Hi, this is for Mark, I believe. You know, one of these constraints, I think, was the FDA, and they, I know under PDUFA VII or IX, they have increased staffers. Do you think that was an issue? It seems like it was, Mark, and is this getting resolved on the FDA side? You're talking about from an approval standpoint? Yeah. Yeah. I mean, there was definitively a bottleneck on that side. yes, I do think that will have a positive impact. Well, it takes a while, I'm assuming, to get this kind of rolling at the FDA, right? Yeah. It's not instantaneous. You know, basically what it's doing, though, is it's increasing the throughput, right? They're gonna, but it's gonna take time for them to work down that backlog. Yes, the additional staffing at the FDA will assist in acceleration a nd then- Paul, it's, I believe in the January presentation that FDA did, they had a goal to double their staff. I don't know where they are in that process, but they know they have to add heads to deal with not only what's there, but this wave of therapies that are trying to get through as well. Yeah. New trial starts as well. Yeah, we did see four applications in the first quarter, with one other additional filing after quarter end. There is activity moving through. Okay. Then you talked to this issue of capacity. You know, we follow some CDMOs as well. I, is it an issue of physical capacity and enough of it, or is it the understanding on how to produce and scale some of these therapies? Is it enough lab hoods or is it they just are trying to figure out how to get it done en masse? Short answer is it's both, right? One is just raw physical space to manufacture product. The second is efficiencies within the clean room environment. You'll see that some of the biggest drivers against capacity are they're moving from open systems to closed systems in a clean room environment, which really increases their ability to process and push additional volume through the same square footage. Ultimately, you get both benefits. Hopefully too, Paul, you'll see Allo starting to pick up, and there you can you know, create these therapies in batches. Yeah. Okay. The last question then I would have would be, I guess really in hindsight, MVE was yet another issue with stocking in the world and destocking, I guess, it seems to be over. What do you think the long-term growth rate of an MVE business is, Jerrell? Paul, just to correct you, they don't stock freezers, or we don't stock freezers or Dewar's. It doesn't operate that way. Jerrell can answer fully. You know, Paul, the long-term growth rate of freezers is going to be related to the long-term growth of biology in general, particularly the life sciences. You know, the question is, you know, how, what, you know, at what rate are the life sciences gonna grow in their applications? Because that's who we serve. I mean, if you manufacture samples, if you manufacture a commercial product, and it's cellular, you need MVE. There's no way around it. You know, our guess there is 10%-12%. Got it. Okay. Thank you. Your next question comes from David Saxon with Needham & Company. Great. Hi, everyone. Thanks for taking the questions. Maybe I'll start on PDP. In the script, you talk about building out the PDP footprint in the U.S., which I believe, kind of drives a lot of the revenue synergies you talked about when you acquired them. I guess I wanted to ask, you know, what specifically drives those synergies, and is that something you can benefit from later in 2023 or does that take longer to capture? Yeah. The synergies themselves are tied around a couple of things. One is, well, one is density and the ability to be able to support high touch white glove service, right? All of the activity that systems historically has had is high touch service. It's not a FedEx where you stick it in a box and throw it into a queue and it shows up three days later. These are tracked. They're basically, there needs to be a custody of the product at all times based on the value of it and the sensitivity of it. You know, the timelines are extremely tight as it relates to managing that product life cycle. You know, as we're building out the asset and competency of CryoPDP in the States, all of those elements have to be met for any geography that they step into. We're actively working on that. We're actively building out staff, we're building out capacity, we're building out infrastructure in informatics to be able to support that. You know, and it is having bearing as CryoPDP is getting written into an increasing number of filings that we support on an accelerating basis. As that continues to build out, that number will continue to accelerate. Got it. That's super helpful. A lot's been asked on MVE as it relates to the freezer portfolio. I wanted to ask on the Dewar side, how's demand trending there? The trend's doing very well on the Dewar side. The Dewar side is, you know, manufactured in the Newburg plant, which is at record production. In fact, we have an expansion going on at that plant now. Okay. Got it. Maybe last one for me. Can you just talk about CapEx for the year? How should we think about cash burn and kind of the path to cash flow profitability? Thanks so much. We don't look at it as cash burn. We don't look at anything in that way. We look at it as investment. We are investing in the future. Our CapEx has been substantial for the last two or three years, and it will continue to be this year. Nothing unusual in the CapEx area. All of these projects that we have going on, you know, will have industry impact. We, you know, we recently looked at our income statement because it gets distorted because of some of the projects that we have going on. We did a peel back to confirm that our core business was strong, and it is. We reaffirmed the financials and the returns around each of the projects we have going on. You've heard about a few of them, the Cryo Trax. You've heard about Cryosphere. You've heard about the Elite line. You've heard about the Cryoportal version 2 that we just launched. Just those kinds of things that we continue to work on. You also could go to the Vario, you could go to the Fusion. Capital investment will. We have a secret project called Project Kona that we are undertaking. All these things are industry moving. You can depend on us investing in projects where we get a return, a great return. Yeah, maybe just to add to it, I mean, obviously, where we're trying to seize the opportunity that lies ahead of us, you know, we have some really strong holds within the supply chain for cell and gene therapies. We're building out, you know, the supply chain capabilities within our companies to really capture additional revenue. Like I mentioned on the services side, you see a little bit of operating leverage in terms of increase in gross margins, and we're trying to balance that. You look at adjusted EBITDA. Adjusted EBITDA was, you know, positive, increased, you know, both over Q1 of last year as well as over Q4. You know, we have, you know, positive, you know, cash from operating activities for the quarter. We are trying to balance that. Like Jerrell said, we are at the same time making investments in building out our capabilities and capacity to handle, you know, the increase in commercially available therapies. Great. Thank you. As a reminder, if you'd like to ask a question, please signal by pressing star one. We'll go next to Jacob Johnson with Stephens. Hey, good afternoon, everybody. I feel like I should ask about Project Kona, but I'm guessing you wouldn't answer that question. I knew you, I knew you'd ask about the secret, you know. You mentioned it, Jerrell. You opened the door. Maybe just one on starting on China. You know, we've heard of in some of the reports the last couple weeks, some weakness out of that region. Just curious kind of what you're seeing there. On China? Yeah, on China. You know, yeah. Okay. Yeah, I just wanted to clarify. Look, look, China is a different part of the world. It's a different economy, and it has a curtain around it, so to speak, not the Iron Curtain, but it has somewhat of a curtain around it. We operate very successfully in China. We, out of our China operations, we serve the domestic market as well as foreign markets, and we also manufacture components and accessories in that plant. We do very well. That, that operation is doing very well, and we will expand our presence in China in all of our areas of business at some point. Okay. Thanks for that, Jerrell. Just going back to kind of the macro and the growth drivers this year. You know, Jerrell, you mentioned kind of a challenging macro, solid start to the year here. But to get to the guidance for the year, you know, revenues have to continue to improve sequentially throughout the year. I guess as I'm seeing that kind of MVE, which stabilized this quarter, can you just talk about some of the key kind of growth drivers off of Q1 that gets you to the guidance for the year? Yeah. Well, you know, they're the markets, primarily. I mean, the cell and gene therapy market is forecast to grow at 25% per year for the foreseeable future, depending on who you know, who and what you, who and what you look at. You know, our confidence is based on a careful analysis of all of our businesses. You know, we budget from the bottom up, so we've got visibility on all of our revenue streams, Jacob. We think that our cell and gene therapy revenue will step up. We're launching new products and services and, you know, they'll bring in new revenue, and we're confident, frankly, that our company will grow, you know, across the world. Okay. Maybe just last question. Just, you mentioned IntegriCell, in your prepared comments, but we haven't really talked much about it during the Q&A. Just curious, kind of any color on how that effort's going. That effort is in its infancy and it takes a while to build a platform like IntegriCell out. You know, we have two plants being built, one in Liege, Belgium, and one in Houston, Texas. They are not quite yet validated, but they will be this year. But it'll take a couple of years to roll that out. Mark, you may have some more comments on that. As Jerrell had mentioned, that we're nearing completion of the construction phase. We have to go through a validation activity to get them, you know, obviously GMP approved. We anticipate that'll happen sometime in, you know, at the end of this year, and that we'll, you know, we'll be starting to contribute revenue, nominal revenue very late this year and increasing revenue into 2024. But this is a long. As Jerrell said, this is a long-term play. One of the areas, you know, we've been talking a lot about capacity. As the manufacturing capacity comes online, you're gonna have a significant barrier as it relates to patient availability and the ability to collect material that's gonna go into the manufacturing process. Having a scalable competency to collect material to support all of this capacity coming online is going to be a critical consideration. We have to build this in order to support all of that expansion in the future. That's why that's one of the reasons that we're obviously doing this and we're doing it in advance of that capacity coming online so it's ready and waiting for that capacity as it starts to emerge. Perfect. I'll leave it there. Thanks, guys. Thanks. Thank you. Your next question will come from Yuan Zhi with B. Riley Financial. Good afternoon. Thank you for taking our questions, and congrats on a good quarter. Maybe I have missed this. Can you clarify if you guys are opening new logistic centers in the U.S., replicating what you have done in New Jersey and Texas? On the system side, there is not any new sites being opened up in the States other than what we currently have. We are upgrading the facility in California, to a full logistics center. Our global supply chain center, which will have BioServices, it will have cryopreservation as well as our logistics competencies, which will open sometime in 2024. Beyond that, there's nothing additional in the U.S. at this time. We're focused on building out rest of world. We have the Paris site that we're building, going to be building out later this year, as well as we're looking and evaluating expansion into the U.K. right now. Got it. That's very helpful. I think most of the question has been asked before, but one of the things we care about is, while your customer, Legend, will update highly anticipated data of their cell therapy at EHA medical conference this year, do you think that product will be a near-term growth driver for your logistics services? Yeah. It will absolutely contribute to revenue growth 100%. Yeah. Got it. We're not just dependent on one customer or one therapy. We have a broad base of customers that have commercial therapies that are ramping, and we anticipate more therapies coming to market. It's a broad base of revenue that we have. Got it. Thank you. That's all our questions. Thank you. Once again, if you would like to ask a question, please signal by pressing star one now. We'll pause for just a moment to allow everyone an opportunity to signal. It appears there are no further questions at this time. I'd like to turn the conference back to our hosts for any additional or closing remarks. Thank you for your questions and our discussion. It's always a pleasure. In summary, Cryoport delivered another strong quarter with double-digit revenue growth across all markets. We also continued to invest in innovation, introduce new products, and take strategic actions to support our company's long-term growth. As we move forward in 2023, while being mindful of global macroeconomic headwinds, we anticipate that favorable industry trends will continue to help drive our future growth. At the same time, we're always looking at strategic opportunities to increase our footprint and supply chain support for life sciences. Our team is dedicated to being the essential supply chain company serving the life sciences. Thank you for joining us today. We appreciate your continuing support of our company, and we look forward to updating you on our progress again next quarter. We hope you have a good evening. This concludes today's conference call. Thank you for attending.