Cryoport - Q4 2022
February 23, 2023
Transcript
Operator (participant)
Good afternoon. Welcome to Cryoport's Fourth Quarter and Full Year 2022 Earnings Conference Call. All participants will start in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the call over to your host, Todd Fromer from KCSA Strategic Communications. Please go ahead.
Todd Fromer (Managing Director)
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 and 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 the other reports 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. Jerry, the floor is yours.
Jerrell Shelton (CEO)
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, 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 fourth quarter and full fiscal year 2022 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 operational performance and a general business outlook. If you have not had a chance to read it, I would encourage you to go to our website and download it as it is elucidating in terms of our development pathway and the initiatives we are undertaking to assure our future.
Now I'd like to provide a brief update on our business, then we'll move on to answering your questions. Today, we reported a solid finish to 2022 with record total revenue of $237,300,000, led by a 24% increase in revenue from Cryoport Systems. Our annual growth at Cryoport Systems was fueled by strong demand for our comprehensive suite of products and services and strong growth in the cell and gene therapy market. At the end of the year, we supported a total of 654 clinical trials worldwide, a net gain of 52 clinical trials since year-end 2021, and with 79 of these trials in Phase III. At the end of the year, we also supported 10 commercial therapies, an increase from eight since year-end 2021.
We anticipate supporting up to 21 commercial therapies in 2023 as a result of our forecast of up to an additional 22 anticipated application filings, 11 new therapy approvals, and an additional 12 label or geographic expansion approvals for a combined total of 23 anticipated industry approvals in 2023. The regenerative medicine market continued its development in 2022 as one of the fastest-growing therapeutic segments. While patient demand remained robust, our commercial revenue ramp was partially impacted sequentially due to our clients' continued cell therapy manufacturing capacity constraints, shortages of fludarabine, and a pause in the shipment of an auxiliary therapy dosage to BioStorage for a specific client due to their supply chain issues. Having said that, the recent introduction of new cell and gene therapies into the market has set the stage for greater activity levels in 2023.
Over time, we expect the industry manufacturing capacity will increase in order to meet the pent-up patient demand. As it does, Cryoport will continue to lead the way in the development of advanced temperature control supply chain solutions that will support the advancement of cell and gene therapies as well as our growth. Notwithstanding current manufacturing capacity constraints, many analysts expect the regenerative medicine market to grow at a compounded annual growth rate of 25%-30% over the foreseeable future.
Part of the reason for our confidence today is that 2022 marked a year of significant achievement for Cryoport, as reflected in our adjusted EBITDA, which is $13.7 million for the year. We continued to make significant strategic investments to build out our informatic competencies, global supply chain center network, manufacturing capacities, bioservice offerings, and capabilities to support and accelerate our growth. These actions are designed to further expand our end-to-end solutions supporting the supply chain for the life sciences market and specifically the cell and gene therapy market. Our investments are designed to strengthen our market position and to create new and diverse revenue streams. To provide you with some examples of our investments, in June of 2022, we opened our first two global supply chain centers located in Houston, Texas, and Morris Plains, New Jersey.
These are state-of-the-art facilities that employ cutting-edge technologies, providing advanced logistics combined with GMP bioservices operations designed to support cell and gene therapy with storage, secondary labeling, kitting, and fulfillment. Clients have already begun to acknowledge the value of these novel services. Others are in the process of qualifying our facilities to join those who are already enjoying its benefits. We also continue the development of SkyTrax, a revolutionary condition monitoring system, and the next generation of the Cryoport Elite line of shippers, which includes Elite Ultra Cold and the Elite Cryosphere, which will officially launch during the second quarter of 2023. At MVE Biological Solutions, we have strengthened the innovation pipeline and have a number of new initiatives that we will announce as they mature.
Regarding CRYOPDP, we continue to build out the most advanced global biopharma logistics network in the world, which in 2022 was expanded in India and into Japan, Ireland, Poland, and Spain. We have not forgotten the growth opportunities for our virus storage operations, as CRYOGENE will be expanding into San Antonio and Philadelphia markets during 2023. Our strategic initiatives during 2022 included targeted acquisitions such as Cell&Co BioServices in France and Cell Matters in Belgium. Cell&Co, a first-class biorepository, was acquired to provide a foothold for our global supply chain center network in EMEA. We will soon expand that operation into Paris. The acquisition of Cell Matters provided us cryopreservation expertise for launching our IntegriCell platform.
IntegriCell will offer the cell and gene therapy a standardized apheresis collection and end-to-end cryopreservation service for leukapheresis-derived autologous and allogeneic cell therapies. This is important to the cell and gene therapy industry as it will be the first time biopharma manufacturers will be able to source consistent, higher quality starting materials from which to manufacture their therapies. Our actions in 2022 were a step in the development of initiatives that are designed to lay a very strong foundation to help drive our long-term growth. The development of our continually advancing technologies to meet industry needs and support requirements globally gives us an unmatched capability to support the rapid advancement of clinical and commercial cell and gene therapies.
Considering these actions and the impact of our planned initiatives in 2023, we're providing a full year 2023 revenue guidance in the range of $270 million-$290 million. This represents top line growth of 18% at the midpoint over 2022 revenue. Our 2023 outlook reflects our expectations of a continued solid demand environment with macro conditions improving and the continued development of our exciting array of initiatives. As we close a successful 2022 and head into this new year, we are excited and confident about 2023 and our long-term growth prospects. We believe Cryoport has never been in a stronger industry leadership position than it is today as we enter 2023 with a strong balance sheet, cash position, and a fantastic team of highly motivated people.
Our continually advancing technology and global footprint gives us the critical infrastructure and unmatched ability to support the swift growth of cell and gene therapies from research to commercialization. We do not think that there is any other company that offers such a wide range of comprehensive end-to-end solutions to support these life-saving therapies. We'll be happy to take your questions. Operator?
Operator (participant)
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from the line of Puneet Souda with SVB Securities. Please go ahead.
Speaker 11
Hi, you have Michael on for Puneet. Congrats on a strong finish to 2022. I was hoping to start with getting a bit more clarity on the guide. I was wondering how much of this is reflecting a recovery in MVE and CRYOPDP after some hiccups in 2022, and how much is strengths in clinical trials or some of these new commercial therapies coming online?
Jerrell Shelton (CEO)
I'll let Robert answer that question.
Robert Stefanovich (CFO)
Yeah, maybe just a couple of things on the guidance. You know, one, you know, we do have strong conviction on the revenue guidance. It's, you know, the 18% growth over 2022 at the midpoint and 22% growth at the high end of the range. A couple of things to have in mind. One, if you look at MVE and CRYOPDP, yes, we do expect them to go back to double-digit growth. But, you know, a few things. You know, we did have some unanticipated headwinds in 2022. If you just look at Q1 of last year where we had the fire damage at our MVE New Prague facility, where we had about a $9.4 million revenue loss.
If you were to add that back to the 2022 number and look at it at a constant currency rate, you know, we would be about 14% constant currency with that add back. You compare that with the 18% midpoint, you know, it's certainly achievable. More importantly, you know, Jerry talked about, you know, some of the initiatives that we've put in place during 2022 in expanding our bioservices in Houston and New Jersey, the acquisition of Cell&Co, which adds bioservice capabilities in Europe, and then a number of, you know, key new product introductions in Q2 of this year. All of these will contribute to the revenue growth in 2023. I think that's, you know, important to realize.
The other part is, as you've seen in the growth of clinical trials, we're seeing not only growth in clinical trial basis, but also maturation of the clinical trials and advancements into the filings, as well as into expected approvals that we'll be supporting. There's, you know, significant kind of dynamics within our market, within our customer base that allows us really to drive the revenue growth for 2023.
Speaker 11
All right. Great. I think that clarifies a little bit. I also had a question about the global bioservice network you're building out. I was just curious what sort of incremental OpEx you expect that to drive and if there's any gross margin contribution we should expect as new capacity comes online.
Robert Stefanovich (CFO)
Well, in general, in terms of the margin contribution bioservices, you know, a couple of things. We're still expecting overall targeted gross margin of 55%. That is our target. Clearly, we're not quite there yet, you know, with, you know, 43.8% gross margin. If you look at the bioservices, it's a significant revenue capture opportunity. All of our initiatives are really designed to capture revenue along the temperature-controlled supply chain supporting the cell and gene therapy space. Bioservice is one of those components, and, you know, we expect certainly, you know, the margin contribution to be accretive, you know, to our overall margin based on that service.
In terms of the operating expenses, you know, if you look at Houston and New Jersey, yeah, those have been already baked in because as we've talked about in Q3, while we set up these bioservice capabilities, we have to have them fully staffed before clients can come in and do their audits. At this point, at Cryoport Systems, I think we have an audit every week. That really further demonstrates, you know, the interest and the movement on bioservices.
Speaker 11
Okay, great. If I could just squeeze in one more. I'm just curious if you have any color on China. I know last quarter you mentioned some headwinds to MVE from the closure of Chengdu, and we've heard some other tools players having headwinds with the COVID zero unwinding. I'm just curious if you have any thoughts there.
Jerrell Shelton (CEO)
Yeah, we do. We monitor China on a regular basis. You know, China is an important country to us. We manufacture in China, we export from China, we manufacture domestic products, and we import in China. So far, everything is working well. The, as the immunity builds up in the society then for COVID, that becomes less of a threat, and we haven't had any rolling shutdowns lately. We don't expect any. China, we think is in good shape.
No one knows what President Xi is going to do in the future and what his 2025 initiatives are going to entail, but we're prepared to work with those because we do have a strong internal base, and we have a fantastic team in China.
Speaker 11
Great. Thank you very much.
Operator (participant)
Thank you. Our next question is from the line of Brandon Couillard with Jefferies. Please go ahead.
Speaker 10
Hey, thanks. This is Matt on for Brandon. Maybe, sticking with that theme. You know, I think on the third quarter call, there was kind of three items you guys discussed for the guidance reset, you know, freezer pricing China and then some headwinds at PDP. You touched on China, but I'd be curious, Jerry, to get your thoughts on kind of the updated status of the freezer pricing and trade down dynamics as well as some of the headwinds you saw in PDP, how those fared in 4Q and kinda how you're thinking about them heading into 2023. Thanks.
Jerrell Shelton (CEO)
Okay. You know, thanks for that question. I mean, it's a good thing to be following up with. The mix of MVE business was still challenged in the fourth quarter, due to the macro environment and some of the pushback that we were getting. But that's stabilizing, and it's beginning to turn back. As I explained to you about those uncertainties, it was just, you know, capital allocation reservations because of that macro conditions. Things are, you know, tending to normalize right now, and we don't that's disappearing. And I think we discussed that, you know, a little bit earlier. In terms of CRYOPDP, it's moving along well. We have expanded our operations in CRYOPDP.
Some of the initiatives did impact our income statement, as I alluded to in my earlier comments and Robert alluded to, because, you know, they are investments. We did move into five different countries last year. four countries expansion wise, and then a massive in development in India, where we lead the market with CRYOPDP services.
Speaker 10
Thanks. That's helpful. Then, you know, you guys have discussed a lot the slew of new products and services coming online in 2023 from the Cryosphere to the Cryoport Elite, as well as some of the newer global supply chain centers ramping up, and the Takeda service as well, just to name a few. Is there any way you can kind of talk about or quantify how those are expected to contribute to revenue in 2023? you know, maybe if you don't, you know, have dollars for each one, maybe, you know, stack rank, which could be, you know, potentially the biggest new product catalyst, as we think about 2023 here. Thanks.
Mark Sawicki (Chief Scientific Officer)
Yeah. Let's start with the IntegriCell platform because I think that's the one that ties back into the Takeda and InSitu announcements. You know, this, from our perspective, is one of the most exciting concepts to hit the cell and gene therapy industry in quite a while. It's really the first opportunity for the space to be able to provide accessibility to fully standardized high quality leukopaks. It addresses also a significant patient accessibility issue. Obviously it's gonna take some time to build this infrastructure out and it has to also go through, you know, obviously regulatory and audit activity with our clients.
We're, we're not gonna obviously disclose anything financially on that at this point, but we do believe that we'll start to see revenue, although modest, late in, late in 2023, and it, and it will start to ramp and become more material in 2024. The other two platforms, the Cryosphere and the Elite platforms. The Cryosphere is, you know, as Jerry mentioned, will launch in early Q2. It is ready to go. Our clients are now initiating validation-related activity around it, as well as the Elite line, which is really focused around gene therapy distribution. Those processes take a little bit of time because they have to go through a full validation process which can take upwards of a year.
We don't, you know, some of these have already been started, like for example, for Elite, we do have folks that have been actively working in conjunction with us for that validation, and we'll see contribution on the -80 Elite line this year. Cryosphere, we won't see a material impact until next year.
Speaker 10
Great. Thanks, I'll leave it there.
Operator (participant)
Thank you. Our next question is from the line of John Sourbeer with UBS. Please go ahead.
John Sourbeer (Executive Director)
Hi. Thanks for taking the question. You know, if you look at clinical trials year to date, I think up around 9%, and I think also you prepared, remarks maybe mentioning you think you're taking some market share. Can you just talk about some of the competitive wins at Cryoport Systems and any just thoughts on what your market share is looking like across Phase III trials?
Mark Sawicki (Chief Scientific Officer)
Yeah. As we had mentioned, we're at 79 programs in Phase III. We continue to add programs, and, you know, increase our overall portfolio within the space itself. You know, there's not a direct head-to-head competitor in the market. We have some folks that are complementary to certain aspects, but it's not a completely, you know, a direct correlation from that perspective. We don't have a concern from that regard. You know, we are the clear market share leader in the supply chain support. You know, as you guys are aware, cell and gene therapy is a very, very fast-growing market within life sciences. You know, we're continuing to grow that base and the related revenue.
We are anticipating upwards of 11 new commercial approvals on Cryoport portfolio companies this year, as well as another potential 12 line and geographic expansions of existing portfolio. That's gonna really start to drive, you know, obviously revenue on the commercial side.
John Sourbeer (Executive Director)
Appreciate that. Maybe just, you know, adding on to that, so you think long term here, and I think you also mentioned regenerative medicine growing 25%, 30%. You're at around 18% here for the midpoint in the 2023 guide. Do you think there's an opportunity to, you know, as these trials mature, become commercialized to accelerate your growth to maybe closer to where some of the industry analysts are pointing at that for the range?
Mark Sawicki (Chief Scientific Officer)
All of these therapies, they kind of move up in a stepwise manner. You know, there's been headwinds as it relates to ramp associated with a couple of factors. One is manufacturing capacity. You know, a lot of our commercial portfolio entities have really been working hard to increase overall capacity. The second issue these guys are seeing right now is, you can see this in a lot of our commercial clients' recent earnings commentary, they're only supporting about 30% of patient demand today. That's really down to a patient accessibility issue. One of the reasons we launched the IntegriCell platform was to drive accessibility, and to provide accessibility to facilitate ramp for them.
As these things come online, we absolutely believe they will, they will contribute to acceleration in that number.
Jerrell Shelton (CEO)
Maybe just to add too, if you look at Cryoport Systems, you know, the revenue growth there was 24% and actually commercial revenue grew 27%. It is continuing to increase. As Mark alluded to, you know, there's significant dynamics in 2023 that will further, you know, help revenue increase.
Mark Sawicki (Chief Scientific Officer)
Yeah. Remember, the commercial trials are a net number. So they don't, they also account for programs that have dropped out. So there's, We have seen in the second half year a little bit more volatility on the number of drops and adds. It is a net number.
John Sourbeer (Executive Director)
I guess maybe last one here, just on that last point. Just maybe is that, you know, on the drops and adds, is some of that, you know, macro funding related that you're seeing or any slowdown in projects there? I guess any just additional color you can provide.
Mark Sawicki (Chief Scientific Officer)
Absolutely not a slowdown. No slowdown at all. We see accelerating activity with a lot of our clients. You know, there was still over twelve and a half billion dollars put into the market in a bad fiscal year, which is a significant investment in the space.
John Sourbeer (Executive Director)
Great. Appreciate all the color. Thanks for the questions.
Mark Sawicki (Chief Scientific Officer)
Thanks.
Operator (participant)
Thank you. Our next question is from the line of David Larsen with BTIG. Please go ahead.
David Larsen (Managing Director)
Hey, congratulations on a good quarter. Can you talk a little bit more about MVE? Like, roughly what percentage of total revenue is coming from MVE? We're now almost through February or two out of three months in the first quarter, have you seen an uptick in the large freezer shipments and, you know, with a warmer sort of summer, have energy costs improved over in Europe? Is that having a favorable impact? Just any more color there, what you're seeing through February would be really helpful. Thanks.
Jerrell Shelton (CEO)
Yeah. As I mentioned earlier, MVE is sort of returning to normalcy. it's, it will grow this in this next year. The impact and there's nothing to talk about the impact of energy prices in Europe at this particular time. look, we had Nothing goes in a straight line, and we had a little bit of a blip. while nothing has happened, while the market is buoyant for Cryoport Systems, you know, there was a pause there for MVE, which has straightened out and progress is being made there. you know, the other platform is the product orders are back into the normal mix.
David Larsen (Managing Director)
Okay, great. Then, for Cryoport Systems, you know, 24% year-over-year revenue growth. That sounds very high to me. Just can you provide any color around what the mix is between, like, incremental clinical trials that you've picked up versus pricing versus additional, you know, products that you're selling into those customers? What's driving that 24% growth?
Mark Sawicki (Chief Scientific Officer)
As you guys recall, I mean, you know, a lot of these initiatives that we've been really focused on building are starting to pay dividends. You know, we're really focused around revenue diversification of our portfolio of clinical and commercial entities. I think what you're seeing is that disconnect between number of trials added versus revenue is a manifestation of that strategy, a successful manifestation of that strategy related to revenue diversification.
David Larsen (Managing Director)
Okay. Then just one last one. Any thoughts on, you know, your clients' investments into manufacturing capacity? I mean, are you generally seeing that across the board with like Bristol and Novartis, like Gilead? Just, like, are you seeing that happen now? I guess that should be a tailwind in 2023.
Mark Sawicki (Chief Scientific Officer)
Yeah. There's been a substantial investment in manufacturing capacity, and it continues on. You know, Kite launched their significant facility in Frederick, Maryland, the middle of last year. You know, BMS is very active in building out two additional facilities, one in Massachusetts and one in the Netherlands. We'll absolutely see, you know, accelerating activity associated with that.
Jerrell Shelton (CEO)
CDMOs are also building out, Dave. It's the outsource manufacturing is growing in addition to the customer direct own manufacturing.
David Larsen (Managing Director)
Okay. Great. Thanks very much. Congrats on a good quarter. I'll hop back in the queue.
Jerrell Shelton (CEO)
Thank you.
Operator (participant)
Thank you. Our next question is from the line of David Saxon with Needham & Company. Please go ahead.
David Saxon (Senior Analyst)
Hey, guys. thanks for taking the questions, and congrats on the quarter. Maybe just to follow up on that last question about customer capacity. You guys have in the past talked about revenue per therapy being in the $2 million-$28 million range. As far as I can tell, none of your therapies are tracking to that, I guess, on average. Do you have a path to reaching that, you know, with your visibility into customer manufacturing capacity expansion? How should we think about once a therapy gets approved, how long that it could take to kind of reach the steady state run rate?
Mark Sawicki (Chief Scientific Officer)
Yeah, remember, these programs are still early in the evolutionary cycle from a pharmaceutical maturation standpoint. You know, one of the, one of the keys here around achieving that $28 million, you know, threshold is broadening out the accessibility of that product line. You know, with moving from third line to or fourth line to third line and now third line to second line, as well as those geographic expansions, those are gonna really facilitate, you know, acceleration of that revenue associated with these therapies. I mean, if you take a look at some of these alone, you know, you look at, you know, the BMS products, you know, their patient population went from 8,000 to 14,000.
I mean, that's almost a 2x increase in potential patients that can be treated by that therapy. You can kinda do the math in your head and what that, you know, what we could attribute as an upside opportunity for that, just as one example.
David Saxon (Senior Analyst)
Okay, thanks. On the P&L, it was nice to see gross margins expanded modestly, but SG&A came in quite a bit above what I was modeling at least. I guess, what's driving that and how should we think about OpEx for 2023? If I could just sneak a third one in quickly. I saw it last quarter, you mentioned you might give kind of updated thoughts on an LRP, the $650 million-$750 million. I guess any update there, and thanks so much for taking the questions.
Robert Stefanovich (CFO)
Yeah, no problem at all. Just real quick on the gross margin. I mean, you're right. You know, if you look at, the full year gross margin was 43.8%, slight increase over last year. In Q4, we had about 43.5%, which is up about 250 basis points over the prior year fourth quarter. You see that for services as well as for product, we've seen an increase in gross margin. Having said that, you know, obviously we have a number of initiatives in 2022 as well as in 2023 that have still some impact on the margin, overall margin contribution.
In terms of the Operating Expense, you know, one thing I do wanna direct you is to look at the quarter and review document. We've put there what we call a peel back in terms of what we've been doing in 2022, what initiatives we've put in place, and how that has impacted our EBITDA. You look at, you know, that peel back analysis, you can see that there's been significant investment that we made, not only on the CapEx side. CapEx was about $22.1 million for 2022, just slightly down from 2021. In geographic expansion, that have probably an impact on OpEx and with that on EBITDA of about $10 million. New service offerings that we've talked about, that relates to IntegriCell as well as to the bioservices.
Then, you know, other parts are obviously the technology and the software we talked about. That's a total impact of about $23 million in 2022 related to initiatives that are all geared towards revenue capture, towards further establishing ourselves as the, and really the essential player in supply chain for the cell and gene therapy space. You know, in terms of looking at the 2025 guidance, you know, look, we understand that, you know, people like to have long-term guidance. You know, given the macroeconomic conditions, volatile markets that are still present today and the level of uncertainty, we felt that, you know, it was not the right time to give long-term guidance. You know, the overall economic environment related to inflation, supply chain issues, COVID-19, the situation in Ukraine, there are still a lot of factors that we're all aware of.
Given that, we felt it was best not to provide that guidance at this point in time. You know, we're constantly obviously evaluating this top-topic, and we'll provide long-term outlook when we believe it's appropriate.
David Saxon (Senior Analyst)
Okay, great. Thanks so much for the color.
Operator (participant)
Thank you. Our next question is from the line of Jacob Johnson with Stephens. Please go ahead.
Jacob Johnson (Equity Research Analyst)
Hey, thanks. good afternoon, everybody. Maybe following up a couple thoughts on those last questions. Maybe Robert, just first on kind of the path to mid 50% gross margin, can you just talk about the product lines or the areas where there's the greatest opportunity for margin expansion as we think about that path to the mid 50s from where we are today on the gross margin side?
Robert Stefanovich (CFO)
Yeah, absolutely. I think, you know, the critical area for margin improvement is clearly on the services side. On the services side, you know, really within both, you know, the Cryoport Systems offering and the broadening of the offering, as well as CRYOPDP, as well, you know, as CRYOPDP moves more and more into cell and gene, especially courier logistics. If you look at Cryoport Systems, and we said that early on, you know, we're still at the early stage of cell and gene with only a couple of meaningful therapies in the market that are, you know, that have been launched globally and are, and contributing revenue.
Now, if you fast-forward in the next, you know, two years, you'll see really a significant number of new approvals of cell therapies coming into the market, both autologous as well as allogeneic. As we're expanding our solutions and expanding, you know, beyond the temperature controlled logistics into bioservices, into the IntegriCell offering, you'll see, you know, significant operating leverage in improving the margins. It's really based on, you know, the maturation of these clinical trials to commercial launch and then the maturation in the industry on a commercial basis.
Jacob Johnson (Equity Research Analyst)
Okay, got it. Robert, just another long-term question, and then one other kind of quick follow-up on guidance. The other long-term question, you know, you guys talked about 25%-30% growth from the end market, and certainly, you know, I think most agree there's bright days ahead for the industry. As we think about the freezer business, you know, that's probably one that moves around a little bit more than the services side of things. You know, flattish last year, I guess double-digit growth expected in 2023. Is there any way to think about the long-term kind of growth outlook for MVE?
Robert Stefanovich (CFO)
Yes. I mean, I think one thing to have in mind looking at last year is the fact that, you know, there was a one-time event in the New Prague facility that had a impact on the revenue of about $9.4 million. Because of the significant order backlog that we have for that part of the business, we weren't really able to make up that revenue during 2022. You do have to look at that when you look at kind of an apples to apples, 2022 over 2021. You know, having said that, you know, MVE obviously has a very strong reputation in the market for quality. You know, we see demand. We have a very strong distributor network on a global basis.
I think we have line of sight acknowledging, you know, certainly that there's still a lot of uncertainty in the marketplace in general, we do, you know, and did a very kind of bottoms up view for the next year and outwards to see what we can expect. The one part I do wanna mention on MVE, you know, they have a good gross margin. I think there's still some upward mobility on the gross margin. More importantly, you know, they're, you know, they're a solid profitable company, so they have good EBITDA contribution, and, you know, we expect that to continue.
Jacob Johnson (Equity Research Analyst)
Okay, great. Just last one for me. Can you quantify the headwind to the commercial revenue in the quarter? The other question on commercial revenue, you talked about 11 potential approvals this year. Is that something that's included in guidance, or is that something that perhaps could be upside as the year plays out?
Mark Sawicki (Chief Scientific Officer)
The approximation about $1 million in the quarter for Q4 was the headwind on the commercial number. you know, if you, if you account for that, you know, our growth rate on commercial is really closer to 35% for the year, which, you know, obviously is a very strong number. We have modeled, although conservatively, obviously, the commercial launch activity, because, you know, as everybody's aware, you know, there's a lot of volatility associated with timing. Even though there is a expectation for the potential of 11 new therapies coming to market and 12 line expansions, you know, we don't know the exact timing of that. If they all come to fruition on schedule, there obviously is an upside opportunity associated with that.
We do account more conservatively for those launches from you know a guidance standpoint.
Jacob Johnson (Equity Research Analyst)
Got it. That's helpful. Thanks for that, Dr. Sawicki, and thanks for taking the questions.
Mark Sawicki (Chief Scientific Officer)
Sure.
Operator (participant)
Thank you. Our next question is from the line of Yuan Zhi with B. Riley Securities. Please go ahead.
Yuan Zhi (Managing Director)
Good afternoon, and thank you for taking our questions. I have a couple of them. For the 11 new approvals you guys are anticipating, without disclosing who they are, can you comment on how many of them anticipate, anticipated to, get FDA approval in the U.S.?
Robert Stefanovich (CFO)
Yeah. Hold on one second. That'd be nine.
Yuan Zhi (Managing Director)
Got it. As there are a few of the commercialized or near commercial, near commercialization cell and gene therapies did not use logistic services provided by Cryoport Systems. As we see more manufacturing site coming online, is there a plan to take market shares from those territories?
Jerrell Shelton (CEO)
Could you restate that please?
Robert Stefanovich (CFO)
Are you talking about therapies that are on the market that are not using Cryoport currently, or are you referring to potential new approvals that won't be using Cryoport?
Yuan Zhi (Managing Director)
I guess both, if there are any.
Robert Stefanovich (CFO)
There are some gene therapies that are approved that are not cryogenic shipments that we're not supporting today. They're primarily at -80 or the dry ice temperature range. Now that we have our Cryoport Elite -80 Ultra Shipper, which is being released in conjunction with one of our new gene therapy customers, I think you'll see us wade into those other gene therapies that haven't had a Cryoport solution before. We're gonna target that. I don't know if, Mark, you wanna comment more.
Mark Sawicki (Chief Scientific Officer)
Yeah. I mean, the whole point of, you know The Cryoport Elite Ultra Cold Shipper was actually designed in conjunction with one of our key gene therapy partners who has a significant, you know, amount of filing activity coming around their portfolio.
It's been custom-built specifically for cell and gene, and we do believe strongly that, and the feedback from the industry has been extremely positive that we'll be able to pull share from other existing you know, offerings on the market today that are supporting gene therapies in queue.
Yuan Zhi (Managing Director)
Got it. Thank you for that.
Mark Sawicki (Chief Scientific Officer)
About 15x.
Jerrell Shelton (CEO)
Yeah.
Yuan Zhi (Managing Director)
Thank you for the helpful insight there. One last question from us. For CRYOPDP, can you remind us whether it provides services to those therapies beyond cell and gene therapies? Could it provide logistics for radiopharma, radiopharmaceuticals as well, for which I see a lot of similarities between cell and gene therapy and radiopharmaceuticals?
Jerrell Shelton (CEO)
Yeah. There are some similarities, but CRYOPDP is focused on biopharma and with a focus on moving to cell and gene therapy, and that's the direction, biopharma and cell and gene therapy with CRYOPDP.
Yuan Zhi (Managing Director)
Got it. Thanks for taking our questions.
Mark Sawicki (Chief Scientific Officer)
Thank you.
Operator (participant)
Thank you. As there are no further questions at this time, I would like to turn the floor back over to Jerry Shelton, CEO, for closing comments.
Jerrell Shelton (CEO)
Thank you, operator, and thank you for your questions and our discussion today. In closing, during 2022, we took a number of strategic actions to drive Cryoport's long-term growth. They're outlined in our quarter and year-end review. As we enter 2023, we're excited about our prospects as we're prepared to launch several new products and services with more to come. We continue to be driven by the rapid growth of cell and gene therapy and will benefit from the expansion of industry manufacturing capacity. Our team is committed to our vision, mission, and we look forward to demonstrating this to you in the coming months. We wanna thank you for joining us today. We appreciate your continuing support and interest in our company. We look forward to updating you on our progress again next quarter.
From Nashville, Tennessee, we bid you a good evening.
Operator (participant)
Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.