Todd Fromer - KCSA Strategic Communications Jerry Shelton - Chief Executive Officer Mark Sawicki - Chief Commercial Officer Robert Stefanovich - Chief Financial Officer

Brian Marckx - Zacks Investment Research

Thank you, operator. Good afternoon, everyone, and thank you for joining us today for CryoPort’s second quarter fiscal year 2017 conference call.

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 to occur 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.

I would now like to turn the call over to Mr. Jerry Shelton, Chief Executive Officer of CryoPort.

Jerry, the floor is yours.

Thank you, Todd. 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 some context regarding our biopharma market and our expanding role within it. And Robert Stefanovich, our Chief Financial Officer, who will present our financial results for the second quarter of fiscal year 2017.

Revenue for the second quarter of fiscal year 2017 was up 38% year-over-year. This growth was driven by a strong performance in the biopharma market, which grew 64% year-over-year.

We continue to make great strides and improve our positioning in biopharma market with new client wins and further expansion within our current client base, supporting new trials and the temperature-controlled logistics for additional - fourth quarter additional biological materials. We also reached several notable operational achievements this quarter, including introducing new technological advancements in integrating our CryoPortal Logistics Management platform with the therapy scheduling platform in support of one of our client’s commercialization preparations.

We also undertook several strategic marketing initiatives, which we view as investments in our future. From an industry perspective, whilst modestly, we’re pleased to win the 2016 Cold Chain Global Forum Excellence Award, which is the most prestigious award in the cold chain logistics industry.

Later in this call, Dr. Sawicki will have further comments about our progress in growing our reputation as a best-in-class provider of cutting-edge cold chain logistics for life sciences industry.

Throughout the second quarter, we continued to win new biopharma clients and advance with additional clinical trial progressions. We are now in late-stage negotiations with several clients who are in Phase III of clinical trials to support the commercialization of their respective therapies, which if successful, are expected to contribute significant revenue streams to CryoPort and continue to solidify our position as the market leader in regenerative medicine cryogenic logistics solutions.

We are pleased with the progress we're making in securing master service agreements with U.S. and European companies in the biopharma market.

This is an important part of securing our growth strategy. Our clients are now entrusted - have entrusted us with supporting over 100 clinical trials, of which 16 are in Phase III, generally the last phase of the core commercialization.

We believe this translates into significant embedded revenue opportunities for CryoPort as these trials progress. While now also will necessarily lead to FDA approval, we are excited by significant revenue opportunities for CryoPort that will be driven by successful therapies.

Additionally by making new trials - by adding new trials from our existing client base, we are also maximizing our exposure to an increasing number of regenerative medicine therapies. This diversifies our revenue sources, increases our chances of supporting a larger number of successful clinical trials.

For example, Kite Pharma pioneering cancer immunotherapy has been utilizing our logistics solutions to support its lead candidate, KTE-C19, since late 2014. Kite has announced that they plan to initiate the submission of their BLA or biologic license application for accelerated approval of KTE-C19 by the end of December 2016, with a target completion by the end of the first quarter of 2017 and a potential approval and commercial launch of the KTE-C19 in 2017.

We recently expanded our services to Kite to support all seven of these clinical trials, including in this is our support of Kite’s first clinical trial of its T-cell receptor or TCR product candidate. We’re delighted to be a supporting partner in Kite’s progress toward advancing novel immunotherapy treatments for both aggressive non-Hodgkin lymphoma and certain solid cancers.

We've continuously chosen for these important missions of support by our clients, serves to bolster CryoPort’s advanced logistic solution and its ability to be adaptable to client needs in this growing market. Our client list is steadily growing, and with many of the world’s leading biopharmaceutical companies, utilizing our temperature controlled cold chain logistics solutions to avoid costly device and/or clinical trial data loss when transporting and/or storing their biologics, such as regenerative medicines and advanced cellular therapies.

CryoPort supports a wide range of clients in biopharma with recent agreements signed with Heat Biologics, Unum Therapeutics, ImmunoCellular, Gradalis, Perseus PCI, Stemedica, Atoyo Bio [ph] and many others. Perseus is a tongue twister.

By developing relationship with Bristol-Myers Squibb, it is of particular note. BMS is pursuing multiple drug platforms in immuno-oncology and gene-therapy treatments among others, and in there is selected CryoPort to support logistics for their cryogenic component of a commercially launched therapy.

This program will craze in over coming quarters as a relevant - as the relevant quality and regulatory elements are completed. To underscore the importance of BMS, in 2015, Bristol-Myers Squibb invested $4 billion in R&D, which included the discovery and development of new medicines for patients.

We are delighted to report this relationship at a time when BMS is investing significantly in developing and producing new regenerative medicines. As I reported before, as our clients progress through clinical trial phases, we are poised to experience greater shipping volumes.

As a reminder, annualized revenue to CryoPort for Phase I trials typically ranges from $15,000 to $75,000 annually; for Phase II $50,000 to $150,000; for Phase III $200,000 to $1 million, and when commercialized, we anticipate $3 million to $20 million-plus annually. The sequential increases in revenue, as they materialize, will significantly accelerate our growth.

During the quarter, we expanded our contract with Stemedica Cell Technologies, Inc. to provide cold chain logistics for support of a Phase II clinical trial for stem cell-based therapies in the treatment of Alzheimer's disease.

We have worked with Stemedica since 2015, transporting ischemic-tolerant stem cells to clinical research institutions and accredited hospitals worldwide for use in preclinical and clinical studies. Stemedica successfully demonstrated to improve clinical and overseas clinical trial data that intravenous administration of stem cell result in a delay of the accumulation of plaque and also in reduction of plaque in an animal Alzheimer model.

Stemedica is now conducting a Phase II clinical trial and has asked CryoPort to provide a cold chain solution to maintain the integrity of its product line as they work to assess allogeneic stem cell-based therapies in the treatment of Alzheimer's disease. This trial will enroll 40 patients in Phase II.

We are very pleased to be working with Stemedica to support in this important work in fighting Alzheimer's disease. This is the one example of fostering strong relationships with innovative life sciences companies and serves as an example of the ongoing opportunities available to us as our clients find success in the progressions with their respective clinical trial candidates.

Of course we are always proactively seeking new trials and product launches that are taking place in the industry, as we know, there remains a large untapped markets that CryoPort does not yet serve. During the quarter, we disclosed that Lonza, one of the world’s foremost contract manufacturers to the biopharma industry intends to convert its suite of liquid nitrogen dewars to one of the CryoPort’s tailored logistics solutions, designed specifically to filling cryogenic logistics requirements in its contract manufacturing operations.

Additionally Lonza has recently purchased another CryoPort client, Triangle Research Labs, which has relied on CryoPort logistics solutions for distribution of its hepatocytes and other commercial products for over one year. Lonza Group Limited, a Swiss-based company is the world’s leading supplier to the pharmaceutical biotech specialty ingredient markets.

With 40 manufacturing and research and development facilities worldwide, its global manufacturing and development expertise with advanced technologies and high quality products are renowned, we are proud to have such a well-respected multinational company seeking and selecting CryoPort as its cryogenic logistics partner and to have the opportunity to win business from each of its business units. CryoPort is now supporting more than 100 clinical trials, which is an exciting milestone.

Our comprehensive scientific approach to supporting cold chain logistics for our clients has put our company in the leading position as the preferred cryogenic logistics provider to the life sciences industry, reaching the 100 trial mark in support of cellular therapies is a threshold point and a testimony to our clients appreciation on our expertise and experience in providing agile solutions for their cryogenic logistics requirements. With each new clinical trial, the revenue opportunities inherent in our business plan become more evident.

To use an analogy, our part of the business, especially in regard to clinical trials, might be compared to an archer, pulling further and further back on his bow, with each new clinical trial, we are creating an increasing store of energy which has the potential to translate into revenue growth at a very rapid pace as these respected trials progress into later phases and ultimately to commercial products. We are early in the development of regenerative therapies, so this is not yet filter into our financial statements.

However we are very confident that our strategy is tracking. We have never felt better about our place in the market and are more confident about CryoPort’s future.

Mark will comment further about two of our main clients, whom we anticipate following their - who anticipate following their respective biological license applications in the coming months. The biopharma markets’ robust growth, driven largely by the rapid development and continued maturation of the regenerative medicine market will play a primary role in fueling our expansion going forward.

We think that the advanced logistics requirements and complexity in an regenerative medicine space are beyond what any other single company, as on CryoPort, can provide and we believe that this is reflected in the excellent progress we have made in recent quarters raising our profile and securing new clients. Our cold chain technology is unique in the industry, and CryoPort’s ability to integrate its cloud-based CryoPortal Logistics Management System with other platforms for manufacturing patient/HUB services, storage and transportation allows us to continuously adapt to and fill marketing issues.

A good example is our recent integration of our proprietary logistics technology, the CryoPortal, with an integrated Cell Therapy Automated Network scheduling platform. The integration of these two platforms is design to solve the challenges of manufacturing, distribution and global supply chain planning for the clinical development and commercialization of sales in gene-therapy products.

With this integration, clients will be able to gain efficiencies in overall scheduling and coordination with one integrated solution. This end-to-end systems managed workflow eliminates the potential for manual data entry errors and provides better visibility and transparency from the clinical and manufacturing sites and vital information regarding the position of the therapy at every stage of logistics.

These type of advancements strengthen our leadership position and open doors to new revenue opportunities. Before turning the call over to Mark, I would like to touch briefly on our reproductive medicine and animal health markets.

The total reproductive medicine market was relatively flat this quarter due to an ongoing shift away from international market shipments due to unfavorable legislation in some of Asian countries. In the rest of the world, however, we were able to grow revenue and remain healthy.

Looking ahead, we expect strong revenue performance from the U.S. market, specifically due to clinical adaptation.

The Asian portion of the market remains uncertain. Our animal health market continues to feel the impact of reduced activity from one of our larger customers.

However we view this as temporary and continue to see a significant opportunity for growth in the animal health market over the longer term. In summary, the biopharma market is currently our core growth driver and we are making excellent progress building our presence in this market.

We’re now recognized as the gold standard for our logistics HUB in valuable biologic materials. We have validated the effectiveness in our solution through extensive testing and sales to multiple major biopharma companies and we have demonstrated our ability to win new clients in the fast-growing biopharma market.

At this point, I'll turn the call over to Dr. Mark Sawicki, our Chief Commercial Officer, who is going to talk you through some of our sales and marketing investments.

This is going to be a focus for us this quarter. He will also go into more depth on the trends we are seeing in the broader regenerative medicine industry and how they are affecting CryoPort.

Dr. Sawicki and his team continue to do an excellent job in driving new client relationships and shaping our reputation as the unrivalled advanced cryogenic logistics solutions provider, particularly among major by pharmaceutical companies.

As a reminder, please hold your questions from Mark until the question-and-answer period. Mark, the floor is yours.

Thank you, Jerry. Jerry has highlighted our three markets; biopharma, animal health and reproductive medicine.

While all of these markets are important to us, biopharma is by far the largest and has the most dynamic growth rate. Jerry has asked me to comment on it in further detail.

We continue to see increasing levels of investment in the regenerative medicine market as innovative life science companies’ direct funds towards cell therapy, gene therapy and tissue engineering in the broader global regenerative medicines sector. This is not just a U.S.

phenomenon, with global companies active in selling gene therapies and other regenerative medicines raising more than $3.5 billion in the first three quarters of 2016. In the most recent quarter, there were significant financing and deal-making activity among companies in this space, coupled with strategic partnerships and acquisitions.

This has fueled continued growth in this sector, which we are seeing from both start-ups focused on regenerative medicine markets, as well as established multi-billion dollar biopharma companies as the continued focus on regenerative medicine becomes increasingly widespread. This is evidenced by Pfizer’s recent acquisition of Bamboo Therapeutics earlier in the quarter, providing an entry point for them in this space.

Importantly, the market seems to be reaching an inflection point, so to speak, with several therapies approaching commercialization. This is an extremely exciting time for CryoPort, because as you may know, the specialized logistics needs for the shipping of commercialized products are much more extensive than they are for clinical trials, and therefore entail much more involvement and large revenue potential for CryoPort.

I am pleased to report to you that we are currently in late-stage discussions with several clients, who are in late Phase III of clinical trials, two of which whom anticipate filing their biologic license applications in the coming months to support the respective commercializations of their therapies, which if successful, are anticipated to contribute significant revenue streams to CryoPort and further solidify our position as the market leader for temperature controlled logistics solutions. There can be no doubt that regenerative medicine is in the early stages of causing a medical paradigm shift in the way patients are treated.

It’s worth noting that we expect to see an evolution in industry-wide standards in the regulatory and renewed pathways that companies in the biopharma market must adhere to in order to support these types of programs. As management, we see CryoPort solution becoming more and more entrenched within our clients clinical development processes as clinical trial requirements increasingly consider the impact of transportation on product quality and regulatory scrutiny increases on the integrity of the product.

With that in mind, we have continued to advance the size behind our logistics solutions for life sciences, in order to further validate our service offerings. As a first step, we recently completed as scientific publication quality study in support from Kansas City Analytical Services and Heat Biologics to evaluate the impact of temperature and transport packaging at deep frozen temperatures on both critical biomarkers and cell therapy cancer vaccines.

The driver of this study was the recurring industry feedback to us as well as in certain scientific publications, that a significant percentage of biomarker and cell-based materials are being damaged by improper shipping conditions. In fact Dr.

Dominic Warrino, the Technical Advisor for Large Molecules Sciences at KCAS, recently stated that approximately 30% of all biomarker sample shipped to KCAS for analysis had experience temperature excursions, and as we know, temperature excursions are disruptive to stability and quality attributes of the product. The results of our study entitled “The Science Behind Logistics - How Cold Chain Planning Impacts The Clinical Development and Commercialization of Biologic Therapies” conclusively substantiated the concerns in the industry related to the impact of improper logistics solutions.

More than one-third of the biomarkers tested were adversely impacted by shipment on dry ice, and there is a significant reduction in cell viability for all cell-based materials when they are not shipped at cryogenic temperatures. This scientific data provides unbiased proof for the first time that we believe will further accelerate adoption of our advanced logistic solutions and enable us to expand our support capabilities into the larger biopharmaceuticals market.

An example of the beginning of this adaptation is our recently initiated support for the BMS product, which is one of their blockbuster monoclonal antibodies. Other examples include the expansion of service offerings within our current client base and the extension of our solutions into other client demographics that we have not historically supported.

Biopharma is largely driven by data and the effect of this first study has been very well received. In fact, early discussions on the data from our study with both pharmaceutical and biotechnology companies, has initiated significant new opportunities with multiple companies for CryoPort.

In concluding my remarks on our sales and marketing initiatives, during the past quarter, we had been asked to make multiple presentations at significant trade shows. This positions the CryoPort team as thought-leaders in the industry and enables CryoPort to reach a much broader audience.

We consistently get a very positive reception at these events and secure multiple client leads. And as for industry recognition, as Jerry mentioned earlier, CryoPort was the winner of the 2016 Cold Chain Global Forum Excellence Award, which is the largest and most recognized annual event in the cold chain logistics industry.

Collectively, our sales and marketing initiatives of propelling CryoPort forward and strengthening our position as the go-to provider of choice for all cold chain logistics needs in the biopharma, reproductive medicine and animal health markets. We are very proud of our progress to-date and remain confident that these efforts will drive both top and bottom line growth.

And with that, I will turn the floor back over to Jerry.

Thank you, Mark. Now for a more detailed discussion of our financial report for the second quarter of fiscal year 2017, I'd like to introduce our Chief Financial Officer, Mr.

Robert Stefanovich. Robert?

Thank you, Jerry. Good afternoon, everyone.

I'll now review the financial results for the second quarter of our fiscal year 2017, provide some additional comments, and then turn the call back over to Jerry. Before I delve into the results, I wanted to draw your attention to an announcement we included in today's earnings release that our Board of Directors approved the change of the company's fiscal year-end from March 31 to December 31.

We are doing this to align our business calendar with that of the majority of our clients in the life science industry and for more ease of reporting. As a result of the change, CryoPort’s quarterly reporting periods will be comprised of the calendar months ending March 31, June 30 and September 30.

Now the year-end beginning this year will be December 31. Following the filing of this quarterly report on Form 10-Q, the company’s next periodic report will be filed on Form 10-K for the transition period from April 1, 2016 to the December 31, 2016.

Now let's move on to our six months results. Net revenues for the six months period ended September 30, 2016, were $3.9 million, an increase of 35.8%, or $1 million, as compared to $2.9 million reported for the same period last year.

As Jerry and Mark mentioned, the biopharma market continues to be the leading driver behind our current revenue growth. Revenues in the biopharma market increased by 61.5% over the prior-year to $2.7 million for the six months ended September 30, 2016, driven by an overall increase in the number of clients utilizing the company’s solutions, complemented by growth and frequency from current clients.

We added 58 new biopharma accounts during the first six months of our fiscal year, further expanding our platform for future revenue growth. Revenue in the reproductive medicine market increased by 6.4% to $736,000 for the six months period compared to the same period in the prior-year.

This increase was primarily driven by revenue growth in the U.S. market of 34.6%, and partially offset by a decline in the Asia markets of 15.5%, which continues to be impacted by the restriction of reproductive tourism in certain Asian countries.

Our revenue from the animal health market were $415,000 for the six months ended September 31, 2016, representing a 13.1% decrease over the same period in the prior-year due to a reduction in shipping volumes from one of our larger clients. Gross margin for the period was 40.5%, or $1.6 million, as compared to 32.2%, or $0.9 million, compared to the same period last year.

This is an improvement of over 8 percentage points and 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 increased business volume and pricing adjustment as well as a reduction in freight as a percentage of revenue and operating efficiencies.

Operating expenses increased by $1.4 million or 31% to $5.7 million for the six months ended September 30, 2016, as compared to $4.4 million for the prior-year period. This increase was primarily due to increase in non-cash stock-based compensation expense; increases in salaries and associated employee costs incurred to expand the sales and logistics force to seize the market opportunity, particularly in biopharma, as well as targeted marketing initiatives.

Net loss attributable to common stockholders for the six months period ended September 30, 2016, was $6.1 million, or $0.42 per share, compared to a net loss of $9.3 million, or $1.61 per share, which included a preferred stock beneficial conversion charge of $4.5 million in Q1 of fiscal year 2016. Now moving to our quarterly results.

For the quarter, net revenues increased by $540,000 or 37.6% to $2 million for the three months ended September 30, 2016, as compared to $1.4 million for the prior-year quarter. This growth was driven by our success in the biopharma market, where revenues increased by 63.5% over the prior-year quarter from $871,000 to $1.4 million.

This reflects both an overall increase in the number of clients with 30 new client accounts added during the quarter, as well as revenue growth within our existing client base. Revenue in the reproductive medicine market were increased by 2.6% over the prior-year to $366,000 for the three months ended September 30, 2016.

This increase was primarily driven by revenue growth in the U.S. market of 27.7%, partially offset by a decrease of 18.7% internationally.

Our revenue in the animal health decreased by 10.7% to $187,000 for the quarter compared to the same period in prior-year, due to the aforementioned lower shipping volumes. Gross margin for the three months ended September 30, 2016, was 40.3% or $797,000 compared to 30.4% or $436,000 for the prior-year quarter.

This increase in gross margin is almost 10 percentage points, and is primarily due to increased business volume pricing adjustments, combined with the reduction in freight as a percentage of revenues, and a decrease in fixed manufacturing costs. Operating expenses increased by $0.7 million for the three months ended September 30, 2016, or 31% as compared to the prior-year.

This increase in general and administrative expenses increased $247,000 or 19.6% for the quarter. This increase is primarily due to the non-cash stock-based compensation expense of $217,000 and facility expenses of $50,300 for the new headquarters in Irvine, California.

Sales and marketing expenses increased $338,000 or 37.7% for the quarter. This increase is primarily due to increases in salaries and associated employee costs, and the aggregate amount of $142,800 incurred to expand our sales and logistics force; targeted marketing initiatives to support our sales efforts in the amount of $107,900; non-cash stock-based compensation expense of $32,000; facility expenses of $24,000 related to our office moves and increased traveling expense and trade shows.

Research and development expenses increased $114,000 or 114% for the quarter as compared to the prior-year second quarter. This increase was primarily due to further enhancing our cloud-based logistics management platform, our CryoPortal Logistics Management platform such as adding lot of research tools [ph] for dynamic reporting, increasing data mining capabilities and adding new functionality.

Our CryoPortal Logistics Management platform allows us to efficiently manage the logistics process in a holistic way and has been appraised by our customers and partners, as it provides them with real-time access with the chain of condition and chain of custody data for every single shipment. In addition to the development efforts, we brought on a research and development engineer.

His focus is on continually improving the features of our CryoPort Express solutions, including enhancements to our CryoPort Express Shippers and development of additional packaging accessories to facilitate the safe and efficient shipment of life science commodities. A good example for these advancements, among other initiatives, is our new Condition Monitoring System, the SmartPak II.

Interest expense decreased $582,000 for the three months ended September 30, 2016, as compared to the prior quarter. The prior quarter included amortization of debt discount and the fair value of the beneficial conversion feature of the related-party notes of $587,000 in aggregate.

Net loss attributed on stockholders for the three months ended September 30, 2016 was $2.2 million, or $0.14 per share, compared to $2.7 million, or $0.41 per share, for the last fiscal year second quarter. The company reported $2.6 million in cash and cash equivalents as of September 30, 2016, compared to $2.8 million as for the fiscal year ended March 31, 2016.

Subsequent to the quarter-end, the company received approximately $3.7 million in gross proceeds from warrants tendered and exercised in connection with the previously announced warrant exchange offer that we completed on October 28, 2016. Lastly please note that we also filed our Form 10-Q with the SEC earlier today.

With that, I'll turn back to Jerry. Jerry?

Thank you, Robert. I'd like to thank all of our long-term and loyal shareholders for supporting us during this exciting time in our development.

CryoPort is well positioned to leverage the rapid growth in the biopharma companies with an excellent sales team in place, and an parallel offering which has high barriers - or provides high barriers to entry. Our advanced cryogenic logistics solutions are unmatched and we’re now recognized by a growing number of people as the gold standard for the shipment of invaluable biological materials.

We are continually validating the effectiveness of our solutions through extensive testing and sales to major biopharmaceutical companies, and we have demonstrated our ability to win new clients. We are proud of the progress we have made to-date and will continue to push our revenue and manage cost and investments responsively as we embrace this exciting period of our company’s development.

While we are proud of this progress, it's just the beginning. We believe that we are positioned to grow our revenue at an increasing rate as our diversified client base grows by adding life-saving therapies to the market and groundbreaking biologic research marches on in its progress.

Further its applied to cure through - to cure or prevent cancer, malaria, leukemia, bio neoplastic diseases, infectious diseases and other heard before incurable maladies whether it is the development of therapies using T-cell, B-cell antibodies, lymphocytes, stem cells, genes or other cells, tissue or cellular components, CryoPort will continue to endeavor to evolve and keep base with industry needs by providing the most advanced technology-based solutions for temperature controlled logistics in the life sciences industry. We thank you for joining us today and we hope you found our call informative.

We appreciate your support. We appreciate your confidence.

That ends our formal remarks, and now I’ll return the floor back over to the operator for - and she’ll open the floor for questions.

Hi guys, and congratulations on the quarter. Very nice and great progress.

Jerry, just for clarity on my end, Bristol-Myers is the large pharma client that you had referenced on prior calls. Is that right?

Yes, that's correct. Yes.

Okay. So I didn't catch all of your comments regarding that, and I apologize.

But wondering if you could just go through again what your relationship is in terms of that, and then, when you think that that will start generating revenue?

Mark, I'm going to turn that question to you.

Sure, happy to answer that. So what we’re seeing is we've been asked to support the cryogenic component of one of their biologic blockbuster drugs.

But the exact timing of the ramp-up of that support is going to be heavily dependent on us going through their regulatory and quality approval processes. Ultimately there will be - the ramp rate will be dictated by the progress and the expediency that we can move through those processes themselves.

We are actively supporting certain aspects of the program, but it will ramp and additional components will be added as we clear these quality and regulatory hurdles.

Mark, when you talk regulatory, is it already FDA-approved?

This product is, but any time you change any support element of an approved or a clinical program, you have to do, what is known as, a bridging study. And in that bridging study, you have to validate that any change in protocols and that support have to be consistent.

And so they have to conduct those types of elements to assuage the regulatory authorities.

Okay. So you will be - CryoPort will be involved in the shipping of the product to - from where to where?

Can you just help me with that?

I can't tell you more than that at the moment. Sufficed to say, as I had mentioned, we are supporting the cryogenic component of it.

Okay.

But I haven't been given authority to disclose anything more than that from them at the moment.

Okay. Fair enough.

Jerry, you talked about the contract manufacturing relationship as well. And wondering if you can talk a little bit more about that in terms of whether you’ve already commenced activity with the client, and then, how do you generate revenue?

Is that on a per shipment basis, or is it, I guess, structured differently than that?

Well, the reason Lonza moved toward us are several. The contract manufacturing business is burgeoning right now, and Lonza is building a new plan on [indiscernible] public knowledge to handle their portion of the business.

And so we have added and we’re looking at our solutions in the fact that we are more reliable than home-made solutions that we are more reliable and we’re more efficient as a matter of fact, that's why they chose us. And it will be - the model will be a combination of management fee and per shipment.

That's the model.

And then timing of when you expect things to kick-off in terms of revenue generation?

Mark, would you comment on the timing?

Yes, certainly happy to. We are actually already starting to see a significant ramp in the support of that.

And so I think we are going to continue to see a consistent scaling of that relationship as it directly correlates to their manufacturing activity. So as they bring more manufacturing capacity online, what we’re doing will increase a lockstep, so to speak.

But we’re already supporting, as we have mentioned, all of the work that they purchased from Triangle Research Labs, as well as a significant proportion of all of their other cryogenic capabilities and we’re at a process of finalizing conversion on a number of other elements that will further accelerate that. But we’re already seeing a ramp on that revenue support.

Okay. And you guys have done a great job in terms of bringing on - obviously the clinical trial customer base growing there and you're in several Phase III relationships.

So can you just talk about, is there anything - if and when one of these customers has a commercialized product and - for example, Kite. Is there anything significant that you need to do in terms of preparing to support the commercialization of the product?

Well, we are prepared. The way we’ve architected the company and the way we've approached the market is, what I call, in the athletic stance.

And so the first thing is we engineered our solutions so that they are modular. So I think I’ve said before on the call, and maybe to you personally, we have 2,500 possible outcomes of solutions, so we don't have to bill the solutions from A to Z.

We can bill it from M to N if we need to put something into place to modify a solution if it's very quick. We don't always know what the final detail is going to be on there, so we stand at the ready, but we’re quick.

We don't have to do anything in particular. The other thing - other aspect of this to think about is this is - this science is not a small molecule, an old line science.

It’s not - so there is a lot of development going on. The manufacturer sometimes comes in with new requirements and talks to us about changing our methodology or supporting them in a different way.

But we think we are fully prepared. There will be no hold of it.

They are very sensitive to meeting their timeframes. They want revenue coming in just as much as we do.

So the answer is no, there is nothing - no big - no significant hurdle that we have to cross in order to able to serve those clients.

Okay. All right.

That's all I had. Thanks a lot guys.

Thanks Brian.

Good afternoon, gentlemen. I just had a little follow-up on the prior question about your commercial clients.

So it sounded as this client relationship almost five months ago and we still have no foreseeable day at which revenues will be generated from this commercial relationship because of regulatory issues. For shipping solution, it just seems absurd to me.

It may seem absurd. I want Mark to comment on this, but it is not absurd at all.

We deal - let me - I want to try and give you a full answer because as I certainly understand where you’re coming from is, as you look at things, you think well - a lot of this is passed, why haven't we seen something? We are dealing in science and we do not always have the control that we’d like to have because we do have to go through proof and progression and supplying data and there is a lot to getting a client on board.

With that, I’m going to let Mark tell you in more detail what goes on there. But your question is a good question, and I appreciate it.

Mark?

Yes, let me elaborate on that a little bit. So when you look at a filing document that goes into the FDA to support a clinical trial or a commercial BLA application, there is extremely detailed SOPs and procedures all the way down to, things that simple as the padding that goes the blood cassette where actually [ph] goes inside the dewar that goes inside a secondary packaging option which then goes out for distribution.

And if you change something as simple as the padding of that particular package itself, the FDA requires you to demonstrate that that change does not adversely impact the quality of the material being transported. And so you may think that is absurd and ridiculous, which frankly if you look at it from a layman's perspective, I don't disagree with you.

You take a look at and then you go why on earth would that matter? But for us to even do things as simple as converting them from an older model data logger or which looks at chain of condition, chain of custody to our new GPS-enabled data loggers, in many cases they have to actually do a study to demonstrate that that particular equipment doesn't adversely impact the product being transported.

And what the FDA is concerned about because these things are all cryogenic in nature. Something as simple as the probe that goes inside the dewar to monitor the temperature provides - actually gives off heat.

And so even things like the placement of that - let's call the thermocouple inside the dewar, the FDA wants to understand exactly where that is. And if that changes, you have to provide justification.

So it can be very, very problematic. It takes time for them to actually go through and do those processes and they have to actually sometimes run what's called a bridging study to demonstrate parity.

I hope that helps.

That does help. But let me ask you a follow-up question to that.

Sure.

So we have 16 Phase III trial customers currently. I'm not - I'm assuming a reasonably high proportion of those will be approved and raised to commercial status.

So my question is - let's pick one of those at random unnamed and the BLA is approved by the FDA June 30 next year. Most pharma companies that I've been involved with are able to launch their product into the marketplace within 30 to 45 days subsequent to an FDA move to get application approval.

Are you telling me that it's going to be months after an approval before one of your clients can be actively shipping the CryoPort solution because it's certainly not going to be [indiscernible].

So I'm not saying that at all, because you have to differentiate a clinical win transition versus something that we have supported all along. So those 16 Phase III trials that we were talking about, if one of those files, our solutions is already written into their documentation regulatory work for the FDA.

So the minute that they can commercialize, we are already written into those protocols. There is no delay.

However if somebody converts from an internal options, so they have their own fleet and they want to convert to a CryoPort fleet or they are using a third-party and they want to convert to a CryoPort party, and they are actively - all of that our other documentation in regards to processes toward option B are already in their procedures, they have to write and change that. That's why we've been very aggressively going after the clinical market because supporting on a clinical trial, the more that we get embedded early on, it provides that advantage from us from a support standpoint because we don't have to go through all these hurdles and jump through these hoops to support a program.

It makes sense. Sounds for an existing biological company to convert to CryoPort which explains what you’ve been unable to pick up any significant commercial already commercial business, none of these guys want to go through the time and expense of six to nine month bridging study/conversion process.

So is it fair to say that the vast bulk of your business going forward will only emanate from your current stable clinical trial client relationship?

Absolutely not. If there is a significant inherent advantage to them to make that shifts and that was the reason that - let's take, BMS for example, they saw a significant benefit in the product that we had on the table.

It conveyed to them and it does this in a marketplace, in many instances, we reduce the risk of the product during distribution. So for example, if we can reduce the failure rate on distribution of their drug product from 5% to 1%, think of the economic advantage for them.

That's huge.

I understand, and that’s why I’ve been really disappointed over the last 18 months that you have not been able to collect any significant existing commercial business, i.e. take market share away from existing shipping applications with the exception of Bristol so far.

Well, and that's one of the reasons we conducted a study that we had. So the study itself - there is a paucity of scientific data in the marketplace that really demonstrates the advantage of conversion, and so we really wanted to justify.

And then many times we’ll go in and sit down with the big pharma and they'll say show me the data, and we needed to generate the data to demonstrate that. We are currently doing that and having those exact conversations because we have a data to approve the benefit.

Does that answer your question?

Yes, thank you.

Great.

Well, again I want to thank everyone for joining the call. We really appreciate your support, and we look forward to continuing to make progress in the next call.

Thank you very much.