Expert Financial Analysis and Reporting

The market has been manic depressive on assessing the potential commercial benefit of COVID-19 vaccines to Cryoport. The stock ran up to over $60 on the mistaken premise that Pfizer would use Cryoport cryogenics shipping and logistics to support shipments of its vaccine. This premise was wrong because the Pfizer vaccine is shipped at minus 70 degrees Celsius (minus 94  degrees Fahrenheit). This does not require cryogenic shipping; it can be done with dry ice. Then Moderna announced that its vaccine was 95% effective in clinical trials but could be shipped and stored at minus 20 degrees Celsius (minus 4 degrees Fahrenheit) and is stable for 30 days between 2 degrees to 8 degrees Celsius (36 degrees to 46 degrees Fahrenheit). The market did a sharp reverse turn and concluded that somehow the opportunity for the Pfizer vaccine had been diminished and that the Moderna vaccine effectiveness of 95% made it a better drug than the Pfizer vaccine which showed preliminary effectiveness of only 90%. Today Pfizer reported final effectiveness of 95% dispelling this thought. Anyway, the market concluded quite wrongly that Pfizer was a loser in the vaccine development and so was Cryoport causing Cryoport’s stock to drop like a rock.

The thought that the opportunity for the Pfizer vaccine would be diminished because the Moderna vaccine had better temperature shipping and storage characteristics was not correct. Pfizer has said that it can produce 50 million doses in 2020 and because there are two doses per person, this can treat 25 million people. Moderna has said that it can produce 20 million doses that can treat 10 million people. In 2021, Pfizer has said that it can produce 1.3 billion doses to treat 650 million people and Moderna has indicated 500 million doses to treat 250 million people. We are awaiting data on numerous other vaccines that use different technologies to learn about their effectiveness, but it is hard to beat 95%. Vaccines from other manufacturers may or may not be available in quantity in 2H, 2021.

There are over 7 billion people in the world of whom 330 million live in the US and 750 million in Europe. By the end of 2021, Pfizer and Moderna vaccines could potentially treat 850 million people. This is 12% of the world addressable market . Given the highly favorable safety shown by both vaccines, there is no reason for any health agency to do other than to urge people to immediately receive the vaccine. Pfizer and Moderna will likely sell every dose of vaccine they can produce in 2021 and perhaps in 2022. Granted, shipping and storage temperature characteristics favor the Moderna vaccine but so what.

So what is the opportunity for Cryoport? I don’t know but let me make some points:

• This is one of the biggest logistical challenges ever faced by the world. Can you imagine all the global distribution, storage and administration issues? I think that every company in the world with logistical skills in drug distribution will be called on to play a part. In this regard, Cryoport has major services to provide.
• CryoPDP has global distribution for products of all temperature ranges.
• MVE Biologics has freezers that can maintain the minus 70 degrees Celsius required for storage of the Pfizer vaccine.
• There are many less developed areas of the world that do not have the logistical capabilities to store the Pfizer vaccine. To the extent that the Pfizer vaccine is needed to treat health care providers and high risk patients, Pfizer might consider using the Cryoport dewar for shipping and then storage for several days before use.

I really can’t detail the extent that Cryoport will commercially benefit from the Moderna and Pfizer vaccines and I don’t think Cryoport management can at this time. Intuitively, I think it will be meaningful. However, the thrust behind the Cryoport investment story is cryogenic shipping of cell based therapies. The COVID vaccines are a side show from a commercial standpoint.