BioLife Buying The Remaining 56% Of SAVSU Is A Huge Positive Signal

Summary

• We noticed a huge and recent valuation gap between BioLife and CryoPort, both operating in the regenerative medicine market supplying storage media and distribution solutions.
• We surmised this was mostly due to investors discounting BioLife's distribution business, SAVSU.
• Now that BioLife has exercised its option to buy the remaining 56% of SAVSU, it is publicly signaling progress and there are even fewer reasons for the huge valuation discount.

We wrote an article comparing BioLife (NASDAQ:BLFS) with CryoPort (CYRX) as we struggled to explain the tremendous valuation gap between the companies that operate in the same market.

Basically, we did see two possible explanations:

• CryoPort is more established in the CAR-T market.
• CryoPort takes a significantly greater wallet share, as its distribution is more established.

We find little evidence of the first, so we settled on the differences in the distribution business. For distribution, BioLife depends on its 44% stake in SAVSU, which is in a much earlier state of development compared to CryoPort.

BioLife has been extending its stake in SAVSU, lately in early September last year increasing its stake from 31% to 44% for $5 million. It also has an 18-month agreement to buy the rest (company PR):

The 18-month purchase option provides BioLife, at its sole discretion, with the right to acquire the 56% of SAVSU not already owned, for the greater of 1,000,000 shares of BioLife common stock, or approximately $23 million of BioLife common stock, calculated on the day of exercise. If BioLife exercises the purchase option in the future, 75% of the shares would be issued at closing, with the remaining 25% issued upon the achievement of specific revenue milestones.

Well, on July 8, that is last Monday, the company lifted this option (company PR):

announced that it has exercised its option to acquire the remaining 56% of the outstanding shares of privately held SAVSU Technologies that BioLife currently does not own in exchange for 1.1 million shares of BioLife common stock. The acquisition will be pursuant to a share purchase agreement and is expected to close within 45 days.

This is a huge positive for BioLife, for the following reasons:

• Management argued that the purchase option (widely misunderstood at the time) gave them

Analyst’s Disclosure:I am/we are long BLFS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.